10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 333-134748

Chaparral Energy, Inc.

(Exact name of registrant as specified in its charter)

Delaware	73-1590941
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
701 Cedar Lake Boulevard Oklahoma City, Oklahoma	73114
(Address of principal executive offices)	(Zip code)

(405) 478-8770

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No  ☒

(Explanatory Note: The registrant is a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer (Do not check if a smaller reporting company)	☒
Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.                  Yes  ☒    No  ☐

Number of shares outstanding of each of the issuer’s classes of common stock as of May 15, 2017:

Class	Number of Shares
Class A Common Stock, $0.01 par value		37,110,630
Class B Common Stock, $0.01 par value		7,871,512

CHAPARRAL ENERGY, INC.

Index to Form 10-Q

	Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements	7
Consolidated Balance Sheets	7
Consolidated Statements of Operations	9
Consolidated Statements of Stockholders' Equity (Deficit)	10
Consolidated Statements of Cash Flows	11
Condensed Notes to Consolidated Financial Statements	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Overview	36
Results of Operations	39
Liquidity and Capital Resources	46
Non-GAAP Financial Measure and Reconciliation	50
Critical Accounting Policies	52
Recent Accounting Pronouncements	52
Item 3. Quantitative and Qualitative Disclosures about Market Risk	52
Item 4. Controls and Procedures	54
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	54
Item 1A. Risk Factors	55
Item 3. Defaults Upon Senior Securities	56
Item 5. Other Information	56
Item 6. Exhibits	56
Signatures	57

2

CAUTIONARY NOTE

REGARDING FORWARD-LOOKING STATEMENTS

This report includes statements that constitute forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flow, pending legal and regulatory proceedings and claims, including environmental matters, future economic performance, operating income, cost savings, and management’s plans, strategies, goals and objectives for future operations and growth. These forward-looking statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect,” “should,” “seek,” “project,” “plan” or similar expressions. Any statement that is not a historical fact is a forward-looking statement. It should be understood that these forward-looking statements are necessarily estimates reflecting the best judgment of senior management, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements in this report may include, for example, statements about:

• fluctuations in demand or the prices received for oil and natural gas;

• the amount, nature and timing of capital expenditures;

• drilling, completion and performance of wells;

• competition and government regulations;

• timing and amount of future production of oil and natural gas;

• costs of exploiting and developing properties and conducting other operations, in the aggregate and on a per-unit equivalent basis;

• changes in proved reserves;

• operating costs and other expenses;

• our future financial condition, results of operations, revenue, cash flows and expenses;

• estimates of proved reserves;

• exploitation of property acquisitions; and

• marketing of oil and natural gas.

These forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In addition to the risk factors described in Item 1A of this report and under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, the factors include:

• the ability to operate our business following emergence from bankruptcy;

• worldwide supply of and demand for oil and natural gas;

• volatility and declines in oil and natural gas prices;

• drilling plans (including scheduled and budgeted wells);

• our new capital structure and the adoption of fresh start accounting, including the risk that assumptions and factors used in estimating enterprise value vary significantly from current values;

• the number, timing or results of any wells;

• changes in wells operated and in reserve estimates;

• supply of CO₂ ;

• future growth and expansion;

• future exploration;

• integration of existing and new technologies into operations;

3

• future capital expenditures (or funding thereof) and working capital;

• borrowings and capital resources and liquidity;

• changes in strategy and business discipline, including our post-emergence business strategy;

• future tax matters;

• any loss of key personnel;

• geopolitical events affecting oil and natural gas prices;

• outcome, effects or timing of legal proceedings;

• the effect of litigation and contingencies;

• the ability to generate additional prospects; and

• the ability to successfully complete merger, acquisition or divestiture plans, regulatory or other limitations imposed as a result of a merger, acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements contained herein. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

4

GLOSSARY OF CERTAIN DEFINED TERMS

The terms defined in this section are used throughout this Form 10-Q:

Active EOR Areas	Areas where we are currently or plan to inject and/or recycle CO2 as a means of oil recovery.
Basin	A low region or natural depression in the earth’s crust where sedimentary deposits accumulate.
Bankruptcy Court	United States Bankruptcy Court for the District of Delaware
Bbl	One stock tank barrel of 42 U.S. gallons liquid volume used herein in reference to crude oil, condensate, or natural gas liquids.
BBtu	One billion British thermal units.
Boe	Barrels of oil equivalent using the ratio of six thousand cubic feet of natural gas to one barrel of oil.
Boe/d	Barrels of oil equivalent per day.
Btu	British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.
Completion	The process of treating a drilled well followed by the installation of permanent equipment for the production of oil or natural gas, or in the case of a dry well, the reporting to the appropriate authority that the well has been abandoned.
CO2	Carbon dioxide.
Developed acreage	The number of acres that are assignable to productive wells.
Dry well or dry hole	An exploratory, development or extension well that proves to be incapable of producing either oil or natural gas in sufficient quantities to justify completion as an oil or natural gas well.
Enhanced oil recovery (EOR)	The use of any improved recovery method, including injection of CO2 or polymer, to remove additional oil after Secondary Recovery.
Prior Credit Facility	Eighth Restated Credit Agreement, dated as of April 12, 2010, by and among us, Chaparral Energy, L.L.C., in its capacity as Borrower Representative for the Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent and each of the Lenders named therein, as amended.
Field	An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
MBbls	One thousand barrels of crude oil, condensate, or natural gas liquids.
MBoe	One thousand barrels of crude oil equivalent.
Mcf	One thousand cubic feet of natural gas.
MMBtu	One million British thermal units.
MMcf	One million cubic feet of natural gas.
MMcf/d	Millions of cubic feet per day.
Natural gas liquids (NGLs)	Those hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption, condensation, adsorption or other methods in gas processing or cycling plants. Natural gas liquids primarily include propane, butane, isobutane, pentane, hexane and natural gasoline.

5

New Credit Facility	Ninth Restated Credit Agreement, dated as of March 21, 2017, by and among us, Chaparral Energy, Inc., as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and The Lenders and Prepetition Borrowers Party Hereto.
NYMEX	The New York Mercantile Exchange.
Play	A term describing an area of land following the identification by geologists and geophysicists of reservoirs with potential oil and natural gas reserves.
Proved developed reserves	Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, or in which the cost of the required equipment is relatively minor compared to the cost of a new well.
Proved reserves	The quantities of oil and natural gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain.
Proved undeveloped reserves	Reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.
PV-10 value	When used with respect to oil and natural gas reserves, PV-10 value means the estimated future gross revenue to be generated from the production of proved reserves, net of estimated production and future development costs, excluding escalations of prices and costs based upon future conditions, before income taxes, and without giving effect to non-property-related expenses, discounted to a present value using an annual discount rate of 10%.
Registration Rights Agreement	Registration Rights Agreement, dated as of March 21, 2017, by and among Chaparral Energy, Inc. and the Stockholders named therein.
Reorganization Plan	First Amended Joint Plan of Reorganization for Chaparral Energy, Inc. and its Affiliate Debtors under Chapter 11 of the Bankruptcy Code.
SEC	The Securities and Exchange Commission.
Secondary Recovery	The recovery of oil and natural gas through the injection of liquids or gases into the reservoir, supplementing its natural energy. Secondary Recovery methods are often applied when production slows due to depletion of the natural pressure.
Senior Notes	Collectively, our 9.875% senior notes due 2020, 8.25% senior notes due 2021, and 7.625% senior notes due 2022, of which all obligations have been discharged upon consummation of our Reorganization Plan.
STACK	An acronym standing for Sooner Trend Anadarko Canadian Kingfisher. A play in the Anadarko Basin of Oklahoma in which we operate.
Undeveloped acreage	Lease acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil or natural gas regardless of whether such acreage contains proved reserves.
Unit	The joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests. Also, the area covered by a unitization agreement.

6

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Chaparral Energy, Inc. and subsidiaries

Consolidated balance sheets

	Successor			Predecessor
	March 31,			December 31,
(dollars in thousands, except share data)	2017			2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	32,494		$	186,480
Accounts receivable, net		50,418			46,226
Inventories, net		6,847			7,351
Prepaid expenses		4,319			3,886
Derivative instruments		10,001			—
Total current assets		104,079			243,943
Property and equipment, net		56,136			41,347
Oil and natural gas properties, using the full cost method:
Proved		608,789			4,323,964
Unevaluated (excluded from the amortization base)		586,672			20,353
Accumulated depreciation, depletion, amortization and impairment		(3,034	)		(3,789,133	)
Total oil and natural gas properties		1,192,427			555,184
Derivative instruments		9,544			—
Other assets		5,988			5,513
Total assets	$	1,368,174		$	845,987

The accompanying notes are an integral part of these consolidated financial statements.

7

Chaparral Energy, Inc. and subsidiaries

Consolidated balance sheets—continued

	Successor			Predecessor
	March 31,			December 31,
(dollars in thousands, except share data)	2017			2016
	(unaudited)
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and accrued liabilities	$	60,262		$	42,442
Accrued payroll and benefits payable		7,358			3,459
Accrued interest payable		—			732
Revenue distribution payable		12,535			9,426
Long-term debt and capital leases, classified as current		4,588			469,112
Derivative instruments		—			7,525
Total current liabilities		84,743			532,696
Long-term debt and capital leases, less current maturities		288,991			—
Derivative instruments		—			5,844
Deferred compensation		529			—
Asset retirement obligations		64,531			65,456
Liabilities subject to compromise		—			1,284,144
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Predecessor preferred stock, 600,000 shares authorized, none issued and outstanding as of December 31, 2016		—			—
Predecessor Class A Common stock, $0.01 par value, 10,000,000 shares authorized and 333,686 shares issued and outstanding as of December 31, 2016		—			4
Predecessor Class B Common stock, $0.01 par value, 10,000,000 shares authorized and 344,859 shares issued and outstanding as of December 31, 2016		—			3
Predecessor Class C Common stock, $0.01 par value, 10,000,000 shares authorized and 209,882 shares issued and outstanding as of December 31, 2016		—			2
Predecessor Class E Common stock, $0.01 par value, 10,000,000 shares authorized and 504,276 shares issued and outstanding as of December 31, 2016		—			5
Predecessor Class F Common stock, $0.01 par value, 1 share authorized, issued, and outstanding as of December 31, 2016		—			—
Predecessor Class G Common stock, $0.01 par value, 3 shares authorized and 2 shares issued and outstanding as of December 31, 2016		—			—
Predecessor additional paid in capital		—			425,231
Successor preferred stock, 5,000,000 shares authorized, none issued and outstanding		—			—
Successor Class A Common stock, $0.01 par value, 180,000,000 shares authorized and 37,110,630 shares issued and outstanding as of March 31, 2017		371			—
Successor Class B Common stock, $0.01 par value, 20,000,000 shares authorized and 7,871,512 shares issued and outstanding as of March 31, 2017		79			—
Successor additional paid in capital		948,613			—
Accumulated deficit		(19,683	)		(1,467,398	)
Total stockholders' equity (deficit)		929,380			(1,042,153	)
Total liabilities and stockholders' equity (deficit)	$	1,368,174		$	845,987

The accompanying notes are an integral part of these consolidated financial statements.

8

Chaparral Energy, Inc. and subsidiaries

Consolidated statements of operations

(Unaudited)

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
(in thousands)	March 31, 2017			March 21, 2017			March 31, 2016
Revenues - commodity sales	$	7,808		$	66,531		$	48,239
Costs and expenses:
Lease operating		4,259			19,941			23,415
Transportation and processing		361			2,034			1,879
Production taxes		316			2,417			1,756
Depreciation, depletion and amortization		3,414			24,915			31,808
Loss on impairment of oil and gas assets		—			—			77,896
General and administrative		5,744			6,843			6,489
Liability management		—			—			5,589
Cost reduction initiatives		6			629			3,125
Total costs and expenses		14,100			56,779			151,957
Operating (loss) income		(6,292	)		9,752			(103,718	)
Non-operating (expense) income:
Interest expense		(650	)		(5,862	)		(29,654	)
Derivative (losses) gains		(12,115	)		48,006			11,932
Write-off of Senior Note issuance costs, discount and premium		—			—			(16,970	)
Other (expense) income, net		(5	)		1,373			136
Net non-operating (expense) income		(12,770	)		43,517			(34,556	)
Reorganization items, net		(620	)		988,727			—
(Loss) income before income taxes		(19,682	)		1,041,996			(138,274	)
Income tax expense		1			37			132
Net (loss) income	$	(19,683	)	$	1,041,959		$	(138,406	)

The accompanying notes are an integral part of these consolidated financial statements.

9

Chaparral Energy, Inc. and subsidiaries

Consolidated statements of stockholders’ equity (deficit)

										Retained
							Additional			earnings
	Common stock						paid in			(accumulated
(dollars in thousands)	Shares			Amount			capital			deficit)			Total
Balance at December 31, 2016 - Predecessor		1,392,706		$	14		$	425,231		$	(1,467,398	)	$	(1,042,153	)
Restricted stock forfeited		(1,454	)		—			—			—			—
Restricted stock cancelled		(8,964	)		—			—			—			—
Stock-based compensation		—			—			194			—			194
Net income		—			—			—			1,041,959			1,041,959
Balance at March 21, 2017 - Predecessor		1,382,288			14			425,425			(425,439	)		—
Cancellation of Predecessor equity		(1,382,288	)		(14	)		(425,425	)		425,439			—
Balance at March 21, 2017 - Predecessor		—			—			—			—			—
Issuance of Successor common stock - rights offering		4,197,210			42			49,985			—			50,027
Issuance of Successor common stock - backstop premium		367,030			4		—				—			4
Issuance of Successor common stock - settlement of claims		40,417,902			404			898,510			—			898,914
Issuance of Successor warrants	—				—			118			—			118
Balance at March 21, 2017 - Successor		44,982,142			450			948,613			—			949,063
Net loss		—			—			—			(19,683	)		(19,683	)
Balance at March 31, 2017 - Successor		44,982,142		$	450		$	948,613		$	(19,683	)	$	929,380

The accompanying notes are an integral part of these consolidated financial statements.

10

Chaparral Energy, Inc. and subsidiaries

Consolidated statements of cash flows

(Unaudited)

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
(in thousands)	March 31, 2017			March 21, 2017			March 31, 2016
Cash flows from operating activities
Net (loss) income	$	(19,683	)	$	1,041,959		$	(138,406	)
Adjustments to reconcile net loss to net cash provided by operating activities
Non-cash reorganization items		—			(1,012,090	)		—
Depreciation, depletion and amortization		3,414			24,915			31,808
Loss on impairment of assets		—			—			77,896
Write-off of Senior Note issuance costs, discount and premium		—			—			16,970
Derivative losses (gains)		12,115			(48,006	)		(11,932	)
Gain on sale of assets		—			(206	)		(68	)
Other		1,012			645			1,554
Change in assets and liabilities
Accounts receivable		(3,577	)		198			6,262
Inventories		38			466			1,285
Prepaid expenses and other assets		180			(497	)		159
Accounts payable and accrued liabilities		(3,423	)		8,733			7,939
Revenue distribution payable		1,510			(1,875	)		(2,763	)
Deferred compensation		13			143			(955	)
Net cash (used in) provided by operating activities		(8,401	)		14,385			(10,251	)
Cash flows from investing activities
Expenditures for property, plant, and equipment and oil and natural gas properties		(5,832	)		(31,179	)		(47,087	)
Proceeds from asset dispositions		—			1,884			471
Proceeds from derivative instruments		1,692			1,285			47,486
Net cash (used in) provided by investing activities		(4,140	)		(28,010	)		870
Cash flows from financing activities
Proceeds from long-term debt		—			270,000			181,000
Repayment of long-term debt		(19	)		(444,785	)		(597	)
Proceeds from rights offering, net		—			50,031			—
Principal payments under capital lease obligations		(69	)		(568	)		(614	)
Payment of other financing fees		—			(2,410	)		—
Net cash (used in) provided by financing activities		(88	)		(127,732	)		179,789
Net (decrease) increase in cash and cash equivalents		(12,629	)		(141,357	)		170,408
Cash and cash equivalents at beginning of period		45,123			186,480			17,065
Cash and cash equivalents at end of period	$	32,494		$	45,123		$	187,473

The accompanying notes are an integral part of these consolidated financial statements.

11

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited)

(dollars in thousands, unless otherwise noted)

Note 1: Nature of operations and summary of significant accounting policies

Nature of operations

Chaparral Energy, Inc. and its subsidiaries, (collectively, “we”, “our”, “us”, or the “Company”) are involved in the acquisition, exploration, development, production and operation of oil and natural gas properties. Our properties are located primarily in Oklahoma and Texas. To facilitate our financial statement presentations, we refer to the post-emergence reorganized company in these consolidated financial statements and footnotes as the “Successor” for periods subsequent to March 21, 2017, and to the pre-emergence company as “Predecessor” for periods prior to March 21, 2017. As discussed in “Note 2—Chapter 11 Reorganization,” we filed voluntary petitions for bankruptcy relief and subsequently operated as debtor in possession, in accordance with the applicable provisions of the Bankruptcy Code, until our emergence from bankruptcy on March 21, 2017. The cancellation of all existing shares outstanding followed by the issuance of new shares in the reorganized Company upon our emergence from bankruptcy caused a related change of control under US GAAP. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Reorganization Plan, the Company’s consolidated financial statements on or after March 21, 2017, are not comparable with the consolidated financial statements prior to that date.

Interim financial statements

The accompanying unaudited consolidated interim financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC and do not include all of the financial information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) 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, 2016.

The financial information as of March 31, 2017, and for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), and the three months ended March 31, 2016, is unaudited. The financial information as of December 31, 2016, has been derived from the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. In management’s opinion, such information contains all adjustments considered necessary for a fair presentation of the results of the interim periods. The results of operations for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), are not necessarily indicative of the results of operations that will be realized for the year ended December 31, 2017.

Cash and cash equivalents

We maintain cash and cash equivalents in bank deposit accounts and money market funds which may not be federally insured. As of March 31, 2017, cash with a recorded balance totaling approximately $27,600 was held at JP Morgan Chase Bank, N.A. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk on such accounts.

As of March 31, 2017 we had restricted cash of $14,200 which is included in “Cash and cash equivalents” in our consolidated balance sheets. The restricted funds were maintained primarily to pay debtor related professional fees associated with our reorganization as well as certain convenience class unsecured claims upon our emergence from bankruptcy. As of December 31, 2016, we had restricted cash of $1,400 which was required to be maintained during the pendency of our bankruptcy.

Accounts receivable

We have receivables from joint interest owners and oil and natural gas purchasers which are generally uncollateralized. Accounts receivable consisted of the following at March 31, 2017, and December 31, 2016:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
Joint interests	$	13,304		$	13,818
Accrued commodity sales		32,460			31,304
Derivative settlements		3,231			—
Other		2,016			1,657
Allowance for doubtful accounts		(593	)		(553	)
	$	50,418		$	46,226

12

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Inventories

Inventories consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Equipment inventory	$	5,326	$	8,165
Commodities		1,521		1,418
Inventory valuation allowance		—		(2,232	)
	$	6,847	$	7,351

Oil and natural gas properties

Costs associated with unevaluated oil and natural gas properties are excluded from the amortizable base until a determination has been made as to the existence of proved reserves. Unevaluated leasehold costs are transferred to the amortization base with the costs of drilling the related well upon proving up reserves of a successful well or upon determination of a dry or uneconomic well, under a process that is conducted each quarter. Furthermore, unevaluated oil and natural gas properties are reviewed for impairment if events and circumstances exist that indicate a possible decline in the recoverability of the carrying amount of such property. The impairment assessment is conducted at least once annually and whenever there are indicators that an impairment has occurred. In assessing whether an impairment has occurred, we consider factors such as intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. Upon determination of an impairment, all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. The processes above are applied to unevaluated oil and natural gas properties on an individual basis or as a group if properties are individually insignificant.

In the past, the costs associated with unevaluated properties typically relate to acquisition costs of unproved acreage. However, as a result of fresh start accounting, substantially all of the carrying value of our unevaluated properties are the result of a fair value increase to reflect the value of our acreage in our STACK play (see “Note 3—Fresh start accounting”).

The costs of unevaluated oil and natural gas properties consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Leasehold acquisitions	$	579,151	$	15,455
Capitalized interest		54		1,894
Wells and facilities in progress of completion		7,467		3,004
Total unevaluated oil and natural gas properties excluded from amortization	$	586,672	$	20,353

Ceiling Test. In accordance with the full cost method of accounting, the net capitalized costs of oil and natural gas properties are not to exceed their related PV-10 value, net of tax considerations, plus the cost of unproved properties not being amortized.

Our estimates of oil and natural gas reserves as of March 31, 2017, were prepared using an average price for oil and natural gas on the first day of each month for the prior twelve months as required by the SEC. As discussed in “Note 3—Fresh start accounting,” our application of fresh start accounting to our balance sheet on March 21, 2017,  resulted in the carrying value of our oil and natural gas properties being restated based on their fair value. The estimated fresh start fair value along with adjustments for activity between March 21, 2017, and the end of the first quarter of 2017 as well as the increase in SEC average prices resulted in a carrying value that was below the full cost ceiling at quarter-end and thus a ceiling test write-down was not required.

Income taxes

We recorded income tax expense during the Successor and Predecessor periods in 2017 to reflect our obligation for current Texas margin tax on gross revenues less certain deductions. We did not record any net deferred tax benefit in the Successor or Predecessor periods in 2017 as any deferred tax asset arising from the benefit is reduced by a valuation allowance.

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, as well as the jurisdiction in which such taxable income is generated, to determine whether a

13

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

As of the bankruptcy emergence date of March 21, 2017, we are in a net deferred tax asset position and based on our anticipated operating results in subsequent quarters, we project being in a net deferred tax asset position at December 31, 2017. We believe it is more likely than not that these deferred tax assets will not be realized, and accordingly, recorded a full valuation allowance against our net deferred tax assets as of March 21, 2017, and as of March 31, 2017.

We will continue to evaluate whether the valuation allowance is needed in future reporting periods. The valuation allowance will remain until we can determine that the net deferred tax assets are more likely than not to be realized. Future events or new evidence which may lead us to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings,  improvements in oil prices, and taxable events that could result from one or more transactions. The valuation allowance does not prevent future utilization of the tax attributes if we recognize taxable income. As long as we conclude that the valuation allowance against its net deferred tax assets is necessary, we likely will not have any additional deferred income tax expense or benefit.

The benefit of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the consolidated financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Interest and penalties, if any, related to uncertain tax positions would be recorded in interest expense and other expense, respectively. There were no uncertain tax positions at March 31, 2017, and December 31, 2016.

As described in “Note 2—Chapter 11 Reorganization,” elements of the Reorganization Plan provided that our indebtedness related to Senior Notes and certain general unsecured claims were exchanged Successor common stock in settlement of those claims. Absent an exception, a debtor recognizes cancellation of indebtedness income (“CODI”) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code of 1986, as amended (“IRC”), provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from Chapter 11 bankruptcy proceedings, the estimated amount of CODI is approximately $61,000, which will reduce the value of the Company’s net operating losses. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of emergence, or January 1, 2018. The reduction of net operating losses is expected to be fully offset by a corresponding decrease in valuation allowance.

The IRC provides an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future taxable income in the event of a change in ownership. Emergence from Chapter 11 bankruptcy proceedings resulted in a change in ownership for purposes of the IRC Section 382. We analyzed alternatives available within the IRC to taxpayers in Chapter 11 bankruptcy proceedings in order to minimize the impact of the ownership change and cancellation of indebtedness income on its tax attributes. Upon filing its 2017 U.S. Federal income tax return, we plan to elect an available alternative which would likely result in the Company experiencing a limitation that subjects existing tax attributes at emergence to an IRC Section 382 limitation that could result in some or all of the remaining net operating loss carryforwards expiring unused. However, we will continue to evaluate the remaining available alternatives which would not subject existing tax attributes to an IRC Section 382 limitation.

Liability management

Liability management expense includes third party legal and professional service fees incurred from our activities to restructure our debt and in preparation for our bankruptcy petition. As a result of our Chapter 11 petition, such expenses, to the extent that they are incremental and directly related to our bankruptcy reorganization, are reflected in “Reorganization items” in our consolidated statements of operations.

14

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Cost reduction initiatives

Cost reduction initiatives include expenses related to our efforts to reduce our capital, operating and administrative costs in response to the depressed commodity pricing environment. The expense consists of costs for one-time severance and termination benefits in connection with our reductions in force and third party legal and professional services we have engaged to assist in our cost savings initiatives as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
One-time severance and termination benefits	$	1	$	608	$	3,036
Professional fees		5		21		89
Total cost reduction initiatives expense	$	6	$	629	$	3,125

Recently adopted accounting pronouncements

In March 2016, the FASB issued authoritative guidance with the objective to simplify several aspects of the accounting for share-based payments, including accounting for income taxes when awards vest or are settled, statutory withholdings and accounting for forfeitures. Classification of these aspects on the statement of cash flows is also addressed. We have adopted this guidance, which was effective for fiscal periods beginning after December 15, 2016, and interim periods thereafter, in the current quarter, with no material impact to our financial statements of results of operation. We did not have any previously unrecognized excess tax benefits that required an adjustment to the opening balance of retained earnings under the modified retrospective transition method required by the guidance.

In March 2016, the FASB issued authoritative guidance that clarifies that the assessment of whether an embedded contingent put or call option in a financial instrument is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence described in ASC 815. We adopted this guidance, which was effective for fiscal periods beginning after December 15, 2016, and interim periods thereafter, in the current quarter, with no material impact to our financial statements or results of operations.

In August 2014, the FASB issued authoritative guidance that required entities to evaluate whether there is substantial doubt about their ability to continue as a going concern and required additional disclosures if certain criteria were met. The guidance was adopted on December 31, 2016, and other than discussions regarding our emergence from bankruptcy and the related exit financing in “Note 2 — Chapter 11 reorganization” and “Note 6—Debt”, there were no additional required disclosures as contemplated by this guidance.

Recently issued accounting pronouncements

In January 2017, the FASB issued authoritative guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities constitutes a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described under updated revenue recognition guidance. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We expect that adoption of the new guidance may reduce the likelihood that a future transaction would be accounted for as a business combination although such a determination may require a greater degree of judgment.

In May 2014, the FASB issued authoritative guidance that supersedes previous revenue recognition requirements and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The new standard allows for either full retrospective adoption, meaning the standard is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning the standard is applied only to the most current period presented. During 2015 and 2016, the FASB released further updates that, among others, provided supplemental guidance and clarification to this topic including clarification on

15

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

principal vs. agent considerations and identifying performance obligations and licensing. We are currently evaluating the effect the new standard and its subsequent updates will have on our financial statements and results of operations. In 2017, we established an implementation team and engaged external advisers to develop a multi-phase plan to assess our business and contracts, as well as any changes to processes to adopt the requirements of the new standard and its related updates.

In January 2016, the FASB issued authoritative guidance that amends existing requirements on the classification and measurement of financial instruments. The standard principally affects accounting for equity investments and financial liabilities where the fair value option has been elected. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods thereafter. Early adoption of certain provisions is permitted. We do not expect this guidance to materially impact our financial statements or results of operations.

In February 2016, the FASB issued authoritative guidance significantly amending the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. Furthermore, all leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, a sale will only be recognized if the criteria in the new revenue recognition standard are met. For public business entities, this guidance is effective for fiscal periods beginning after December 15, 2018 and interim periods thereafter, and should be applied using a modified retrospective approach. Early adoption is permitted. Based on an assessment of our current operating leases, which are predominantly comprised of leases for CO₂ compressors, we do not expect this guidance to materially impact our balance sheet or results of operations. However, we also enter into contractual arrangements relating to rights of ways or surface use that are typical of upstream oil and gas operations. We are currently assessing whether such arrangements are included in the new guidance and the potential impact, if any, on our financial statements or results of operations from these arrangements.

In June 2016, the FASB issued authoritative guidance which modifies the measurement of expected credit losses of certain financial instruments. The guidance is effective for fiscal years beginning after December 15, 2020, however early adoption is permitted for fiscal years beginning after December 15, 2018. The updated guidance impacts our financial statements primarily due to its effect on our accounts receivables. Our history of accounts receivable credit losses almost entirely relates to receivables from joint interest owners in our operated oil and natural gas wells. Based on this history and on mitigating actions we are permitted to take    such as netting past due amounts against revenue and assuming title to the working interest, we do not expect this guidance to materially impact our financial statements or results of operations.

In August 2016, the FASB issued authoritative guidance which provides clarification on how certain cash receipts and cash payments are presented and classified on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and is required to be adopted using a retrospective approach if practicable. Early adoption is permitted. We do not expect this guidance to have a material impact on our consolidated statement of cash flows.

Note 2: Chapter 11 reorganization

Bankruptcy petition and emergence. On May 9, 2016 (the “Petition Date”), Chaparral Energy, Inc. and its subsidiaries including Chaparral Energy, L.L.C., Chaparral Resources, L.L.C., Chaparral Real Estate, L.L.C., Chaparral CO₂ , L.L.C., CEI Pipeline, L.L.C., CEI Acquisition, L.L.C., Green Country Supply, Inc., Chaparral Biofuels, L.L.C., Chaparral Exploration, L.L.C., Roadrunner Drilling, L.L.C. (collectively, the “Chapter 11 Subsidiaries” and, together with Chaparral Energy, Inc., the “Debtors”) filed voluntary petitions seeking relief under Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) commencing cases for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”).

On March 10, 2017 (the “Confirmation Date”), the Bankruptcy Court confirmed our Reorganization Plan and on March 21, 2017 (the “Effective Date”), the Reorganization Plan became effective and we emerged from bankruptcy.

Debtor-In-Possession.  During the pendency of the Chapter 11 Cases, we operated our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted all first day motions filed by us which were designed primarily to minimize the impact of the Chapter 11 Cases on our normal day-to-day operations, our customers, regulatory agencies, including taxing authorities, and employees. As a result, we were able to conduct normal business activities and pay all associated obligations for the post-petition period and we were also authorized to pay and have paid (subject to limitations applicable to payments of certain pre-petition obligations) pre-petition employee wages and benefits, pre-petition amounts owed to certain lienholders and critical vendors, amounts due to taxing authorities for production and other related taxes and funds belonging

16

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

to third parties, including royalty and working interest holders. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of our business required the approval of the Bankruptcy Court.

Automatic Stay. Subject to certain exceptions, under the Bankruptcy Code, the filing of the bankruptcy petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or the filing of other actions against us or our property to recover, collect or secure a claim arising prior to the Petition Date. Absent an order from the Bankruptcy Court, substantially all of our pre-petition liabilities were subject to settlement under the Bankruptcy Code.

Plan of Reorganization. Pursuant to the terms of the Reorganization Plan, which was supported by us, certain lenders under our Prior Credit Facility (collectively, the “Lenders”) and certain holders of our Senior Notes (collectively, the “Noteholders”), the following transactions occurred on or around the Effective Date:

• On or around the Effective Date, we issued 44,982,142 shares of common stock of the reorganized company (“New Common Stock”), which were the result of the transactions described below. We also entered into a stockholders agreement and a Registration Rights Agreement and amended our certificate of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions.

• Our Predecessor common stock was cancelled, extinguished and discharged and the Predecessor equity holders did not receive any consideration in respect of their equity interests;

• The $1,267,410 of indebtedness, including accrued interest, attributable to our Senior Notes were exchanged for New Common Stock. In addition, we issued or reserved shares of New Common Stock to be exchanged in settlement of $2,439 of certain general unsecured claims. In aggregate, the shares of New Common Stock issued or to be issued in settlement of the Senior Note and these general unsecured claims represented approximately 90% percent of outstanding Successor common shares;

• We completed a rights offering backstopped by certain holders of our Senior Notes (the “Backstop Parties”) which generated $50,031 of gross proceeds. The rights offering resulted in the issuance of New Common Stock, representing approximately nine percent of outstanding Successor common shares, to holders of claims arising under the Senior Notes and to the Backstop Parties;

• In connection with the rights offering described above, the Backstop Parties received approximately one percent of outstanding Successor common shares as a backstop fee;

• Additional shares, representing seven percent of outstanding Successor common shares on a fully diluted basis, were authorized for issuance under a new management incentive plan;

• Warrants to purchase 140,023 shares of New Common Stock were issued to Mr. Mark Fischer, our founder and former Chief Executive Officer, with an exercise price of $36.78 per share and expiring on June 30, 2018. The warrants were issued in exchange for consulting services provided by Mr. Fischer;

• Our Prior Credit Facility, previously consisting of a senior secured revolving credit facility was restructured into a New Credit Facility consisting of a first-out revolving facility (“New Revolver”) and a second-out term loan (“New Term Loan”). On the Effective Date, the entire balance on the Prior Credit Facility in the amount of $444,440 was repaid while we received gross proceeds representing the opening balances on our New Revolver of $120,000 and a New Term Loan of $150,000. For more information refer to “Note 5—Debt;”

• We paid $6,954 for creditor-related professional fees and also funded a $11,000 segregated account for debtor-related professional fees in connection with the reorganization related transactions above;

• Certain other priority or convenience class claims were paid in full in cash, reinstated or otherwise treated in a manner acceptable to the creditor claimholders;

• Plaintiffs to one of our royalty owner litigation cases, which were identified as a separate class of creditors (Class 8) in our bankruptcy case, rejected the Reorganization Plan. If the claimants under Class 8 are permitted to file a class of proof claim on behalf of the putative class, certified on a class basis, and the plaintiffs ultimately prevail on the merits of their claims, any liability arising under judgement or settlement of the claims would be satisfied through issuance of Successor common shares.

In support of the Reorganization Plan, the Company estimated the enterprise value of the Successor to be in the range of $1,050,000 to $1,350,000, which was subsequently approved by the Bankruptcy Court. In accordance with the Reorganization Plan,

17

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

our post-emergence board of directors is made up of seven directors consisting of the Chief Executive Officer of the post-emergence Company (K. Earl Reynolds) and six non-employee members. Our new board members are Mr. Robert Heineman (Chairman of the Board), Mr. Douglas Brooks, Mr. Kenneth Moore, Mr. Matthew Cabell, Mr. Samuel Langford and Mr. Gysle Shellum.

Liabilities Subject to Compromise. In accordance with ASC 852 “Reorganizations,” our financial statements include amounts classified as liabilities subject to compromise which represent estimates of pre-petition obligations that were allowed as claims in our bankruptcy case. These liabilities are reported at the amounts allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. The amounts disclosed below as of March 21, 2017, reflect the liabilities immediately prior to our Reorganization Plan becoming effective:

	Predecessor
	March 21, 2017		December 31, 2016
Accounts payable and accrued liabilities	$	6,687	$	9,212
Accrued payroll and benefits payable		3,949		4,048
Revenue distribution payable		3,050		3,474
Senior Notes and associated accrued interest		1,267,410		1,267,410
Liabilities subject to compromise	$	1,281,096	$	1,284,144

Note 3: Fresh start accounting

Upon emergence from bankruptcy, we qualified for and applied fresh start accounting to our financial statements in accordance with the provisions set forth in ASC 852 as (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Reorganization Plan was less than the post-petition liabilities and allowed claims.

Adopting fresh start accounting results in a new reporting entity for financial reporting purposes with no beginning retained earnings or deficit. The cancellation of all existing shares outstanding on the Effective Date and issuance of new shares in the reorganized Company caused a related change of control under US GAAP. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Reorganization Plan, the Predecessor and Successor periods may lack comparability, as required in Accounting Standards Codification Topic 205, Presentation of Financial Statements (“ASC 205”). ASC 205 states financial statements are required to be presented comparably from year to year, with any exceptions to comparability clearly disclosed. Therefore, "black-line" financial statements are presented to distinguish between the Predecessor and Successor periods.

Enterprise Value and Reorganization Value

Reorganization value represents the fair value of the Company's total assets prior to the consideration of liabilities and is intended to approximate the amount a willing buyer would pay for the Company's assets immediately after restructuring. The reorganization value was allocated to the Company's individual assets based on their estimated fair values.

The Company's reorganization value was derived from enterprise value. Enterprise value represents the estimated fair value of an entity's long-term debt and equity. The enterprise value of the Company on the Effective Date, as approved by the Bankruptcy Court in support of the Plan, was estimated to be within a range of $1,050,000 to $1,350,000 with a mid-point value of $1,200,000. Based upon the various estimates and assumptions necessary for fresh start accounting, as further discussed below, the estimated enterprise value was determined to be $1,200,000 before consideration of cash and cash equivalents and outstanding debt at the Effective Date.

18

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

The following table reconciles the enterprise value to the estimated fair value of the Successor’s common stock as of the Effective Date:

Enterprise value	$	1,200,000
Plus: cash and cash equivalents		45,123
Less: fair value of outstanding debt		(296,061	)
Less: fair value of warrants (consideration for previously accrued consulting fees)		(118	)
Fair value of Successor common stock on the Effective Date	$	948,944
Total shares issued under the Reorganization Plan		44,982,142
Per share value (1)	$	21.10

____________________________________________________________

(1) The per share value shown above is calculated based upon the financial information determined using US GAAP at the Effective Date.

The following table reconciles the enterprise value to the estimated reorganization value of the Successor’s assets as of the Effective Date:

Enterprise value	$	1,200,000
Plus: cash and cash equivalents		45,123
Plus: current liabilities		82,254
Plus: noncurrent liabilities excluding long-term debt		64,735
Reorganization value of Successor assets	$	1,392,112

Valuation of Oil and Gas Properties

The Company’s principal assets are its oil and gas properties, which are accounted for under the full cost method of accounting. The oil and gas properties include proved reserves and unevaluated leasehold acreage. With the assistance of valuation consultants, the Company estimated the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the Effective Date.

The fair value analysis was based on the Company’s estimates of proved, probable and possible reserves developed internally by the Company’s reservoir engineers. Discounted cash flow models were prepared using the estimated future revenues and development and operating costs for all developed wells and undeveloped locations comprising the proved, probable and possible reserves. The value estimated for probable and possible reserves was utilized as an estimate of the fair value of the Company’s unevaluated leasehold acreage, which was further corroborated against comparable market transactions. Future revenues were based upon the forward NYMEX strip for oil and natural gas prices as of the Effective Date, adjusted for differentials realized by the Company. Development and operating cost estimates for the oil and gas properties were adjusted for inflation. The after-tax cash flows were discounted to the Effective Date at discount rate of 8.5%. This discount rate was derived from a weighted average cost of capital computation which utilized a blended expected cost of debt and expected return on equity for similar industry participants. Risk adjustment factors were applied to the values derived for the proved non-producing, proved undeveloped, probable and possible reserve categories based on consideration of the risks associated with geology, drilling success rates, development costs and the timing of development and extraction. The discounted cash flow models also included depletion, depreciation and income tax expense associated with an after-tax valuation analysis.

From this analysis the Company estimated the fair value of its proved reserves and undeveloped leasehold acreage to be $604,065 and $585,574, respectively, as of the Effective Date. These amounts are reflected in the Fresh Start Adjustments item (i) below.

Other valuations

Our adoption of fresh start accounting also required adjustments to certain other assets and liabilities on our balance sheet including property and equipment, other assets and asset retirement obligations.

Property and equipment — consists of real property which includes our headquarters, field offices and pasture land, and personal property which includes vehicles, machinery and equipment, office equipment and fixtures and a natural gas pipeline. These assets were valued using a combination of cost, income and market approaches with the exception of pasture land where we relied on government data to determine fair value.

19

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Other assets — includes, among others, an equity investment in a company that operates ethanol plants. The equity investment was valued utilizing a combination of the market approaches such as the guideline public company method and the similar transactions method.

Asset retirement obligations — our fresh start updates to these obligations included application of the Successor’s credit adjusted risk free rate, which now incorporates a term structure based on the estimated timing of plugging activity, and resetting all obligations to a single layer.

20

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Consolidated Balance Sheet

The following consolidated balance sheet is as of March 21, 2017. This consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Reorganization Plan (reflected in the column "Reorganization Adjustments") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments") as of the Effective Date:

				Reorganization				Fresh Start
	Predecessor			Adjustments				Adjustments				Successor
Assets
Current assets:
Cash and cash equivalents	$	180,456		$	(135,333	)	(a)	$	—			$	45,123
Accounts receivable, net		46,837			—				—				46,837
Inventories, net		6,885			—				—				6,885
Prepaid expenses		4,933			(535	)	(b)		—				4,398
Derivative instruments		19,058			—				—				19,058
Total current assets		258,169			(135,868	)			—				122,301
Property and equipment		38,391			—				18,987		(i)		57,378
Oil and natural gas properties, using the full cost method:
Proved		4,355,576			—				(3,751,511	)	(i)		604,065
Unevaluated (excluded from the amortization base)		26,039			—				559,535		(i)		585,574
Accumulated depreciation, depletion, amortization and impairment		(3,811,326	)		—				3,811,326		(i)		—
Total oil and natural gas properties		570,289			—				619,350		(i)		1,189,639
Derivative instruments		14,295			—				—				14,295
Other assets		5,499			2,410		(c)		590		(i)		8,499
Total assets	$	886,643		$	(133,458	)		$	638,927			$	1,392,112
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and accrued liabilities	$	64,413		$	(2,737	)	(a)(d)	$	—			$	61,676
Accrued payroll and benefits payable		7,366			2,186		(d)		—				9,552
Accrued interest payable		2,095			(2,095	)	(a)		—				—
Revenue distribution payable		7,975			3,050		(d)		—				11,025
Long-term debt and capital leases, classified as current		468,814			(464,182	)	(e)		—				4,632
Total current liabilities		550,663			(463,778	)			—				86,885
Long-term debt and capital leases, less current maturities		—			291,429		(f)		—				291,429
Deferred compensation		—			519		(d)		—				519
Asset retirement obligations		66,973			—				(2,757	)	(i)		64,216
Liabilities subject to compromise		1,281,096			(1,281,096	)	(d)		—				—
Commitments and contingencies
Stockholders’ (deficit) equity:
Predecessor common stock		14			(14	)	(g)		—				—
Predecessor additional paid in capital		425,425			(425,425	)	(g)		—				—
Successor common stock		—			450		(g)		—				450
Successor additional paid in capital		—			948,613		(g)		—				948,613
(Accumulated deficit) retained earnings		(1,437,528	)		795,844		(h)		641,684		(j)		—
Total stockholders' (deficit) equity		(1,012,089	)		1,319,468				641,684				949,063
Total liabilities and stockholders' equity (deficit)	$	886,643		$	(133,458	)		$	638,927			$	1,392,112

21

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Reorganization adjustments

(a) Adjustments reflect the following net cash payments recorded as of the Effective Date from implementation of the Plan:

Cash proceeds from rights offering	$	50,031
Cash proceeds from New Term Loan		150,000
Cash proceeds from New Revolver		120,000
Fees paid to lender for New Term Loan		(750	)
Fees paid to lender for New Revolver		(1,125	)
Payment in full to extinguish Prior Credit Facility		(444,440	)
Payment of accrued interest on Prior Credit Facility		(2,095	)
Payment of previously accrued creditor-related professional fees		(6,954	)
Net cash used	$	(135,333	)

(b) Reclassification of previously prepaid professional fees to debt issuance costs associated with the New Credit Facility.

(c) Reflects issuance costs related to the New Credit Facility:

Fees paid to lender for New Term Loan	$	750
Fees paid to lender for New Revolver		1,125
Professional fees related to debt issuance costs on the New Credit Facility		535
Total issuance costs on New Credit Facility	$	2,410

(d) As part of the Plan, the Bankruptcy Court approved the settlement of certain allowable claims, reported as liabilities subject to compromise in the Company’s historical consolidated balance sheet. As a result, a gain was recognized on the settlement of liabilities subject to compromise calculated as follows:

Senior Notes including interest	$	1,267,410
Accounts payable and accrued liabilities		6,687
Accrued payroll and benefits payable		3,949
Revenue distribution payable		3,050
Total liabilities subject to compromise		1,281,096
Amounts settled in cash, reinstated or otherwise reserved at emergence		(10,089	)
Fair value of equity issued in settlement of Senior Notes and certain general unsecured creditors		(898,914	)
Gain on settlement of liabilities subject to compromise	$	372,093

(e) Reflects extinguishment of Prior Credit Facility along with associated unamortized issuance costs, establishment of New Credit Facility and adjustments to reclassify existing debt back to their scheduled maturities:

Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default	$	(22,612	)
Establishment of New Term Loan - current portion		1,183
Payment in full to extinguish Prior Credit Facility		(444,440	)
Write-off unamortized issuance costs associated with Prior Credit Facility		1,687
	$	(464,182	)

(f) Reflects establishment of our New Credit Facility pursuant to our Reorganization Plan, net of issuance costs, as well as adjustments to reclassify existing debt back to their scheduled maturities:

Origination of the New Term Loan, net of current portion	$	148,817
Origination of the New Revolver		120,000
Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default		22,612
	$	291,429

22

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

(g) Adjustment represents (i) the cancellation of Predecessor equity on the Effective Date, (ii) the issuance of 44,982,142 shares of Successor common stock on the Effective Date and (iii) the issuance of 140,023 warrants on the Effective Date (see “Note 2—Chapter 11 reorganization”)

Cancellation of predecessor equity - par value	$	(14	)
Cancellation of predecessor equity - paid in capital		(425,425	)
Issuance of successor common stock in settlement of claims		898,914
Issuance of successor common stock under rights offering		50,031
Issuance of warrants		118
Net impact to common stock-par and additional paid in capital	$	523,624

(h) Reflects the cumulative impact of the following reorganization adjustments:

Gain on settlement of liabilities subject to compromise	$	372,093
Cancellation of predecessor equity		425,438
Write-off unamortized issuance costs associated with Prior Credit Facility		(1,687	)
Net impact to retained earnings	$	795,844

Fresh start adjustments

(i) Represents fresh start accounting adjustments primarily to (i) remove accumulated depreciation, depletion, amortization and impairment, (ii) increase the value of proved oil and gas properties, (iii) increase the value of unevaluated oil and gas properties primarily to capture the value of our acreage in the STACK, (iv) increase other property and equipment primarily due to increases to land, vehicles, machinery and equipment and (v) decrease asset retirement obligations. These fair value measurements giving rise to these adjustments are primarily based on Level 3 inputs under the fair value hierarchy (See “Note 7—Fair value measurements”).

(j) Reflects the cumulative impact of the fresh start adjustments discussed herein.

Reorganization Items

We use this category to reflect, where applicable, post-petition revenues, expenses, gains and losses that are direct and incremental as a result of the reorganization of the business. Reorganization items are as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017
	through		through
	March 31, 2017		March 21, 2017
Gains on the settlement of liabilities subject to compromise	$	—	$	(372,093	)
Fresh start accounting adjustments		—		(641,684	)
Professional fees		620		18,790
Rejection of employment contracts		—		4,573
Write off unamortized issuance costs on Prior Credit Facility		—		1,687
Total reorganization items	$	620	$	(988,727	)

23

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Note 4: Supplemental disclosures to the consolidated statements of cash flows

Supplemental disclosures to the consolidated statements of cash flows are presented below:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
	March 31, 2017			March 21, 2017			March 31, 2016
Net cash provided by operating activities included:
Cash payments for interest	$	2,768		$	4,105		$	3,639
Interest capitalized		(54	)		(248	)		(1,076	)
Cash payments for interest, net of amounts capitalized	$	2,714		$	3,857		$	2,563
Cash payments for reorganization items	$	—		$	11,405		$	—
Non-cash investing activities included:
Asset retirement obligation additions and revisions	$	—		$	716		$	100
Change in accrued oil and gas capital expenditures	$	—		$	5,387		$	(11,045	)

Note 5: Debt

As of the dates indicated, debt consisted of the following:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
New Revolver	$	120,000		$	—
New Term Loan, net of discount of $745 and $0, respectively		149,255			—
Prior Credit Facility		—			444,440
Real estate mortgage note		9,454			9,595
Installment notes payable		211			434
Capital lease obligations		16,308			16,946
Unamortized debt issuance costs (1)		(1,649	)		(2,303	)
Total debt, net		293,579			469,112
Less current portion		4,588			469,112
Total long-term debt, net	$	288,991		$	—

(1) Debt issuance costs are presented as a direct deduction from debt rather than an asset pursuant to recent accounting guidance. See table below.

	Successor		Predecessor
	March 31,		December 31,
Unamortized debt issuance costs	2017		2016
New Revolver	$	1,649	$	—
Prior Credit Facility		—		2,303
Total unamortized debt issuance costs	$	1,649	$	2,303

Prior to our emergence from bankruptcy, our debt consisted of the Prior Credit Facility and our Senior Notes. On the Effective Date, our obligations under the Senior Notes, including principal and accrued interest, were fully extinguished in exchange for equity in the Successor. In addition, our Prior Credit Facility, previously consisting of a senior secured revolving credit facility, was restructured into the New Credit Facility consisting of the New Revolver and the New Term Loan. On the Effective Date, the entire balance on the Prior Credit Facility in the amount of $444,440 was repaid while we received gross proceeds, before lender fees, representing the opening balances on our New Revolver of $120,000 and a New Term Loan of $150,000. See “Note6—Debt” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016, for further details on our pre-emergence debt facilities.

24

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

New Term Loan

The New Term Loan, which is collateralized by our oil and natural gas properties, is scheduled to mature on March 21, 2021. Interest on the outstanding amount of the New Term Loan will accrue at an interest rate equal to either: (a) the Alternate Base Rate (as defined in the New Credit Facility) plus a 6.75% margin or (b) the Adjusted LIBO Rate (as defined in the New Credit Facility), plus a 7.75% margin with a 1.00% floor on the Adjusted LIBO Rate. As of March 31, 2017, our outstanding borrowings were accruing interest at the Alternate Base Rate which resulted in an interest rate of 10.75%. In early April 2017 our outstanding borrowings began accruing interest at the Adjusted LIBO Rate which lowered the interest rate to 8.78%.

We are required to make scheduled, mandatory principal payments in respect of the New Term Loan according to the schedule below, with the remaining outstanding balance due upon maturity:

Total payments for 2017	$	1,183
Total payments for 2018		1,500
Total payments for 2019		3,750
Total payments for 2020		6,750
Total mandatory prepayments	$	13,183

New Revolver

The New Revolver is a $400,000 facility collateralized by our oil and natural gas properties and is scheduled to mature on March 21, 2021. Availability under our New Revolver is subject to a borrowing base based on the value of our oil and natural gas properties and set by the banks semi-annually on May 1 and November 1 of each year. In addition, the lenders may request an additional borrowing base redetermination once between each scheduled redetermination or upon the occurrence of certain specified events. The banks establish a borrowing base by making an estimate of the collateral value of our oil and natural gas properties. If oil and natural gas prices decrease from the amounts used in estimating the collateral value of our oil and natural gas properties, the borrowing base may be reduced, thus reducing funds available under the borrowing base. The initial borrowing base on the Effective Date was $225,000 and the first borrowing base redetermination has been set for on or about May 1, 2018. Availability on the New Revolver as of March 31, 2017, after taking into account outstanding borrowings and letters of credit on that date, was $104,172.

Interest on the outstanding amounts under the New Revolver will accrue at an interest rate equal to either (i) the Alternate Base Rate plus a margin that ranges between 2.00% to 3.00% depending on utilization or (ii) the Adjusted LIBO Rate applicable to one, two, three or six month borrowings plus a margin that ranges between 3.00% to 4.00% depending on utilization. In the case that an Event of Default (as defined under the New Credit Facility) occurs, the applicable rate while in default will be the Alternate Base Rate plus an additional 2.00% and plus the applicable margin. As of March 31, 2017, our outstanding borrowings were accruing interest at the Alternate Base Rate which resulted in an interest rate of 6.50%. In early April 2017 our outstanding borrowings began accruing interest at the Adjusted LIBO Rate which lowered the interest rate to 4.53%.

Commitment fees of 0.50% accrue on the unused portion of the borrowing base amount, based on the utilization percentage, and are included as a component of interest expense. We generally have the right to make prepayments of the borrowings at any time without penalty or premium. Letter of credit fees will accrue at 0.125% plus the margin used to determine the interest rate applicable to New Revolver borrowings that are based on Adjusted LIBO Rate.

Covenants

The New Credit Facility contains covenants and events of default customary for oil and natural gas reserve-based lending facilities including restrictions on additional debt, guarantees, liens, restricted payments, investments and hedging activity. Additionally, our New Credit Facility specifies events of default, including non-payment, breach of warranty, non-performance of covenants, default on other indebtedness or swap agreements, certain adverse judgments, bankruptcy events and change of control, among others.

The financial covenants require that we maintain: (1) a Current Ratio (as defined in the New Credit Facility) of no less than 1.00 to 1.00, (2) an Asset Coverage Ratio (as defined in the New Credit Facility) of no less than 1.35 to 1.00, (3) Liquidity (as defined in the New Credit Facility) of at least $25,000 and (4) a Ratio Total Debt to EBITDAX (as defined in the New Credit Facility) of no greater than 3.5 to 1.0 calculated on a trailing four-quarter basis. We are required to comply with these covenants for each fiscal quarter ending on and after March 31, 2017, except for the Asset Coverage Ratio, for which compliance is required semiannually.

25

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Write-off of Senior Note issuance costs, discount and premium

In March 2016 we wrote off the remaining unamortized issuance costs, premium and discount related to our Senior Notes for a net charge of $16,970. These deferred items are typically amortized over the life of the corresponding bond. However, as a result of not paying the interest due on our 2021 Senior Notes by the end of our grace period on March 31, 2016, we triggered an Event of Default on our Senior Notes. While uncured, the Event of Default effectively allowed the lender to demand immediate repayment, thus shortening the life of our Senior Notes. As a result, we wrote off the remaining balance of unamortized issuance costs, premium and discount on March 31, 2016, as follows:

Non-cash expense for write-off of debt issuance costs on Senior Notes	$	17,756
Non-cash expense for write-off of debt discount costs on Senior Notes		4,014
Non-cash gain for write-off of debt premium on Senior Notes		(4,800	)
Total	$	16,970

Capital Leases

During 2013, we entered into lease financing agreements with U.S. Bank National Association for $24,500 through the sale and subsequent leaseback of existing compressors owned by us. The carrying value of these compressors is included in our oil and natural gas full cost pool. The lease financing obligations are for 84-month terms and include the option to purchase the equipment for a specified price at 72 months as well as an option to purchase the equipment at the end of the lease term for its then-current fair market value. Lease payments related to the equipment are recognized as principal and interest expense based on a weighted average implicit interest rate of 3.8%. Minimum lease payments are approximately $3,181 annually. As discussed previously, our debt defaults and the commencement of the Chapter 11 Cases are events of default under our capital leases.

Note 6: Derivative instruments

Overview

Our results of operations, financial condition and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil, natural gas and natural gas liquids. These commodity prices are subject to wide fluctuations and market uncertainties. To mitigate a portion of this exposure, we enter into various types of derivative instruments, including commodity price swaps, collars, put options, enhanced swaps and basis protection swaps. See “Note 7—Derivative Instruments” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016, for a description of the various kinds of derivatives we may enter into.

The following table summarizes our crude oil derivatives outstanding as of March 31, 2017:

			Weighted average fixed price per Bbl
Period and type of contract	Volume MBbls		Swaps		Purchased puts		Sold calls
2017
Swaps		2,704	$	54.97	$	—	$	—
2018
Swaps		2,116	$	54.92	$	—	$	—
Collars		183	$	—	$	50.00	$	60.50
2019
Swaps		1,312	$	54.26	$	—	$	—

The following table summarizes our natural gas derivatives outstanding as of March 31, 2017:

Period and type of contract	Volume BBtu		Weighted average fixed price per MMBtu
2017
Swaps		7,091	$	3.34
2018
Swaps		5,861	$	3.03
2019
Swaps		3,322	$	2.86

26

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Effect of derivative instruments on the consolidated balance sheets

All derivative financial instruments are recorded on the balance sheet at fair value. See “Note 7—Fair value measurements” for additional information regarding fair value measurements. The estimated fair values of derivative instruments are provided below. The carrying amounts of these instruments are equal to the estimated fair values.

	Successor							Predecessor
	March 31, 2017							December 31, 2016
	Assets		Liabilities			Net value		Assets		Liabilities			Net value
Natural gas derivative contracts	$	634	$	(363	)	$	271	$	184	$	(3,658	)	$	(3,474	)
Crude oil derivative contracts		19,274		—			19,274		—		(9,895	)		(9,895	)
Total derivative instruments		19,908		(363	)		19,545		184		(13,553	)		(13,369	)
Less:
Netting adjustments (1)		363		(363	)		—		184		(184	)		—
Derivative instruments - current		10,001		—			10,001		—		(7,525	)		(7,525	)
Derivative instruments - long-term	$	9,544	$	—		$	9,544	$	—	$	(5,844	)	$	(5,844	)

(1) Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted only to the extent that they relate to the same current versus noncurrent classification on the balance sheet.

Effect of derivative instruments on the consolidated statements of operations

We do not apply hedge accounting to any of our derivative instruments. As a result, all gains and losses associated with our derivative contracts are recognized immediately as “Derivative (losses) gains” in the consolidated statements of operations.

“Derivative (losses) gains” in the consolidated statements of operations are comprised of the following:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017		Three months
	through			through		ended
	March 31, 2017			March 21, 2017		March 31, 2016
Change in fair value of commodity price derivatives	$	(13,807	)	$	46,721	$	(35,554	)
Settlement gains on commodity price derivatives		1,692			1,285		47,486
Total derivative (losses) gains	$	(12,115	)	$	48,006	$	11,932

Note 7: Fair value measurements

Fair value is defined by the FASB 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. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Fair value measurements are categorized according to the fair value hierarchy defined by the FASB. The hierarchical levels are based upon the level of judgment associated with the inputs used to measure the fair value of the assets and liabilities as follows:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 inputs include quoted prices for identical or similar instruments in markets that are not active and inputs other than quoted prices that are observable for the asset or liability.

• Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Our

27

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

Recurring fair value measurements

As of March 31, 2017, and December 31, 2016, our financial instruments recorded at fair value on a recurring basis consisted of commodity derivative contracts (see “Note 6—Derivative instruments”). We had no Level 1 assets or liabilities. Our derivative contracts classified as Level 2 consisted of commodity price swaps which are valued using an income approach. Future cash flows from the commodity price swaps are estimated based on the difference between the fixed contract price and the underlying published forward market price. Our derivative contracts classified as Level 3 consisted of collars. The fair value of these contracts is developed by a third-party pricing service using a proprietary valuation model, which we believe incorporates the assumptions that market participants would have made at the end of each period. Observable inputs include contractual terms, published forward pricing curves, and yield curves. Significant unobservable inputs are implied volatilities. Significant increases (decreases) in implied volatilities in isolation would result in a significantly higher (lower) fair value measurement. We review these valuations and the changes in the fair value measurements for reasonableness. All derivative instruments are recorded at fair value and include a measure of our own nonperformance risk for derivative liabilities or that of our counterparties for derivative assets.

The fair value hierarchy for our financial assets and liabilities is shown by the following table:

	Successor								Predecessor
	March 31, 2017								December 31, 2016
	Derivative assets			Derivative liabilities			Net assets (liabilities)		Derivative assets			Derivative liabilities			Net assets (liabilities)
Significant other observable inputs (Level 2)	$	19,432		$	(363	)	$	19,069	$	184		$	(13,455	)	$	(13,271	)
Significant unobservable inputs (Level 3)		476			—			476		—			(98	)		(98	)
Netting adjustments (1)		(363	)		363			—		(184	)		184			—
	$	19,545		$	—		$	19,545	$	—		$	(13,369	)	$	(13,369	)

(1) Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification.

Changes in the fair value of our derivative instruments, classified as Level 3 in the fair value hierarchy, were as follows for the periods presented:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
Net derivative assets (liabilities)	March 31, 2017			March 21, 2017			March 31, 2016
Beginning balance	$	715		$	(98	)	$	123,068
Realized and unrealized (losses) gains included in derivative gains		(239	)		813			6,978
Settlements received		—			—			(39,093	)
Ending balance	$	476		$	715		$	90,953
(Losses) gains relating to instruments still held at the reporting date included in derivative (losses) gains for the period	$	(239	)	$	813		$	2,027

Nonrecurring fair value measurements

Asset retirement obligations. Additions to the asset and liability associated with our asset retirement obligations are measured at fair value on a nonrecurring basis. Our asset retirement obligations consist of the estimated present value of future costs to plug and abandon or otherwise dispose of our oil and natural gas properties and related facilities. Significant inputs used in determining such obligations include estimates of plugging and abandonment costs, inflation rates, discount rates, and well life, all of which are Level 3 inputs according to the fair value hierarchy. The estimated future costs to dispose of properties added during the first three months of 2017 and 2016 were escalated using an annual inflation rate of 2.30% and 2.42%, respectively. The estimated future costs to dispose of properties added during the first three months of 2017 were discounted, depending on the range of maturity of the property, with a credit-adjusted risk-free rate ranging from 5.20% to 7.40%. The discount rate used for the first three months of 2016 was our weighted average credit-adjusted risk-free interest rate of 20.00%. These estimates may change based upon future inflation rates and changes in

28

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

statutory remediation rules. See “Note 8—Asset retirement obligations” for additional information regarding our asset retirement obligations.

Fair value of other financial instruments

Our significant financial instruments, other than derivatives, consist primarily of cash and cash equivalents, accounts receivable, accounts payable, and debt. We believe the carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair values due to the short-term maturities of these instruments.

The carrying value and estimated fair value of our debt at March 31, 2017, and December 31, 2016, were as follows:

	Successor				Predecessor
	March 31, 2017				December 31, 2016
Level 2	Carrying value (1)		Estimated fair value		Carrying value (1)		Estimated fair value
New Revolver	$	120,000	$	120,000	$	—	$	—
New Term Loan		150,000		150,000		—		—
Other secured debt		9,665		9,665		10,029		10,029
9.875% Senior Notes due 2020		—		—		298,000		268,200
8.25% Senior Notes due 2021		—		—		384,045		344,680
7.625% Senior Notes due 2022		—		—		525,910		470,689

(1) The carrying value excludes deductions for debt issuance costs and discounts.

The carrying value of our New Revolver, New Term Loan and other secured long-term debt approximates fair value because the rates are comparable to those at which we could currently borrow under similar terms, are variable and incorporate a measure of our credit risk. The fair value of our Senior Notes was estimated based on quoted market prices. We have not disclosed the fair value of outstanding amounts under our Prior Credit Facility as of December 31, 2016, as it was not practicable to obtain a reasonable estimate of such value while the Predecessor was in bankruptcy.

Counterparty credit risk

Our derivative contracts are executed with institutions, or affiliates of institutions, that are parties to our credit facilities at the time of execution, and we believe the credit risks associated with all of these institutions are acceptable. We do not require collateral or other security from counterparties to support derivative instruments. Master agreements are in place with each of our derivative counterparties which provide for net settlement in the event of default or termination of the contracts under each respective agreement. As a result of the netting provisions, our maximum amount of loss under derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the derivatives. Our loss is further limited as any amounts due from a defaulting counterparty that is a Lender, or an affiliate of a Lender, under our credit facilities can be offset against amounts owed to such counterparty Lender. As of March 31, 2017, the counterparties to our open derivative contracts consisted of four financial institutions, of which all were subject to our rights of offset under our New Credit Facility.

29

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

The following table summarizes our derivative assets and liabilities which are offset in the consolidated balance sheets under our master netting agreements. It also reflects the amounts outstanding under our credit facilities that are available to offset our net derivative assets due from counterparties that are lenders under our credit facilities.

	Offset in the consolidated balance sheets									Gross amounts not offset in the consolidated balance sheets
	Gross assets (liabilities)			Offsetting assets (liabilities)			Net assets (liabilities)			Derivatives (1)		Amounts outstanding under credit facilities			Net amount
Successor - March 31, 2017
Derivative assets	$	19,908		$	(363	)	$	19,545		$	—	$	(19,545	)	$	—
Derivative liabilities		(363	)		363			—			—		—			—
	$	19,545		$	—		$	19,545		$	—	$	(19,545	)	$	—
Predecessor - December 31, 2016
Derivative assets	$	184		$	(184	)	$	—		$	—	$	—		$	—
Derivative liabilities		(13,553	)		184			(13,369	)		—		—			(13,369	)
	$	(13,369	)	$	—		$	(13,369	)	$	—	$	—		$	(13,369	)

_____________________________________________________

(1) Since positive and negative positions with a counterparty are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification, these represent remaining amounts that could have been offset under our master netting agreements.

We did not post additional collateral under any of these contracts as all of our counterparties are secured by the collateral under our credit facilities. Payment on our derivative contracts could be accelerated in the event of a default on our New Credit Facility. The aggregate fair value of our derivative liabilities subject to acceleration in the event of default was $363 at March 31, 2017.

Note 8: Asset retirement obligations

The following table provides a summary of our asset retirement obligation activity:  

Liability for asset retirement obligations as of December 31, 2016 (Predecessor)	$	72,137
Liabilities incurred in current period		535
Liabilities settled and disposed in current period		(869	)
Revisions in estimated cash flows		181
Accretion expense		1,249
Liability for asset retirement obligations as of March 21, 2017 (Predecessor)	$	73,233
Fair value fresh-start adjustment	$	(2,757	)
Liability for asset retirement obligations as of March 21, 2017 (Successor)	$	70,476
Liabilities incurred in current period		—
Liabilities settled and disposed in current period		—
Revisions in estimated cash flows		—
Accretion expense		121
Liability for asset retirement obligations as of March 31, 2017 (Successor)	$	70,597
Less current portion included in accounts payable and    accrued liabilities		6,066
Asset retirement obligations, long-term	$	64,531

See “Note 7—Fair value measurements” for additional information regarding fair value assumptions associated with our asset retirement obligations.

30

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Note 9: Deferred compensation

Restricted Stock Unit Plan

Prior to our emergence from bankruptcy, we had a Non-Officer Restricted Stock Unit Plan (the “RSU Plan”) in effect as an incentive plan for nonexecutive employees. The provisions under our RSU Plan are discussed in Note 11 — Deferred compensation in Item 8. Financial Statements and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016. As of January 1, 2017, there were 98,596 unvested and outstanding Restricted Stock Units with a weighted average grant date fair value of $7.18 per unit.

Due to the severe decline in commodity pricing, which has resulted in a steep decline in our estimated proved reserves, the estimated fair value per RSU as of January 1, 2017, was $0.00. All remaining unvested awards were cancelled upon our emergence from bankruptcy on the Effective Date.

2015 Cash Incentive Plan

We adopted the Long-Term Cash Incentive Plan (the “2015 Cash LTIP”) on August 7, 2015. The 2015 Cash LTIP provides additional cash compensation to certain employees of the Company in the form of awards that generally vest in equal annual increments over a four -year period. Since the awards do not vary according to the value of the Company’s equity, the awards are not considered “stock-based compensation” under accounting guidance. We accrue for the cost of each annual increment over the period service is required to vest. A summary of compensation expense for the 2015 Cash LTIP is presented below:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
2015 Cash LTIP expense (net of amounts capitalized)	$	13	$	5	$	159
2015 Cash LTIP payments		—		17		42

On April 3, 2017, the Company awarded an additional $3,321 under the 2015 Cash LTIP.

2010 Equity Incentive Plan

We adopted the Chaparral Energy, Inc. 2010 Equity Incentive Plan (the “2010 Plan”) on April 12, 2010. The 2010 Plan reserved a total of 86,301 shares of our class A common stock for awards issued under the 2010 Plan. All of our or our affiliates’ employees, officers, directors, and consultants, as defined in the 2010 Plan, were eligible to participate in the 2010 Plan.

The awards granted under the 2010 Plan consisted of shares that were subject to service vesting conditions (the “Time Vested” awards) and shares that are subject to market and performance vested conditions (the “Performance Vested” awards). The material provisions under the 2010 Plan are discussed in “Note 11—Deferred compensation” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016.

As of result of our bankruptcy, the estimated fair value of our Time Vested restricted awards was $0.00 per share since the Petition Date. Furthermore, during the third quarter of 2016, we recorded a cumulative catch up adjustment of to reverse the aggregate compensation cost associated with our Performance Vested awards in order to reflect a decrease in the probability that requisite service would be achieved for these awards. Pursuant to our Reorganization Plan, all outstanding restricted shares were cancelled. As this cancellation was not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration, it was accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost was recognized at the cancellation date.

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Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

A summary of our restricted stock activity for the Predecessor period in 2017 is presented below:

	Time Vested							Performance Vested
	Weighted average grant date fair value		Restricted shares			Vest date fair value		Weighted average grant date fair value		Restricted shares
	($ per share)							($ per share)
Unvested and outstanding at January 1, 2017 - Predecessor	$	790.91		6,667				$	277.33		21,475
Granted	$	—		—				$	—		—
Vested	$	812.91		(2,602	)	$	—	$	—		—
Forfeited	$	785.70		(468	)			$	195.75		(986	)
Cancelled	$	775.66		(3,597	)			$	281.26		(20,489	)
Unvested and outstanding at March 21, 2017 - Predecessor	$	—		—				$	—		—

Stock-based compensation cost

Compensation cost is calculated net of forfeitures, which are estimated based on our historical and expected turnover rates. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation cost could be different from what we have recorded in the current period.

A portion of stock-based compensation cost associated with employees involved in our acquisition, exploration, and development activities has been capitalized as part of our oil and natural gas properties. The remaining cost is reflected in lease operating and general and administrative expenses in the consolidated statements of operations. We recognized stock-based compensation expense as follows for the periods indicated:  

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017			Three months
	through		through			ended
	March 31, 2017		March 21, 2017			March 31, 2016
Stock-based compensation cost (credit)	$	—	$	194		$	(898	)
Less: stock-based compensation cost capitalized		—		(39	)		(124	)
Stock-based compensation expense (credit)	$	—	$	155		$	(1,022	)
Payments for stock-based compensation	$	—	$	—		$	49

The credit for stock-based compensation for the three months ended March 31, 2016, was primarily a result of forfeitures from our workforce reduction in January 2016. As of March 31, 2017, and December 31, 2016, accrued payroll and benefits payable included $0 and $0, respectively, for stock-based compensation costs expected to be settled within the next twelve months. We did not have any unrecognized compensation cost as of March 31, 2017, as all previously outstanding equity based awards were cancelled.

Note 10: Commitments and contingencies

Standby letters of credit (“Letters”) available under our Credit Facility are used in lieu of surety bonds with various organizations for liabilities relating to the operation of oil and natural gas properties. We had Letters outstanding totaling $828 as of March 31, 2017, and December 31, 2016. When amounts under the Letters are paid by the lenders, interest accrues on the amount paid at the same interest rate applicable to borrowings under the Credit Facility. No amounts were paid by the lenders under the Letters; therefore, we paid no interest on the Letters during the three months ended March 31, 2017 or 2016.

Litigation and Claims

Chapter 11 Proceedings. Commencement of the Chapter 11 Cases automatically stayed many of the proceedings and actions against us noted below as well as other claims and actions that were or could have been brought prior to May 9, 2016, and the claims remain subject to bankruptcy court jurisdiction. In connection with the proofs of claim asserted during bankruptcy from the proceedings or actions below, we are unable to estimate the amounts that will be allowed through the Bankruptcy proceedings due to the complexity and number of legal and factual issues presented by the matters and uncertainties with respect to, amongst other things, the nature of the claims and defenses, the potential size of the classes, the scope and types of the properties and agreements involved, and the ultimate potential outcomes of the matters. As a result, no reserves were established within our liabilities in connection with

32

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

the proceedings and actions described below. To the extent that any of these legal proceedings result in a claim being allowed against us, pursuant to the terms of the Reorganization Plan, such claims will be satisfied through the issuance of new stock in the Company.

Naylor Farms, Inc., individually and as class representative on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On June 7, 2011, an alleged class action was filed against us in the United States District Court for the Western District of Oklahoma (“Naylor Trial Court”) alleging that we improperly deducted post-production costs from royalties paid to plaintiffs and other royalty interest owners as categorized in the petition from crude oil and natural gas wells located in Oklahoma (“Naylor Farms Case”). The purported class includes non-governmental royalty interest owners in oil and natural gas wells we operate in Oklahoma. The plaintiffs have alleged a number of claims, including breach of contract, fraud, breach of fiduciary duty, unjust enrichment, and other claims and seek termination of leases, recovery of compensatory damages, interest, punitive damages and attorney fees on behalf of the alleged class. We have responded to the Naylor Farms petition, denied the allegations and raised arguments and defenses. Plaintiffs filed a motion for class certification in October 2015. In addition, the plaintiffs filed a motion for summary judgment asking the court to determine as a matter of law that natural gas is not marketable until it is in the condition and location to enter an interstate pipeline. Responsive briefs to both motions were filed in the fourth quarter of 2015. On May 20, 2016, we filed a Notice of Suggestion of Bankruptcy with the Naylor Trial Court, informing the court that we had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. In response, on May 23, 2016, the court issued an order administratively closing the case, subject to reopening depending on the disposition of the bankruptcy proceedings. On July 22, 2016, attorneys for the putative class filed a motion in the Bankruptcy Court asking the court to lift the automatic stay and allow the case to proceed in the Naylor Trial Court. We did not object to lifting the automatic stay with regard to this case for the limited purpose of allowing the Naylor Trial Court to rule on the pending motion for class certification. On January 17, 2017, the Naylor Trial Court certified a modified class of plaintiffs with oil and gas leases containing specific language. The modified class constitutes less than 60% of the leases the Plaintiffs originally sought to certify. On January 30, 2017, the Company filed a motion for reconsideration with the Naylor Trial Court, asking the court to rule the class cannot be immediately certified because Plaintiffs did not define dates for class membership. Plaintiffs responded the class should include claims reaching back to December 1, 1999, to which we responded the statute of limitations should limit the beginning of the class period to June 1, 2006. The Naylor Trial Court issued an order conditionally denying reconsideration, contingent on Plaintiffs selection of June 1, 2006 as the commencement of the class period. Plaintiffs amended the class to include only claims relating back to June 1, 2006. On April 18, 2017, the Naylor Trial Court denied our motion for reconsideration and also issued an order administratively closing the case pending disposition of the bankruptcy proceedings. On May 1, 2017, we filed a Petition for Permission to Appeal Class Certification Order with the Tenth Circuit Court of Appeals (“Appellate Petition”). The Tenth Circuit has not ruled on our Appellate Petition.

The plaintiffs have indicated, if the class is certified, they seek damages in excess of $5,000 which may increase with the passage of time, a majority of which damages would be comprised of interest. In addition to filing claims on behalf of the named plaintiffs and associated parties, plaintiffs’ attorneys filed a proof of claim on behalf of the putative class claiming in excess of $150,000 in our Chapter 11 Cases. The Company has objected treatment of the claim on a class basis, asserting the claim should be addressed on an individual basis. The Bankruptcy Court heard testimony and arguments regarding class-wide treatment of the claim on February 28, 2017, but has not ruled on the matter. Under the Reorganization Plan, the Plaintiffs are identified as a separate class of creditors, Class 8. Under the Reorganization Plan, Class 8 claims are entitled to receive their pro rata share of new stock issued to the holders of general unsecured claims (including claims of the Noteholders). Although the members of Class 8 voted to reject the Plan, the Bankruptcy Court confirmed the Plan on March 10, 2017, without objection by the Plaintiffs. If the Bankruptcy Court permits the Plaintiffs’ proof of claim to proceed on behalf of the class and the plaintiffs ultimately prevail on the merits of their claims, any liability arising under judgment or settlement of the unsecured claims would be satisfied through the issuance of new stock in the Company. We continue to dispute the plaintiffs’ allegations, dispute the case meets the requirements for class certification, and are objecting to the claims both individually and on a class-wide basis.

Amanda Dodson, individually and as class representative on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On May 10, 2013, Amanda Dodson, filed a complaint against us in the District Court of Mayes County, Oklahoma, (“Dodson Case”) with an allegation similar to those asserted in the Naylor Farms case related to post-production deductions, and include claims for breach of contract, fraud, breach of fiduciary duty, unjust enrichment, and other claims and seek termination of leases, recovery of compensatory damages, interest, punitive damages and attorney fees on behalf of the alleged class. The alleged class includes non-governmental royalty interest owners in oil and natural gas wells we operate in Oklahoma. We have responded to the Dodson petition, denied the allegations and raised a number of affirmative defenses. At the time we filed our Bankruptcy Petitions, a class had not been certified and discovery had not yet commenced. As the plaintiffs in the Dodson case did not file proofs of claim either for the putative class or the putative class representative, we anticipate any liability related to this claim will be addressed only based on proofs of claim filed by individual royalty owners.

33

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

Martha Donelson and John Friend, on behalf of themselves and on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On August 11, 2014, an alleged class action was filed against us, as well as several other operators in Osage County, in the United States District Court for the Northern District of Oklahoma, alleging claims on behalf of the named plaintiffs and all similarly situated Osage County land owners and surface lessees. The plaintiffs challenged leases and drilling permits approved by the Bureau of Indian Affairs without the environmental studies allegedly required under the National Environmental Protection (NEPA). The plaintiffs assert claims seeking recovery for trespass, nuisance, negligence and unjust enrichment. Relief sought includes declaring oil and natural gas leases and drilling permits obtained in Osage County without a prior NEPA study void ab initio, removing us from all properties owned by the class members, disgorgement of profits, and compensatory and punitive damages. On March 31, 2016, the Court dismissed the case against the federal agencies named as defendants, and therefore against all defendants, as an improper challenge under NEPA and the Administrative Procedures Act. On April 29, 2016, the plaintiffs filed a motion to alter or amend the court’s opinion and vacate the judgment, arguing the court does have jurisdiction to hear the claims and dismissal of the federal defendants does not require dismissal of the oil company defendants. The plaintiffs also filed a motion to file an amended complaint to cure the deficiencies which the court found in the dismissed complaint. Several defendants have filed briefs objecting to plaintiffs’ motions. On May 20, 2016, the Company filed a Notice of Suggestion of Bankruptcy, informing the court that we had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, and has not responded to the plaintiffs’ motions. After a motion for reconsideration was denied, Plaintiffs filed a Notice of Appeal on December 6, 2016. On December 30, 2016, the Court of Appeals entered an Order Abating Appeal due to pending bankruptcy proceedings of multiple defendants. On January 13, 2017, Plaintiffs responded to the Order Abating Appeal, asking the Court to proceed with the appeal. The Court has not ruled on the appeal as of the date of this report. The Court lifted the Stay as to Chaparral on April 13, 2017, and we joined the answer filed by other non-federal defendants which had been filed on March 24, 2017.

As the plaintiffs in the Donelson case did not file proofs of claim either for the putative class or the putative class representatives, we anticipate any monetary liability related to this claim will be discharged. We dispute plaintiffs’ allegations and dispute that the case meets the requirements for a class action.

Lisa West and Stormy Hopson, individually and as class representatives on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On February 18, 2016, an alleged class action was filed against us, as well as several other operators in the District Court of Pottawatomie County, State of Oklahoma (“West Case”), alleging claims on behalf of named plaintiffs and all similarly situated persons having an insurable real property interest in eight counties in central Oklahoma (the “Class Area”). The plaintiffs allege the oil and gas operations conducted by us and the other defendants have induced or triggered earthquakes in the Class Area. The plaintiffs are asking the court to require the defendants to reimburse plaintiffs and class members for earthquake insurance premiums from 2011 through a future date defined as the time at which the court determines there is no longer a risk that our activities induce or trigger earthquakes, as well as attorney fees and costs and other relief. The plaintiffs did not ask for damages related to actual property damage which may have occurred. We responded to the petition, denied the allegations and raised a number of affirmative defenses. At this time, a class has not been certified and discovery has not yet commenced. On March 18, 2016, the case was removed to the United States District Court for the Western District of Oklahoma under the Class Action Fairness Act (“CAFA”). On May 20, 2016, we filed a Notice of Suggestion of Bankruptcy, informing the court that we had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. On October 14, 2016, the plaintiffs filed an Amended Complaint adding additional defendants and increasing the Class Area to 25 Central Oklahoma counties. Although we are named as a defendant, the Amended Complaint expressly limits its claims against us to those asserted in the original petition unless and until the automatic stay is lifted. Plaintiffs’ attorneys filed a proof of claim on behalf of the putative class claiming in excess of $75,000 in our Chapter 11 Cases. Other defendants have filed motions to dismiss the action based on various theories, as well as motions to strike various allegations and requested relief as unsupported by Oklahoma law. A hearing on the various motions to dismiss and motions to strike was held on May 12, 2017. The judge made various rulings from the bench, including dismissing the complaint for failure to adequately allege causation, but permitting the plaintiffs to amend the complaint to cure the deficiency. We dispute the plaintiffs’ claims, dispute that the case meets the requirements for a class action, dispute the remedies requested are available under Oklahoma law, and are vigorously defending the case.

We are involved in various other legal proceedings including, but not limited to, commercial disputes, claims from royalty and surface owners, property damage claims, personal injury claims, employment claims, and other matters which arise in the ordinary course of business. In addition, other proofs of claim have been filed in our bankruptcy case which we anticipate repudiating. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect any of them individually to have a material effect on our financial condition, results of operations or cash flows.

We have numerous contractual commitments in the ordinary course of business including debt service requirements, operating leases, capital leases and purchase obligations. Our operating leases primarily relate to CO₂ recycle compressors at our EOR facilities and office equipment while our capital leases are related to the sale and subsequent leaseback of compressors. Our purchase

34

Chaparral Energy, Inc. and subsidiaries

Condensed notes to consolidated financial statements (unaudited) –continued

(dollars in thousands, unless otherwise noted)

obligations primarily relate to a contract for the purchase of CO₂ and drilling rig services. Other than changes to our credit facility (see “Note 5—Debt”) and the discharge of our Senior Notes and certain general unsecured claims pursuant our Reorganization Plan (see “Note 3—Chapter 11 reorganization”), the only other material change to our contractual commitments since December 31, 2016, relates to our contracts for drilling rig services. As of March 31, 2017, our obligations under our drilling rig contracts were $2,581.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to assist in understanding our financial condition and results of operations for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), and the three months ended March 31, 2016 (Predecessor), and should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included in this quarterly report with the consolidated financial statements, notes and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, though as described below, such prior financial statements may not be comparable to our interim financial statements due to the adoption of fresh-start accounting. References to "Successor" or "Successor Company" relate to the financial position and results of operations of the reorganized company subsequent to March 21, 2017. References to "Predecessor" or "Predecessor Company" relate to the financial position and results of operations of the Company prior to, and including, March 21, 2017.

Statements in our discussion may be forward-looking statements. These forward-looking statements involve risks and uncertainties. We caution that a number of factors could cause future production, revenues and expenses to differ materially from our expectations. For more information, see “Cautionary Note Regarding Forward-Looking Statements.”

Overview

Founded in 1988 and headquartered in Oklahoma City, we are a Mid-Continent independent oil and natural gas exploration and production company. We have capitalized on our sustained success in the Mid-Continent area in recent years by expanding our holdings to become a leading player in the liquids-rich STACK play, which is home to multiple oil-rich reservoirs including the Oswego, Meramec, Osage and Woodford formations. We also have significant production from CO₂ EOR methods underscored by our activity in the North Burbank Unit in Osage County, Oklahoma, which is the single largest oil recovery unit in the state. Our reserves as of December 31, 2016, were 43% proved developed, 74% crude oil, 17% natural gas and 9% natural gas liquids.

Our revenues, profitability and future growth depend substantially on prevailing prices for oil and natural gas and on our ability to find, develop and acquire oil and natural gas reserves that are economically recoverable. The preparation of our financial statements in conformity with generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect our reported results of operations and the amount of our reported assets, liabilities and proved oil and natural gas reserves. We use the full cost method of accounting for our oil and natural gas activities.

Generally, our producing properties have declining production rates. Our December 31, 2016, reserve estimates reflect that our production rate on current proved developed properties will decline at annual rates of approximately 15%, 13%, and 15% for the next three years.  To grow our production and cash flow, we must find, develop and acquire new oil and natural gas reserves to replace those being depleted by production.  Substantial capital expenditures are required to find, develop and acquire oil and natural gas reserves.

Oil and natural gas prices fluctuate widely. We generally hedge a substantial portion of our expected future oil and natural gas production to reduce our exposure to commodity price decreases. The prices we receive for our oil and natural gas production affect our:

• cash flow available for capital expenditures;

• ability to borrow and raise additional capital;

• ability to service debt;

• quantity of oil and natural gas we can produce;

• quantity of oil and natural gas reserves; and

• operating results for oil and natural gas activities.

Chapter 11 Reorganization

Bankruptcy petition and emergence. On May 9, 2016 (the “Petition Date”), Chaparral Energy, Inc. and its subsidiaries including Chaparral Energy, L.L.C., Chaparral Resources, L.L.C., Chaparral Real Estate, L.L.C., Chaparral CO2 , L.L.C., CEI Pipeline, L.L.C., CEI Acquisition, L.L.C., Green Country Supply, Inc., Chaparral Biofuels, L.L.C., Chaparral Exploration, L.L.C., Roadrunner Drilling, L.L.C. (collectively, the “Chapter 11 Subsidiaries” and, together with Chaparral Energy, Inc., the “Debtors”) filed voluntary petitions seeking relief under Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) commencing cases for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”).

On March 10, 2017, (the “Confirmation Date”), the Bankruptcy Court confirmed our Reorganization Plan and on March 21, 2017 (the “Effective Date”), the Reorganization Plan became effective and we emerged from bankruptcy.

36

Debtor-In-Possession.  During the pendency of the Chapter 11 Cases, we operated our business as debtors in possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted all first day motions filed by us which were designed primarily to minimize the impact of the Chapter 11 Cases on our normal day-to-day operations, our customers, regulatory agencies, including taxing authorities, and employees. As a result, we were able to conduct normal business activities and pay all associated obligations for the post-petition period and we were also authorized to pay and have paid (subject to limitations applicable to payments of certain pre-petition obligations) pre-petition employee wages and benefits, pre-petition amounts owed to certain lienholders and critical vendors, amounts due to taxing authorities for production and other related taxes and funds belonging to third parties, including royalty and working interest holders. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of our business required the approval of the Bankruptcy Court.

Automatic Stay. Subject to certain exceptions, under the Bankruptcy Code, the filing of the bankruptcy petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or the filing of other actions against us or our property to recover, collect or secure a claim arising prior to the Petition Date. Absent an order from the Bankruptcy Court, substantially all of our pre-petition liabilities were subject to settlement under the Bankruptcy Code.

Plan of Reorganization. Pursuant to the terms of the Reorganization Plan, which was supported by us, certain lenders under our Prior Credit Facility  (collectively, the “Lenders”) and certain holders of the Company’s Senior Notes (collectively, the “Noteholders”), the following transactions were completed subsequent to the Confirmation Date and prior to or at the Effective Date:

• On the Effective Date, we issued or reserved for issuance 44,982,142 shares of common stock of the Successor company (“New Common Stock”), in accordance with the transactions described below. We also entered into a stockholders agreement and a Registration Rights Agreement and amended our certificate of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions;

• Our Predecessor common stock was cancelled, extinguished and discharged and the Predecessor equity holders did not receive any consideration in respect of their equity interests;

• The $1.3 billion of indebtedness, including accrued interest, attributable to our Senior Notes were exchanged for New Common Stock. In addition, we reserved shares of New Common Stock to be exchanged in settlement of $2.4 million of certain general unsecured claims. In aggregate, the shares of New Common Stock issued or to be issued in settlement of the Senior Note and these general unsecured claims represented approximately 90% of outstanding Successor common shares;

• We completed a rights offering backstopped by certain holders of our Senior Notes (the “Backstop Parties”) which generated $50.0 million of gross proceeds. The rights offering resulted in the issuance of New Common Stock, representing approximately nine percent of outstanding Successor common shares, to holders of claims arising under the Senior Notes and to the Backstop Parties;

• In connection with the rights offering described above, the Backstop Parties received approximately one percent of outstanding Successor common shares as a backstop fee;

• Additional shares, representing seven percent of outstanding Successor common shares on a fully diluted basis, were authorized for issuance under a new management incentive plan;

• Warrants to purchase 140,023 shares of New Common Stock were issued to Mr. Mark Fischer, our founder and former Chief Executive Officer, with an exercise price of $36.78 per share and expiring on June 30, 2018. The warrants were issued in exchange for consulting services provided by Mr. Fischer;

• Our Prior Credit Facility, previously consisting of a senior secured revolving credit facility with an outstanding balance of $444 million prior to emergence, was restructured into a New Credit Facility consisting of a first-out senior secured revolving facility (“New Revolver”) and a second-out senior secured term loan (“New Term Loan”). On the Effective Date, the entire balance on the Prior Credit Facility was repaid while we received gross proceeds representing the opening balances on our New Revolver of $120 million and a New Term Loan of $150 million;

• We paid $7.0 million for creditor-related professional fees and also funded a $11.0 million segregated account for debtor-related professional fees in connection with the reorganization related transactions described above;

• Certain other priority or convenience class claims were paid in full in cash, reinstated or otherwise treated in a manner acceptable to the creditor claimholders;

• Plaintiffs to one of our royalty owner litigation cases, which were identified as a separate class of creditors (Class 8) in our bankruptcy case, rejected the Reorganization Plan. If the claimants under Class 8 are permitted to file a class of proof claim on behalf of the putative class, certified on a class basis, and the plaintiffs ultimately prevail on the merits of their claims, any liability arising under judgement or settlement of the claims would be satisfied through issuance of Successor common

37

shares. See “Note 10—Commitments and Contingencies” in Item 1 Financial Statements of this report for a discussion of the litigation.

In support of the Reorganization Plan, the Company estimated the enterprise value of the Successor to be in the range of $1.05 billion to $1.35 billion, which was subsequently approved by the Bankruptcy Court.

Fresh-start Accounting

Upon our emergence from bankruptcy, on March 21, 2017, we adopted fresh-start accounting in accordance with the provisions set forth in Accounting Standards Codification 852, Reorganizations, as (i) the Reorganization Value of our assets immediately prior to the date of confirmation was less than the post-petition liabilities and allowed claims and (ii) the holders of our existing voting shares of the Predecessor entity received less than 50% of the voting shares of the emerging entity.

Adopting fresh-start accounting results in a new financial reporting entity with no beginning or ending retained earnings or deficit balances as of the fresh-start reporting date. Upon the adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of the fresh-start reporting date. Our adoption of fresh-start accounting may materially affect our results of operations following the fresh-start reporting date, as we will have a new basis in our assets and liabilities. As a result of the adoption of fresh-start reporting and the effects of the implementation of the Plan, our unaudited consolidated financial statements subsequent to March 21, 2017, may not be comparable to our unaudited consolidated financial statements prior to March 21, 2017, as such, "black-line" financial statements are presented to distinguish between the Predecessor and Successor companies. In order to facilitate the discussion and analysis herein, we have addressed the Predecessor and Successor periods discretely and have provided comparative analysis, to the extent practical, where appropriate.

Price Uncertainty and the Full-Cost Ceiling Impairment

We deal with volatility in commodity prices primarily by insuring our overall cost structure is competitive and supportive in a $40/bbl to $60/bbl oil price environment. In addition, we maintain flexibility in our capital investment program with a diversified drilling portfolio and limited long-term commitments, which enables us to respond quickly to industry price volatility. We also deal with price volatility by hedging a substantial portion of our expected future oil and natural gas production to reduce our exposure to commodity price decreases.  We currently have derivative contracts in place for oil and natural gas production in 2017, 2018 and 2019 (see Item 3. Quantitative and Qualitative Disclosures About Market Risk).

Price volatility also impacts our business through the full cost ceiling test calculation. The ceiling test calculation dictates that we use the unweighted arithmetic average price of crude oil and natural gas as of the first day of each month for the 12-month period ending on the balance sheet date. The average price utilized in our ceiling test calculation over the past 12 months is as follows:

	Second quarter 2016		Third quarter 2016		Year-end 2016		First quarter 2017
Crude oil ($ per Bbl)	$	43.12	$	41.68	$	42.75	$	47.61
Natural gas ($ per MMBtu)	$	2.23	$	2.28	$	2.49	$	2.73
Natural gas liquids ($ per Bbl)	$	13.92	$	14.03	$	13.47	$	17.14

As discussed above, our application of fresh start accounting to our balance sheet on March 21, 2017, resulted in the carrying value of our oil and natural gas properties being restated based on their fair value. The estimated fresh start fair value along with adjustments for activity between the March 21, 2017, and the end of the first quarter of 2017 as well as the increase in SEC average prices resulted in a carrying value that was below the full cost ceiling at quarter-end and thus a ceiling test write-down was not required.

In addition to commodity prices, our production rates, levels of proved reserves, estimated future operating expenses, estimated future development costs, transfers of unevaluated properties and other factors will determine our actual ceiling test calculation and impairment analyses in future periods.

Financial and Operating Highlights

Our financial and operating performance, outside of transactions related to our emergence from bankruptcy, in the first quarter of 2017 includes the following highlights:

• We reported a net loss of $19.7 million for the Successor period in 2017 and net income of $1,042 million for the Predecessor period in 2017 (totaling net income of $1,022 million for both Successor and Predecessor periods in 2017) largely as a result of the $642 million increase in carrying value of our net assets restated to fair value pursuant to the adoption of fresh-start accounting combined with the $372 million gain on settlement of liabilities subject to compromise. These gains are reflected in “Reorganization items, net” on our consolidated statement of operations. Significant increases in carrying value of our assets including the following:

o $560 million increase in our unevaluated oil and gas properties primarily to capture the value of our acreage in our STACK resource play;

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o $60 million increase in our proved oil and gas properties; and

o $19 million increase in other property and equipment.

• Our total net production of 227 MBoe for the Successor and 1,796 MBoe for the Predecessor periods in 2017, for a total of 2,023 MBoe in 2017, declined 11% from the prior year quarter. The decline was primarily a result of decreased capital spending for the drilling and completion of wells as well as natural decline.

• Our commodity sales of $7.8 million for the Successor and $66.5 million for the Predecessor periods in 2017, for a total of $74.3 million in 2017, were 54% higher than the prior year quarter primarily due to increases in prices on all commodities, offset partially by the production decline discussed above.

Future of Active EOR

We announced on April 28, 2017, that during the remainder of 2017, we will be pursuing strategic alternatives for our EOR assets as we shifts our strategy and portfolio to focus solely on our more profitable STACK Area. In that regard, we retained CIBC Griffis & Small as an advisor to assist in marketing its EOR assets which will commence in June or July of the current year.

Capital development

During the three months ended March 31, 2017, we incurred capital expenditures of $43.2 million. This included expenditure for completing three wells spudded in the previous year, drilling and completing one well, and drilling an additional two wells to be completed in the second quarter, as well as participating in outside operated wells, all within our STACK play. We began the year with one rig, which increased to two rigs during the first quarter and we expect to continue to drill two rigs through the second quarter. Depending on commodity pricing and asset sale proceeds, we may continue to run two rigs in the play.  We also incurred capital expenditures within our Active EOR Areas for continuing CO₂ purchases, developing our North Burbank Unit and efficiently producing our other units experiencing production decline. Our oil and natural gas capital budget for 2017 is $145.9 million which we plan to fund with a combination of cash flows from operations and proceeds from the sale of non-core assets from which we expect to generate $25 million to $30 million in net proceeds.

Results of operations

Production

Production volumes by area were as follows:

	Successor		Predecessor
Production volume (MBoe)	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
STACK Areas
STACK - Meramec		26		190		78
STACK - Osage		19		137		170
STACK - Oswego		14		123		110
STACK - Woodford		9		98		160
STACK - Vertical		11		96		87
Total STACK Areas		79		644		605
Active EOR Projects		58		445		525
Other		90		707		1,150
Total		227		1,796		2,280

We have recently realigned our operating plays/areas to better highlight those areas where we are focusing our operations and where our current and future capital will be spent. Please see Items 1. and 2. Business and Properties of our Annual Report on Form 10-K for the year ended December 31, 2016, for a discussion of operating areas.

Our total net production of 227 MBoe for the Successor and 1,796 MBoe for the Predecessor periods in 2017, for a total of 2,023 MBoe in 2017, declined from the prior year quarter. The decline was due to production declines in all our areas outside the STACK. Areas outside the STACK, other than our North Burbank Unit, experienced declining production due to a decrease in development activity. In addition, a severe ice storm in the Oklahoma Panhandle during the Predecessor period in 2017 had an adverse impact on our oil production in our Active EOR and Other areas. Production in our STACK play increased as a result of the 11 wells that came online during the period and our participation in new outside-operated wells in this play. In our Active EOR Areas, increases in production at our North Burbank Unit as a result of ongoing investment partially mitigated the decreases experienced at our Booker, Camrick and Farnsworth units.  

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Revenues

Our commodity sales are derived from the production and sale of oil, natural gas and natural gas liquids. These revenues do not include the effects of derivative instruments and may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices.

The following table presents information about our production and commodity sales before the effects of commodity derivative settlements:

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
Commodity sales (in thousands):
Oil	$	6,230	$	51,847	$	37,065
Natural gas		785		9,140		7,350
Natural gas liquids		793		5,544		3,824
Total commodity sales	$	7,808	$	66,531	$	48,239
Production:
Oil (MBbls)		134		1,036		1,245
Natural gas (MMcf)		344		3,046		4,100
Natural gas liquids (MBbls)		36		252		351
MBoe		227		1,796		2,280
Average daily production (Boe/d)		22,700		22,450		25,055
Average sales prices (excluding derivative settlements):
Oil per Bbl	$	46.49	$	50.05	$	29.77
Natural gas per Mcf	$	2.28	$	3.00	$	1.79
NGLs per Bbl	$	22.03	$	22.00	$	10.89
Average sales price per Boe	$	34.40	$	37.04	$	21.16

Our commodity sales of $7.8 million for the Successor and $66.5 million for the Predecessor periods in 2017, for a total of $74.3 million in 2017, were higher than the prior year quarter primarily due to increases in prices on all commodities offset partially by the production decline as shown below:

	Three months ended March 31,
	2017 vs. 2016
(in thousands)	Sales change			Percentage change in sales
Change in oil sales due to:
Prices	$	23,245			62.7	%
Production	$	(2,233	)		(6.0	)%
Total change in oil sales	$	21,012			56.7	%
Change in natural gas sales due to:
Prices	$	3,848			52.3	%
Production	$	(1,273	)		(17.3	)%
Total change in natural gas sales	$	2,575			35.0	%
Change in natural gas liquids sales due to:
Prices	$	3,199			83.6	%
Production	$	(686	)		(17.9	)%
Total change in natural gas liquids sales	$	2,513			65.7	%

Derivative activities

Our results of operations, financial condition and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties. To mitigate a

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portion of this exposure, we have entered into various types of derivative instruments, including commodity price swaps and costless collars.

Due to defaults under the master agreements governing our derivative contracts, our outstanding derivative positions were terminated in May 2016. In December 2016, an agreement was reached with our lenders regarding the resumption of hedging activity prior to our emergence from bankruptcy and thus we began entering into new derivative instruments.

Our realized prices are impacted by realized gains and losses resulting from commodity derivatives contracts. The following table presents information about the effects of derivative settlements on realized prices:

	Successor			Predecessor
	Period from March 22, 2017 through March 31, 2017			Period from January 1, 2017 through March 21, 2017			Three months ended March 31, 2016
Oil (per Bbl)(1):
Before derivative settlements	$	41.31		$	44.56		$	25.62
After derivative settlements	$	51.26		$	45.48		$	50.11
Post-settlement to pre-settlement price		124.1	%		102.1	%		195.6	%
Natural gas (per Mcf):
Before derivative settlements	$	2.28		$	3.00		$	1.79
After derivative settlements	$	2.28		$	3.03		$	3.84
Post-settlement to pre-settlement price		100.0	%		101.0	%		214.5	%

_______________________________________

(1) Includes natural gas liquids.

The estimated fair values of our oil and natural gas derivative instruments are provided below. The associated carrying values of these instruments are equal to the estimated fair values.

	Successor		Predecessor
	March 31,		December 31,
(in thousands)	2017		2016
Derivative assets:
Crude oil derivatives	$	19,274	$	(9,895	)
Natural gas derivatives		271		(3,474	)
Net derivative assets	$	19,545	$	(13,369	)

The effects of derivative activities on our results of operations and cash flows were as follows for the periods indicated:

	Successor					Predecessor
	Period from March 22, 2017 through March 31, 2017					Period from January 1, 2017 through March 21, 2017				Three months ended March 31, 2016
(in thousands)	Non-cash fair value adjustment			Settlement gains		Non-cash fair value adjustment		Settlement gains		Non-cash fair value adjustment			Settlement gains
Derivative (losses)  gains:
Crude oil derivatives	$	(13,650	)	$	1,692	$	42,819	$	1,192	$	(32,115	)	$	39,093
Natural gas derivatives		(157	)		—		3,902		93		(3,439	)		8,393
Derivative (losses) gains	$	(13,807	)	$	1,692	$	46,721	$	1,285	$	(35,554	)	$	47,486

We do not apply hedge accounting to any of our derivative instruments. As a result, all gains and losses associated with our derivative contracts are recognized immediately as “Derivative (losses) gains” in our consolidated statements of operations. The fluctuation in derivative (losses) gains from period to period is due primarily to the significant volatility of oil and natural gas prices and to changes in our outstanding derivative contracts during these periods.

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Lease operating expenses

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
Lease operating expenses (in thousands, except per Boe data):
STACK Areas	$	281	$	2,170	$	2,434
Active EOR Project Areas		510		8,491		9,442
Other		1,449		9,280		11,539
Total lease operating expense before bonus adjustment		2,240		19,941		23,415
Bonus adjustment		2,019		—		—
Total lease operating expense	$	4,259	$	19,941	$	23,415
Lease operating expenses per Boe:
STACK Areas	$	3.56	$	3.37	$	4.02
Active EOR Project Areas	$	8.79	$	19.08	$	17.98
Other	$	16.10	$	13.13	$	10.03
Lease operating expenses per Boe before bonus adjustment	$	9.87	$	11.10	$	10.27
Lease operating expenses per Boe	$	18.76	$	11.10	$	10.27

Lease operating costs are sensitive to changes in demand for field equipment, services, and qualified operational personnel, which is driven by demand for oil and natural gas. However, the timing of changes in operating costs may lag behind changes in commodity prices. Our EOR projects are more expensive to operate than traditional industry operations due to the nature of operations along with the costs of recovery and recycling of CO₂.

Total lease operating expense is not comparable across the time periods presented above in part due to the bonus adjustment depicted in the table above. Provisions set by the Bankruptcy Court during the pendency of our bankruptcy prevented us from paying bonuses in the ordinary course of business. Pursuant to these provisions, we did not accrue bonuses during 2016 and during the entire pendency of our bankruptcy. Upon emergence, we recognized expense for the entire amount of our 2016 fiscal year bonus (paid in March 2017) as well as accrued a pro rata portion of our 2017 fiscal year bonus reflecting the first three months of 2017; both adjustments totaled $2.0 million as disclosed in the table above.

Absent the bonus adjustment, lease operating expenses, which were $2.2 million and $19.9 million in the Successor and Predecessor periods in 2017, respectively, totaling $22.2 million for the three months ended March 31, 2017, were lower compared to the three months ended March 31, 2016, primarily due to reductions in our Active EOR Project Areas and Other areas.

Lease operating expenses for our STACK Areas were flat from 2016 to 2017. Although we incurred additional costs of oil field goods and services as a result of new wells coming online in 2016, these increases were offset by cost savings from improved efficiencies, which resulted in lease operating expenses being approximately unchanged from period to period. Increased production, improved efficiencies and economies of scale in this area also resulted in a decrease in cost on a Boe basis from 2016 to 2017.

Lease operating expenses for our Active EOR areas decreased from 2016 to 2017 as a result of declining production on our older, higher cost EOR projects later in their lifecycle, partially offset by the increase in production and related economies of scale in our North Burbank Unit.

The decrease in our Other Areas was primarily due to declining production due to a decrease in development activity.

Transportation and processing expenses

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
Transportation and processing expenses (in thousands)	$	361	$	2,034	$	1,879
Transportation and processing expenses per Boe	$	1.59	$	1.13	$	0.82

Transportation and processing expenses principally consist of expenditures to prepare and transport production from the wellhead to a specified sales point and processing costs of gas into natural gas liquids. Transportation and processing costs of $0.4 million and $2.0 million for the Successor and Predecessor periods in 2017, respectively, which totaled $2.4 million, increased from the three months ended March 31, 2016, due to production from new wells in our STACK with substantially higher per unit processing costs.

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Production taxes (which include severance and valorem taxes)

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
Production taxes (in thousands)	$	316	$	2,417	$	1,756
Production taxes per Boe	$	1.39	$	1.35	$	0.77

Production taxes of $0.3 million and $2.4 million for the Successor and Predecessor periods in 2017, respectively, which totaled $2.7 million, increased compared to the three months ended March 31, 2016, as a result of an increase in revenues. As discussed earlier, the increase in revenues is attributable to higher prices which were partially offset by lower volumes.

Depreciation, depletion and amortization (“DD&A”)

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
DD&A (in thousands):
Oil and natural gas properties	$	3,034	$	22,193	$	29,014
Property and equipment		259		1,473		1,875
Accretion of asset retirement obligation		121		1,249		919
Total DD&A	$	3,414	$	24,915	$	31,808
DD&A per Boe:
Oil and natural gas properties	$	13.90	$	13.05	$	13.13
Other fixed assets	$	1.14	$	0.82	$	0.83
Total DD&A per Boe	$	15.04	$	13.87	$	13.96

We adjust our DD&A rate on oil and natural gas properties each quarter for significant changes in our estimates of oil and natural gas reserves and costs. Thus, our DD&A rate could change significantly in the future. DD&A is not comparable between Successor and Predecessor periods as a result our implementation of fresh start accounting upon bankruptcy emergence whereupon the carrying value of our proved oil and gas properties on our balance sheet was restated to fair value. The restatement resulted in an increase in the full cost amortization base which led to a corresponding increase in the DD&A rate per equivalent unit of production for the period from March 22 to March 31, 2017. Overall DD&A for the Successor and Predecessor periods in 2017, which was $3.4 million and $24.9 million, respectively, and totaling $28.3 million, was lower than the three months ended March 31, 2016, primarily due to a decrease in production volumes between the two periods.

Asset impairments

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
Asset impairments (in thousands):
Loss on impairment of oil and natural gas assets	$	—	$	—	$	77,896

Oil and natural gas asset impairments. The ceiling test calculation for our oil and natural gas properties dictates that we use the unweighted arithmetic average price of crude oil and natural gas as of the first day of each month for the 12-month period ending on the balance sheet date. The average price utilized in our ceiling test calculation over the past 12 months has generally followed the following pattern:

	Second quarter		Third quarter		Year-end		First quarter
	2016		2016		2016		2017
Crude oil ($ per Bbl)	$	43.12	$	41.68	$	42.75	$	47.61
Natural gas ($ per MMBtu)	$	2.23	$	2.28	$	2.49	$	2.73
Natural gas liquids ($ per Bbl)	$	13.92	$	14.03	$	13.47	$	17.14

As discussed above, our application of fresh start accounting to our balance sheet on March 21, 2017, resulted in the carrying value of our oil and natural gas properties being restated based on their fair value. The estimated fresh start fair value along with

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adjustments for activity between the March 21, 2017, and the end of the first quarter of 2017, as well as the increase in SEC average prices from year-end 2016 resulted in a carrying value that was below the full cost ceiling at quarter-end and thus a ceiling test write-down was not required as of March 31, 2017. The ceiling test impairment for the three months ended March 31, 2016, of $77.9 million was primarily due to the decrease in SEC prices.

General and administrative expenses (“G&A”)

	Successor			Predecessor
	Period from March 22, 2017 through March 31, 2017			Period from January 1, 2017 through March 21, 2017			Three months ended March 31, 2016
G&A and cost reduction initiatives    (in thousands):
Gross G&A before bonus adjustment	$	928		$	8,117		$	8,385
Bonus adjustment		6,581			—			—
Capitalized exploration and    development costs		(1,765	)		(1,274	)		(1,896	)
Net G&A expenses		5,744			6,843			6,489
Cost reduction initiatives		6			629			3,125
Liability management expenses		—			—			5,589
Net G&A, cost reduction initiatives   and liability management expenses	$	5,750		$	7,472		$	15,203
Average G&A expense per Boe	$	25.30		$	3.81		$	2.85
Average G&A, cost reduction initiatives and liability management expense per Boe	$	25.33		$	4.16		$	6.67

Net G&A expense is not comparable across the time periods presented above in part due to the bonus adjustment. Provisions set by the Bankruptcy Court during the pendency of our bankruptcy prevented us from paying bonuses in the ordinary course of business. Pursuant to these provisions, we did not accrue bonuses during 2016 and during the entire pendency of our bankruptcy. Upon emergence, we recognized expense for the entire amount of our 2016 fiscal year bonus (paid in March 2017) as well as accrued a pro rata portion of our 2017 fiscal year bonus reflecting the first three months of 2017; both adjustments totaled $6.6 million as disclosed in the table above. Gross G&A of $0.9 million and $8.1 million for the Successor and Predecessor periods in 2017, totaling $9.0 million for the three months ended March 31, 2017, was higher than the prior year quarter primarily due to an increase in professional fees.

Capitalized exploration and development costs were higher during the Successor and Predecessor periods in 2017 compared to the three months ended 2016 primarily due the bonus adjustment for which a portion was capitalized.

Cost reduction initiatives include expenses related to our efforts to reduce our capital, operating and administrative costs in response to the deterioration of commodity prices. We implemented workforce reductions during both the current year and prior year periods and therefore recorded one-time severance and termination benefits in connection with the layoffs. The remaining cost reduction expense is a result of professional services we engaged to assist in these initiatives as follows (in thousands):

	Successor		Predecessor
	Period from March 22, 2017 through March 31, 2017		Period from January 1, 2017 through March 21, 2017		Three months ended March 31, 2016
One-time severance and termination benefits	$	1	$	608	$	3,036
Professional fees		5		21		89
Total cost reduction initiatives expense	$	6	$	629	$	3,125

Liability management expenses include third party legal and professional service fees incurred from our activities to restructure our debt and in preparation for our bankruptcy petition. Such costs, to the extent that they are incremental and directly related to our bankruptcy, were recorded as “Reorganization items, net” on our consolidated statement of operations subsequent to the Petition Date.

Income Taxes

The income tax expense that was recognized for the Predecessor and Successor periods in our consolidated statement of operations is a result of current Texas margin tax on gross revenues less certain deductions. We did not record any net deferred tax benefit in the Predecessor and Successor periods in 2017 as any deferred tax asset arising from the benefit is reduced by a valuation

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allowance. Please see “Note 10—Income Taxes” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016, which contains additional information about our income taxes.

Other income and expenses

Interest expense. The following table presents interest expense for the periods indicated:

	Successor			Predecessor
(in thousands)	Period from March 22, 2017 through March 31, 2017			Period from January 1, 2017 through March 21, 2017			Three months ended March 31, 2016
Senior Notes	$	—		$	—		$	25,937
Prior Credit Facility		—			5,193			3,421
New Credit Facility		213			—			—
New Term Loan including amortization of discount		447			—			—
Bank fees, other interest and amortization of issuance costs		44			917			1,372
Capitalized interest		(54	)		(248	)		(1,076	)
Total interest expense	$	650		$	5,862		$	29,654
Average borrowings (including amounts subject to compromise)	$	295,973		$	1,678,870		$	1,726,744

Total interest expense is not comparable across the time periods disclosed above. During the period from March 22 to March 31, 2017, we incurred interest related to our New Term Loan and New Revolver whereas these facilities had not been established prior to our emergence from bankruptcy. During the period from January 1 to March 21, 2017, we incurred interest related to our Prior Credit Facility but did not record any interest on our Senior Notes as we ceased accruing interest on our Senior Notes upon the filing of our bankruptcy petition. During the three months ended March 31, 2016, we incurred interest related to our Senior Notes and Prior Credit Facility. Interest expense of $0.7 million and $5.9 million for the Successor and Predecessor periods in 2017, respectively, which totaled $6.5 million for the three months ended March 31, 2017, was lower than the comparable period in 2016 primarily due to the absence of interest expense on the Senior Notes in the current year periods. We also had a reduction in capitalized interest as a result of a lower carrying amount of unevaluated purchased non-producing leasehold subsequent to the leasehold impairments recorded in 2016. As a result of applying fresh start accounting upon our emergence from bankruptcy, the carrying value of our unevaluated non-producing leasehold was significantly increased to reflect the fair value of our acreage in the STACK. In future periods subsequent to the adoption of fresh start accounting, we will not be capitalizing interest related to the fresh start gross up of the carrying value of unevaluated acreage as capitalized interest will only be calculated based on the carrying value of actual purchased leasehold.

Senior Notes issuance costs, discount and premium. In March 2016, we wrote off the remaining unamortized issuance costs, premium and discount related to our Senior Notes for a net charge of approximately $17.0 million. These deferred items are typically amortized over the life of the corresponding bond. However, as a result of not paying the interest due on our 2021 Senior Notes by the end of our 30-day grace period on March 31, 2016, we triggered an Event of Default on our Senior Notes. While uncured, the Event of Default effectively allowed the lender to demand immediate repayment, thus shortening the life of our Senior Notes to the current period. As a result, we wrote off the remaining balance of unamortized issuance costs, premium and discount.

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Reorganization Items

Reorganization items reflect, where applicable, post-petition revenues, expenses, gains and losses incurred that are incremental and a direct result of the reorganization of the business. As a result of our emergence from bankruptcy, we have also recorded gains on the settlement of liabilities subject to compromise and gains from restating our balance sheet to fair values under fresh start accounting. These adjustments are discussed in “Note 3—Fresh start accounting” in Item 1. Financial Statements of this report. We have incurred significant costs associated with the reorganization and expect to incur an additional $6 million to $8 million of reorganization-related professional fees for the remainder of the year. These costs, which are presented below, are expected to significantly affect our results of operations (in thousands):

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017
	through		through
	March 31, 2017		March 21, 2017
Gains on the settlement of liabilities subject to compromise	$	—	$	(372,093	)
Fresh start accounting adjustments		—		(641,684	)
Professional fees		620		18,790
Rejection of employment contracts		—		4,573
Write off unamortized issuance costs on Prior Credit Facility		—		1,687
Total reorganization items	$	620	$	(988,727	)

Liquidity and capital resources

Historically, our primary sources of liquidity have been cash generated from our operations, borrowings under our credit facility, private equity sales and proceeds from asset dispositions. Our primary use of cash flow has been to fund capital expenditures used to develop our oil and natural gas activities and to meet day-to day operating expenses. Upon emergence from bankruptcy, our primary sources of liquidity are cash flows from operations and borrowings under the New Credit Facility. Other potential sources of liquidity in the next twelve months include proceeds from sales of non-core assets. Our cash balance as of March 31, 2017, was approximately $32 million of which $14 million was restricted for the payment of debtor-related professional fees and convenience class claims pursuant to our Reorganization Plan. We also had borrowing availability under our New Revolver of $104.2 million. As of May 11, 2017, our cash balance was approximately $22.3 million, of which $11.4 million was restricted, with $120.0 million outstanding on our New Revolver and borrowing availability of $104.2 million. We believe that we have sufficient liquidity to fund our capital expenditures and day to day operations for the next 12 months.

Our cash flows from operating activities are subject to significant volatility due to changes in commodity prices for our crude oil, NGL and natural gas products, as well as variations in our production. The prices for these commodities are driven by a number of factors beyond our control, including global and regional product supply and demand, weather, product distribution, refining and processing capacity and other supply chain dynamics, among other factors. The level of our hedging activity and duration of the instruments employed depend on our desired cash flow protection, available hedge prices, the magnitude of our capital program and our operating strategy. We currently have derivative contracts in place for oil and natural gas production in 2017, 2018 and 2019 (see Item 3. Quantitative and Qualitative Disclosures About Market Risk).

Sources and uses of cash

Our net change in cash is summarized as follows:

	Successor			Predecessor
(in thousands)	Period from March 22, 2017 through March 31, 2017			Period from January 1, 2017 through March 21, 2017			Three months ended March 31, 2016
Cash flows (used in) provided by operating activities	$	(8,401	)	$	14,385		$	(10,251	)
Cash flows (used in) provided by investing activities		(4,140	)		(28,010	)		870
Cash flows (used in) provided by financing activities		(88	)		(127,732	)		179,789
Net (decrease)  increase in cash during the period	$	(12,629	)	$	(141,357	)	$	170,408

Our cash flows from operating activities is derived substantially from the production and sale of oil and natural gas. Our cash flows from operating activities for the three months ended March 31, 2017, which included outflows of $8.4 million for Successor period and inflows of $14.4 million for the Predecessor period, increased over the prior year quarter as a result of an increase in revenues and a decrease in cost reduction initiatives expense. These increases were partially offset by the additional expenses to restructure our debt and in preparation for our bankruptcy petition as well as an increase in cash interest paid.

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When available, we use the net cash provided by operations to partially fund our acquisition, exploration and development activities. With limited cash flows from operating activities due to low commodity prices and constraints imposed on us while in bankruptcy, our capital expenditures for the three months ended March 31, 2017, were also funded by the excess cash that we were carrying prior to our emergence.

Our cash flows from investing activities is comprised primarily of cash inflows from asset dispositions and derivative settlement receipts offset by cash outflows for capital expenditures and derivative settlement payments.

Our actual costs incurred, including costs that we have accrued for during the three months ended March 31, 2017, and our budgeted 2017 capital expenditures for oil and natural gas properties are summarized in the table below.

	2017 Capital Expenditures								2017 Capital
(in thousands)	STACK		Active EOR Areas		Other		Total		Expenditures Budget (1) (2)
Acquisitions	$	3,889	$	—	$	—	$	3,889		5,401
Drilling		23,060		784		—		23,844		83,147
Enhancements		1,361		7,283		2,335		10,979		34,570
Pipeline and field infrastructure		—		364		—		364		7,942
CO2 purchases		—		4,075		—		4,075		14,857
Total	$	28,310	$	12,506	$	2,335	$	43,151	$	145,917

(1) Includes $47.4 million allocated to our EOR project areas as follows: enhancements of $24.6 million, pipeline and field infrastructure of $7.9 million and CO₂ purchases of $14.9 million..

(2) Budget categories presented include allocations of capitalized interest and general and administrative expenses.

Net cash used in investing activities during the Successor period in 2017 was comprised of cash outflows for capital expenditure of $5.8 million and cash inflows from derivative settlement receipts of $1.7 million. Net cash used in investing activities during the Predecessor period in 2017 was comprised of cash outflows for capital expenditure of $31.2 million, cash inflows from derivative settlement receipts of $1.3 million and cash inflows from asset sales of $1.9 million. Net cash provided by investing activities during the three months ended March 31, 2016, of the Predecessor, was comprised primarily of cash outflows for capital expenditure of $47.1 million, cash inflows from derivative settlement receipts of $47.5 million and cash inflows from asset sales of $0.5 million.

We had minimal cash flows from financing activities during the Successor period in 2017. Cash flows from financing activities during the Predecessor period in 2017 is comprised primarily of cash outflows for repayments of debt and capital leases of $445.4 million and payment of $2.4 million in debt issuance costs partially offset by cash inflows of $270.0 million from new borrowings. The large repayments and borrowings of debt reflect the extinguishment of our Prior Credit Facility and establishment of our New Credit Facility upon our emergence from bankruptcy. During the three months ended March 31, 2016, of the Predecessor, we borrowed $181.0 million on our debt and made repayments of $0.6 million on our debt and $0.6 million on our capital leases.

Indebtedness

Debt consists of the following as of the dates indicated:

(in thousands)	March 31, 2017			December 31, 2016
New Revolver	$	120,000		$	—
New Term Loan, net of $745 and $0 of discount		149,255			—
Prior Credit Facility		—			444,440
Real estate and equipment notes		9,665			10,029
Capital lease obligations		16,308			16,946
Unamortized debt issuance costs		(1,649	)		(2,303	)
	$	293,579		$	469,112

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Liabilities Subject to Compromise

The following table summarizes the components of “Liabilities subject to compromise” included on our Consolidated Balance Sheet immediately prior to emergence on March 21, 2017:

(in thousands)	March 21, 2017
Accounts payable and accrued liabilities	$	6,687
Accrued payroll and benefits payable		3,949
Revenue distribution payable		3,050
Senior Notes and associated accrued interest		1,267,410
Liabilities subject to compromise	$	1,281,096

As discussed earlier, claims from the Senior Notes and associated interest along with approximately $3 million in general unsecured claims were settled upon emergence through the issuance of Successor common stock. The remaining claims were either paid or reinstated in full.

Credit Facilities

Our Prior Credit Facility, previously consisting of a senior secured revolving credit facility with an outstanding balance of $444 million prior to emergence, was restructured into a New Credit Facility consisting of the New Revolver and New Term Loan. On the Effective Date, the entire balance on the Prior Credit Facility was repaid while we received gross proceeds, before lender fees, representing the opening balances on our New Revolver of $120 million and a New Term Loan of $150 million.

 New Term Loan. The loan, which is collateralized by our oil and natural gas properties, is scheduled to mature on March 21, 2021. Interest on the outstanding amount of the New Term Loan will accrue at an interest rate equal to either: (a) the Alternate Base Rate (as defined in the New Credit Facility) plus a 6.75% margin or (b) the Adjusted LIBO Rate (as defined in the New Credit Facility), plus a 7.75% margin with a 1.00% floor on the Adjusted LIBO Rate. We are required to make scheduled, mandatory principal payments in the amount of $1.2 million in calendar 2017, $1.5 million in 2018, $3.8 million in 2019 and $6.8 million in 2020 with the remaining outstanding balance due upon maturity.

New Revolver. The New Revolver is a $400.0 million facility collateralized by our oil and natural gas properties and is scheduled to mature on March 21, 2021. Availability under our New Revolver is subject to a borrowing base based on the value of our oil and natural gas properties and set by the banks semi-annually on May 1 and November 1 of each year. In addition, the lenders may request a borrowing base redetermination once between each scheduled redetermination or upon the occurrence of certain specified events. The banks establish a borrowing base by making an estimate of the collateral value of our oil and natural gas properties. If oil and natural gas prices decrease from the amounts used in estimating the collateral value of our oil and natural gas properties, the borrowing base may be reduced, thus reducing funds available under the borrowing base. The initial borrowing base on the Effective Date was $225.0 million and the first borrowing base redetermination has been set for on or about May 1, 2018.

Interest on the outstanding amounts under the New Revolver will accrue at an interest rate equal to either (i) the Alternative Base Rate plus a margin that ranges between 2.00% to 3.00% depending on utilization or (ii) the Adjusted LIBO Rate applicable to one, two three or six month borrowings plus a margin that ranges between 3.00% to 4.00% depending on utilization. In the case that an Event of Default (as defined under the New Credit Facility) occurs, the applicable rate while in default will be the Alternative Base Rate plus an additional 2.00% and plus the applicable margin.

Commitment fees of 0.50% accrue on the unused portion of the borrowing base amount, based on the utilization percentage, and are included as a component of interest expense. We generally have the right to make prepayments of the borrowings at any time without penalty or premium. Letter of credit fees will accrue at 0.125% plus the margin used to determine the interest rate applicable to New Revolver borrowings that are based on Adjusted LIBO Rate.

If the outstanding borrowings under our New Revolver were to exceed the borrowing base as a result of a redetermination, we would be required to eliminate this deficiency. Within 10 days after receiving notice of the new borrowing base, we would be required to make an election: (1) to repay the deficiency in a lump sum within 45 days or (2) commencing within 45 days to repay the deficiency in equal monthly installments over a six -month period or (3) to submit within 45 days additional oil and gas properties we own for consideration in connection with the determination of the borrowing base sufficient to eliminate the deficiency.

The New Credit Facility contain covenants and events of default customary for oil and natural gas reserve-based lending facilities including restrictions on additional debt, guarantees, liens, restricted payments, investments and hedging activity. Additionally, our New Credit Facility specifies events of default, including non-payment, breach of warranty, non-performance of covenants, default on other indebtedness or swap agreements, certain adverse judgments, bankruptcy events and change of control, among others. The financial covenants require that we maintain: (1) a Current Ratio (as defined in the New Credit Facility) of no less than 1.00 to 1.00, (2) an Asset Coverage Ratio (as defined in the New Credit Facility) of no less than 1.35 to 1.00, (3) Liquidity (as defined in the New Credit Facility) of at least $25.0 million and (4) a Ratio Total Debt to EBITDAX (as defined in the New Credit

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Facility) of no greater than 3.5 to 1.0 calculated on a trailing four-quarter basis. We are required to comply with these covenants for each fiscal quarter ending on and after March 31, 2017, except for the Asset Coverage Ratio, for which compliance is required semiannually.

Capital Leases

During 2013, we entered into lease financing agreements with U.S. Bank National Association for $24.5 million through the sale and subsequent leaseback of existing compressors owned by us. The lease financing obligations are for 84-month terms and include the option to purchase the equipment for a specified price at 72 months as well as an option to purchase the equipment at the end of the lease term for its then-current fair market value. Lease payments related to the equipment are recognized as principal and interest expense based on a weighted average implicit interest rate of 3.8%. Minimum lease payments are $3.2 million annually.

Contractual Obligations

We have numerous contractual commitments in the ordinary course of business including debt service requirements, operating leases, capital leases and purchase obligations. Our operating leases primarily relate to CO₂ recycle compressors at our EOR facilities and office equipment while our capital leases are related to the sale and subsequent leaseback of compressors. Our purchase obligations primarily relate to contracts for the purchase of CO₂ and drilling rig services.

Other than changes to our credit facility and the discharge of our Senior Notes and certain general unsecured claims pursuant our Reorganization Plan, the only other material change to our contractual commitments since December 31, 2016, relates to our contracts for drilling rig services. As of March 31, 2017, our obligations under our drilling rig contracts were $2.6 million.

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Financial position

Although not directly comparable between Successor and Predecessor, we believe that the following discussion of material changes in our balance sheet may be useful:

	Successor		Predecessor
	March 31,		December 31,
(in thousands)	2017		2016			Change
Assets
Cash and cash equivalents	$	32,494	$	186,480		$	(153,986	)
Derivative instruments		19,545		—			19,545
Property and equipment		56,136		41,347			14,789
Total oil and natural gas properties		1,192,427		555,184			637,243
Liabilities
Accounts payable and accrued liabilities		60,262		42,442			17,820
Long-term debt and capital leases, classified as current		4,588		469,112			(464,524	)
Long-term debt and capital leases, less current maturities		288,991		—			288,991
Derivative instruments		—		13,369			(13,369	)
Liabilities subject to compromise		—		1,284,144			(1,284,144	)
Total stockholders' equity (deficit)		929,380		(1,042,153	)		1,971,533

• The decrease in cash is primarily due to repayments to extinguish the Prior Credit Facility which was partially offset by proceeds from the New Credit Facility and our rights offering.

• Derivative instruments flipped from a net liability to a net asset as a result of the decrease in strip prices of oil and natural gas relative to year-end 2016.

• The increase to property and equipment was primarily due to a fair value gross up as a result of adopting fresh start accounting.

• The increase to oil and natural gas properties was primarily due to a fair value gross up as a result of adopting fresh start accounting. See “Note 3 — Fresh start accounting” in Item 1. Financial Statements of this report.

• Accounts payable and accrued liabilities are higher as a result of reinstatement of amounts upon emergence from bankruptcy that were previously subject to compromise. The balance was also higher as a result of our accrual for debtor-related professional fees related to our reorganization.

• Long term debt was lower in total due to the extinguishment of the Prior Credit Facility which was partially offset by new borrowings under the New Credit Facility. Furthermore, all long term debt was previously classified as current due to the potential acceleration from being in default while in bankruptcy. Upon emergence, debt is classified as current vs. noncurrent according to scheduled repayments.

• Liabilities subject to compromised have been settled pursuant to the provisions under our Reorganization Plan by exchange of equity, payment or reinstatement.

• Total stockholders’ equity increased as a result of the exchange of debt for equity under our Reorganization Plan, the gain from settlement of our liabilities subject to compromise and the gain from our fresh-start accounting adjustments.

Non-GAAP financial measure and reconciliation

Adjusted EBITDA is used as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to net income, as an indicator of our operating performance, as an alternative to cash flows from operating activities, or as a measure of liquidity. Adjusted EBITDA is not defined under GAAP and, accordingly, it may not be a comparable measurement to those used by other companies.

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We define adjusted EBITDA as net income, adjusted to exclude (1) asset impairments, (2) interest and other financing costs, net of capitalized interest, (3) income taxes, (4) depreciation, depletion and amortization, (5) non-cash change in fair value of non-hedge derivative instruments, (6) interest income, (7) stock-based compensation expense, (8) gain or loss on disposed assets, (9) upfront premiums paid on settled derivative contracts, (10) impairment charges, (11) other significant, unusual non-cash charges, (12) proceeds from any early monetization of derivative contracts with a scheduled maturity date more than 12 months following the date of such monetization—this exclusion is consistent with our prior treatment, for EBITDA reporting, of any large monetization of derivative contracts and (13) certain expenses related to our cost reduction initiatives, reorganization and fresh start accounting activities for which our lenders have permitted us to exclude when calculating covenant compliance. The following table provides a reconciliation of net income to adjusted EBITDA for the specific periods:

	Successor			Predecessor
(in thousands)	Period from March 22, 2017 through March 31, 2017			Period from January 1, 2017 through March 21, 2017			Three months ended March 31, 2016
Net loss	$	(19,683	)	$	1,041,959		$	(138,406	)
Interest expense		650			5,862			29,654
Income tax expense		1			37			132
Depreciation, depletion, and amortization		3,414			24,915			31,808
Non-cash change in fair value of derivative instruments		13,807			(46,721	)		35,554
Gain on settlement of  liabilities subject to compromise		—			(372,093	)		—
Fresh start accounting adjustments		—			(641,684	)		—
Upfront premiums paid on settled derivative contracts		—			—			(5,319	)
Interest income		—			(133	)		(29	)
Stock-based compensation expense		—			155			(1,022	)
Loss (gain) on sale of assets		—			(206	)		(68	)
Loss on impairment of assets		—			—			77,896
Write-off of debt issuance costs, discount and premium		—			1,687			16,970
Restructuring, reorganization and other		626			24,297			3,125
Adjusted EBITDA	$	(1,185	)	$	38,075		$	50,295

Our New Credit Facility requires us to maintain a current ratio, as defined in New Credit Facility, of not less than 1.0 to 1.0. The definition of current assets and current liabilities used for determination of the current ratio computed for loan compliance purposes differs from current assets and current liabilities determined in compliance with GAAP. Since compliance with financial covenants is a material requirement under our New Credit Facility, we consider the current ratio calculated under our New Credit Facility to be a useful measure of our liquidity because it includes the funds available to us under our Credit Facility and is not affected by the volatility in working capital caused by changes in the fair value of derivatives. The following table discloses the current ratio for our loan compliance compared to the ratio calculated per GAAP:

(dollars in thousands)	March 31, 2017
Current assets per GAAP	$	104,079
Plus—Availability under senior secured revolving credit    facility		104,172
Less—Short-term derivative instruments		(10,001	)
Current assets as adjusted	$	198,250
Current liabilities per GAAP	$	84,743
Less—Current asset retirement obligation		(6,066	)
Less—Current maturities of long term debt		(4,588	)
Less—Short-term derivative instruments		—
Current liabilities as adjusted	$	74,089
Current ratio per GAAP		1.23
Current ratio for loan compliance (1)		2.68

______________________________________________________

(1) The Company did not provide financial covenant calculations to our credit facility lender during bankruptcy while our debt was in default, hence the ratio as of December 31, 2016, is not disclosed.

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Critical accounting policies

For a discussion of our critical accounting policies, which remain unchanged, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2016.

Also see the footnote disclosures included in “Note 1—Nature of operations and summary of significant accounting policies” in Item 1. Financial Statements of this report.

Recent accounting pronouncements

See recently adopted and issued accounting standards in “Note 1—Nature of operations and summary of significant accounting policies” in Item 1. Financial Statements of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity prices. Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control. We cannot predict future oil and natural gas prices with any degree of certainty. Sustained declines in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of net oil and natural gas reserves that we can produce economically. Any reduction in reserves, including reductions due to price fluctuations, can reduce our borrowing base under our New Credit Facility and adversely affect our liquidity and our ability to obtain capital for our acquisition, exploration and development activities. Based on our production for the three months ended March 31, 2017, our gross revenues from oil and natural gas sales would change approximately $1.5 million for each $1.00 change in oil and natural gas liquid prices and $0.3 million for each $0.10 change in natural gas prices.

To mitigate a portion of our exposure to fluctuations in commodity prices, we enter into various types of derivative instruments, which in the past have included commodity price swaps, collars, put options, enhanced swaps and basis protection swaps. We do not apply hedge accounting to any of our derivative instruments. As a result, all gains and losses associated with our derivative contracts are recognized immediately as “Derivative (losses) gains” in the consolidated statements of operations. This can have a significant impact on our results of operations due to the volatility of the underlying commodity prices. Please see “Note 6—Derivative instruments” in Item 1. Financial statements of this report for further discussion of our derivative instruments.

Derivative positions are adjusted in response to changes in prices and market conditions as part of an ongoing dynamic process. We review our derivative positions continuously and if future market conditions change, we may execute a cash settlement with our counterparty, restructure the position, or enter into a new swap that effectively reverses the current position (a counter-swap). The factors we consider in closing or restructuring a position before the settlement date are identical to those reviewed when deciding to enter into the original derivative position.

The fair value of our outstanding derivative instruments at March 31, 2017, was a net asset of $19.5 million. Based on our outstanding derivative instruments as of March 31, 2017, summarized below, a 10% increase in the March 31, 2017, forward curves used to mark-to-market our derivative instruments would have decreased our net asset position to a net liability of $13.0 million, while a 10% decrease would have increased our net asset position to $52.1 million.

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Our outstanding oil derivative instruments as of March 31, 2017, are summarized below:

			Weighted average fixed price per Bbl
Period and type of contract	Volume MBbls		Swaps		Purchased puts		Sold calls
April - June 2017
Oil swaps		938	$	54.98	$	—	$	—
July - September 2017
Oil swaps		883	$	54.97	$	—	$	—
October - December 2017
Oil swaps		883	$	54.97	$	—	$	—
January - March 2018
Oil swaps		540	$	54.92	$	—	$	—
Oil collars		45	$	—	$	50.00	$	60.50
April - June 2018
Oil swaps		546	$	54.92	$	—	$	—
Oil collars		46	$	—	$	50.00	$	60.50
July - September 2018
Oil swaps		515	$	54.92	$	—	$	—
Oil collars		46	$	—	$	50.00	$	60.50
October - December 2018
Oil swaps		515	$	54.92	$	—	$	—
Oil collars		46	$	—	$	50.00	$	60.50
January - March 2019
Oil swaps		333	$	54.26	$	—	$	—
April - June 2019
Oil swaps		337	$	54.26	$	—	$	—
July - September 2019
Oil swaps		321	$	54.26	$	—	$	—
October - December 2019
Oil swaps		321	$	54.26	$	—	$	—

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Our outstanding natural gas derivative instruments as of March 31, 2017, are summarized below:

Period and type of contract	Volume BBtu		Weighted average fixed price per MMBtu
April - June 2017
Natural gas swaps		2,499	$	3.34
July - September 2017
Natural gas swaps		2,342	$	3.34
October - December 2017
Natural gas swaps		2,250	$	3.33
January - March 2018
Natural gas swaps		1,530	$	3.03
April - June 2018
Natural gas swaps		1,433	$	3.03
July - September 2018
Natural gas swaps		1,449	$	3.03
October - December 2018
Natural gas swaps		1,449	$	3.03
January - March 2019
Natural gas swaps		819	$	2.86
April - June 2019
Natural gas swaps		828	$	2.86
July - September 2019
Natural gas swaps		838	$	2.86
October - December 2019
Natural gas swaps		837	$	2.86

Interest rates.  As of March 31, 2017, borrowings bear interest at the Alternate Base Rate, as defined under the New Credit Facility, plus the applicable margin. Any increases in these rates can have an adverse impact on our results of operations and cash flow. Assuming a constant debt level under our New Credit Facility of $270.0 million, the cash flow impact for a 12-month period resulting from a 100 basis point change in interest rates would be $2.7 million.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2017, at the reasonable assurance level.

Changes in Internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We may make changes in our internal control procedures from time to time.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Please see “Note 10—Commitments and contingencies” in Item 1. Financial Statements of this report for a discussion of our material legal proceedings. In our opinion, there are no other material pending legal proceedings to which we are a party or of which any of our property is the subject. However, due to the nature of our business, certain legal or administrative proceedings may arise

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from time to time in the ordinary course of business. While the outcome of these legal matters cannot be predicted with certainty, we do not expect them to have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

During the first quarter of 2017, there have been no material changes in our risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016, except for the following:

Risks Related to our Emergence from Chapter 11 Bankruptcy

We recently emerged from bankruptcy, which could adversely affect our business and relationships.

It is possible that our having filed for bankruptcy and our recent emergence from the Chapter 11 bankruptcy proceedings could adversely affect our business and relationships with customers, vendors, royalty or working interest owners, contractors, employees or suppliers. Due to uncertainties, many risks exist, including the following:

• key suppliers could terminate their relationship or require financial assurances or enhanced performance;

• the ability to renew existing contracts and compete for new business may be adversely affected;

• the ability to attract, motivate and/or retain key executives and employees may be adversely affected;

• employees may be distracted from performance of their duties or more easily attracted to other employment opportunities;

• landowners may not be willing to lease acreage to us; and

• competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted.

The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation. We cannot assure you that having been subject to bankruptcy protection will not adversely affect our operations in the future.

Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information as a result of the implementation of the Reorganization Plan and the transactions contemplated thereby and our adoption of fresh start accounting.

In connection with the disclosure statement we filed with the Bankruptcy Court, and the hearing to consider confirmation of the Reorganization Plan, we prepared projected financial information to demonstrate to the Bankruptcy Court the feasibility of the Reorganization Plan and our ability to continue operations upon our emergence from bankruptcy. Those projections were prepared solely for the purpose of the bankruptcy proceedings and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors. Although the financial projections disclosed in our disclosure statement filed with the Bankruptcy Court represent our view based on then current known facts and assumptions about the future operations of the Company there is no guarantee that the financial projections will be realized. We may not be able to meet the projected financial results or achieve projected revenues and cash flows assumed in projecting future business prospects. To the extent we do not meet the projected financial results or achieve projected revenues and cash flows, we may lack sufficient liquidity to continue operating as planned and may be unable to service our debt obligations as they come due or may not be able to meet our operational needs. Any one of these failures may preclude us from, among other things: (a) taking advantage of future opportunities; (b) growing our businesses; or (c) responding to future changes in the oil and gas industry. Further, our failure to meet the projected financial results or achieve projected revenues and cash flows could lead to cash flow and working capital constraints, which constraints may require us to seek additional working capital. We may not be able to obtain such working capital when it is required.

In addition, upon our emergence from bankruptcy, we adopted fresh start accounting, as a consequence of which our assets and liabilities were adjusted to fair values and the opening balance of our accumulated deficit upon emergence from bankruptcy was restated to zero. Accordingly, our future financial conditions and results of operations may not be comparable to the financial condition or results of operations reflected in the Company’s historical financial statements.

Upon our emergence from bankruptcy, the composition of our Board of Directors changed significantly.

Pursuant to the Reorganization Plan, the composition of the Board changed significantly. Upon emergence, the Board is now made up of seven directors, with a new non-executive Chairman of the Board, and of which six will not have previously served on the Board. The new directors have different backgrounds, experiences and perspectives from those individuals who previously served on the Board and, thus, may have different views on the issues that will determine the future of the Company. There is no guarantee that the new Board will pursue, or will pursue in the same manner, our current strategic plans. As a result, the future strategy and plans of the Company may differ materially from those of the past.

The ability to attract and retain key personnel is critical to the success of our business and may be affected by our emergence from bankruptcy.

The success of our business depends on key personnel. The ability to attract and retain these key personnel may be difficult in light of our emergence from bankruptcy, the uncertainties currently facing the business and changes we may make to the

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organizational structure to adjust to changing circumstances. Our ability to retain key personnel is further challenged by our recent announcement regarding our plans to pursue strategic alternatives for our EOR assets which comprise a significant portion of our business. We may need to enter into retention or other arrangements that could be costly to maintain. If executives, managers or other key personnel resign, retire or are terminated, or their service is otherwise interrupted, we may not be able to replace them in a timely manner and we could experience significant declines in productivity.

Our ability to utilize our net operating loss carryforwards (“NOLs”) may be limited as a result of our emergence from bankruptcy.

In general, Section 382 of the Internal Revenue Code (“IRC”) of 1986, as amended, provides an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future taxable income in the event of a change in ownership. Emergence from Chapter 11 bankruptcy proceedings resulted in a change in ownership for purposes of the IRC Section 382. The Company analyzed alternatives available within the IRC to taxpayers in Chapter 11 bankruptcy proceedings in order to minimize the impact of the ownership change and cancellation of indebtedness income on its tax attributes. Upon filing its 2017 U.S. Federal income tax return, the Company plans to elect an available alternative which would likely result in the Company experiencing a limitation that subjects existing tax attributes at emergence to an IRC Section 382 limitation that could result in some or all of the remaining net operating loss carryforwards expiring unused. However, the Company will continue to evaluate the remaining available alternative which would not subject existing tax attributes to an IRC Section 382 limitation.

Limitations imposed on our ability to use NOLs to offset future taxable income may cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs. Similar rules and limitations may apply for state income tax purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Please see “Note 2—Chapter 11 reorganization” in Item 1. Financial Statements of this report for a discussion of our default upon senior securities.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits listed below in the Exhibit Index, following the Signatures page, are filed, furnished or incorporated by reference pursuant to the requirements of Item 601 of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHAPARRAL ENERGY, INC.
By:	/s/ K. Earl Reynolds
Name:	K. Earl Reynolds
Title:	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Joseph O. Evans
Name:	Joseph O. Evans
Title:	Chief Financial Officer and Executive Vice President
	(Principal Financial Officer and Principal Accounting Officer)

Date: May 15, 2017

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EXHIBIT INDEX

Exhibit No.	Description
2.1*	First Amended Joint Plan of Reorganization for Chaparral Energy, Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, dated March 7, 2017 (Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on March 14, 2017)
3.1*	Third Amended and Restated Certificate of Incorporation of Chaparral Energy, Inc. (Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
3.2*	Amended and Restated Bylaws of Chaparral Energy, Inc. (Incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
4.1*	Registration Rights Agreement, dated as of March 21, 2017, by and among Chaparral Energy, Inc. and the Stockholders named therein (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
4.2*	Warrant Agreement dated as of March 21, 2017, among Chaparral Energy, Inc. and Computershare Inc. as warrant agent (Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
4.3*	Stockholders Agreement, dated as of March 21, 2017, by and among Chaparral Energy, Inc. and the Stockholders named therein (Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
10.1*	Form of Indemnification Agreement between Chaparral Energy, Inc. and the directors and officers of Chaparral Energy, Inc. (Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
10.2*	Amended and Restated Credit Agreement dated as of March 21, 2017, among Chaparral Energy, Inc. as borrower, the lenders and prepetition borrowers party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 27, 2017)
10.3†	Amended and Restated Employment Agreement, dated as of March 21, 2017, by and between the Company and K. Earl Reynolds
10.4†	Amended and Restated Employment Agreement, dated as of March 21, 2017, by and between the Company and Joseph O. Evans
10.5†	Amended and Restated Employment Agreement, dated as of March 21, 2017, by and between the Company and James M. Miller
31.1	Certification by Principal Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
31.2	Certification by Principal Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
32.1	Certification by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1*	Findings of Fact, Conclusions of Law and Order Confirming the First Amended Joint Plan of Reorganization for Chaparral Energy, Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, as entered by the Bankruptcy Court on March 10, 2017 (Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on March 14, 2017)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated by reference; †Management contract or compensatory plan or arrangement

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EX-10.3

Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 17th day of March, 2017, is entered into by and between CHAPARRAL ENERGY, INC., a Delaware corporation (the “Company”), CHAPARRAL ENERGY, LLC (the “Employer”) and K. Earl Reynolds (“Executive”).

WHEREAS, the Company and Executive entered into an Employment Agreement, dated as of February 1, 2011 (as amended, the “Prior Agreement”), which set forth the terms and conditions for Executive’s employment by the Company; and

WHEREAS, the Company and Executive agree that the Prior Agreement should be amended and restated to make changes as the Company and Executive agree are necessary and in the parties mutual best interest in connection with the consummation of the First Amended Joint Plan of Reorganization of Chaparral Energy, Inc. dated as of March 7, 2017 (the “Transactions”).

IN CONSIDERATION of the premises and the mutual covenants set forth below, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.Term.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment with the Company under this Agreement shall be for a term (the “Term”) commencing upon March 17, 2017 (the “Effective Date”) and ending on the third-year anniversary of the Effective Date; provided, however, that commencing on the date that is the third anniversary of the Effective Date, the Term shall be automatically extended so as to terminate on the second anniversary of such date, and the Term shall be automatically extended so as to terminate on each anniversary thereafter (each such anniversary referred to as a “Renewal Date”).  Notwithstanding the foregoing, if at least ninety (90) days prior to any Renewal Date, the Company gives Executive written notice that the Term will not be so extended, this Agreement will continue for the remainder of the then current Term and automatically expire upon its completion.  The Term may be sooner terminated under Section 5 of this Agreement.  It is agreed that upon the Effective Date, this Agreement shall supersede the Prior Agreement in all respects and any obligations, rights or entitlements thereunder shall be terminated and of no further force and effect.

2.Position and Duties.  During the Term, Executive will serve as Chief Executive Officer of the Company and will report directly to the Board of Directors of the Company (the “Board”).  Executive shall devote Executive’s best efforts and full business time and attention to perform all services reasonably required to fully execute the duties and responsibilities associated with the Company, its subsidiaries and its affiliates as directed by the Board.  Notwithstanding the above, Executive will be permitted, to the extent such activities do not interfere with the performance by Executive of his duties and responsibilities under this Agreement or violate this Agreement, to (i) manage Executive’s personal, financial and legal affairs, and (ii) serve on industry, civic or charitable boards or committees.  Executive agrees to observe and comply with the rules and policies of the Company, as in effect from time to time, including, without limitation, any rules and policies relating to Executive obligations to the

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Company upon a termination of employment.  Executive shall be appointed to the Board as of the Effective Date and during all relevant subsequent elections during the Term, Executive shall be nominated for election to serve as a member of the Board.

3.Place of Performance.  During the Term, Executive’s place of employment will be the Company’s principal executive offices in Oklahoma City, Oklahoma (the “Principal Location”), except for travel to other locations as may be necessary to fulfill Executive’s duties and responsibilities hereunder.

4.Compensation and Related Matters.

(a)Base Salary.  During the Term, the Company will pay Executive a base salary of not less than $530,424 per year (“Base Salary”), in accordance with the Company’s customary payroll practices.  Executive’s Base Salary may be increased, but not decreased unless the base salaries for all executive officers of the Company are decreased, pursuant to annual review by the Compensation Committee (the “Compensation Committee”) of the Board in its discretion.  In the event that Executive’s Base Salary is increased, the increased amount will then constitute the Base Salary for all purposes of this Agreement.

(b)Annual Bonus Incentives.  In addition to the Base Salary, Executive shall be eligible to participate in and earn an annual cash bonus under any annual incentive plan established by the Board so long as the terms of any such plan allow participation by the executive officers of the Company (“Annual Bonus”).  The target Annual Bonus for Executive shall be equal to 100% of Executive’s current Base Salary, but the actual Annual Bonus shall be determined by the Compensation Committee, in accordance with the terms of such plan, in effect at that time, if any.  The terms for the payment of any Annual Bonus shall be determined by the Compensation Committee, in accordance with the terms of such plan in effect at that time, if any.

(c)Management Incentive Plan. Executive may be eligible to participate in the management incentive plan to be implemented in connection with the Transactions pursuant to the terms and conditions determined by the Board.

(d)Welfare, Pension and Incentive Benefit.  During the Term, Executive (and Executive’s spouse and/or eligible dependents to the extent provided in the applicable plans and programs) will be eligible to participate in and be covered under all the welfare benefit plans or programs maintained by the Company or Employer for the benefit of its senior executive officers pursuant to the terms of such plans and programs including, without limitation, all medical, life, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs.  In addition, during the Term, Executive will be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company or Employer for the benefit of its senior executive officers.

(e)Vacation.  Executive shall be entitled to 4 weeks annual paid vacation and otherwise in accordance with the Employer’s vacation policy during the Term.  Executive may use his vacation in a reasonable manner based upon the business needs of the Company.

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(f)Fringe Benefits.  During the Term, the Company will provide Executive with such other fringe benefits as commensurate with Executive’s position.  During the Term, the Company shall reimburse Executive up to a maximum of $500 per year for an annual, comprehensive physical examination at any medical facility of Executive’s choice located in the Continental United States, including related diagnostic and screening tests, examinations, procedures and laboratory work.

(g)Expenses.  Executive will be entitled to receive prompt reimbursement for all reasonable business expenses incurred by Executive in accordance with the Company’s and Employer’s expense reimbursement policy during the Term.  All payments under this Section 4(g) shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred such expenses.

5.Termination of Employment.  Executive’s employment under this Agreement may be terminated during the Term under the following circumstances:

(a)Death.  Executive’s employment under this Agreement will terminate upon his death.

(b)Disability.  Upon Executive’s Disability, Executive will receive a Notice of Termination (as defined in Section 6(a)) from the Company.  If Executive does not return to the substantial performance of his duties on a full-time basis within thirty (30) days of such Notice of Termination, the Company has the right to terminate Executive’s employment under this Agreement for Disability, and such termination will not be a breach of this Agreement by the Company.  For purposes of this Agreement, “Disability” means Executive’s incapacity due to physical or mental illness whereby Executive is substantially unable to perform his duties under this Agreement (with or without reasonable accommodation, as defined under the Americans With Disabilities Act) for a period of six (6) consecutive months.

(c)Cause.  The Company has the right to terminate Executive’s employment for Cause by providing Executive with a Notice of Termination, and such termination will not be a breach of this Agreement by the Company.  For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following events: (i) Executive’s conviction of, or entry by Executive of a guilty or no contest plea to a felony or crime involving moral turpitude; (ii) Executive’s willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company or any affiliate; (iii) Executive’s willful failure to substantially perform or gross neglect of Executive’s duties, including, but not limited to, the failure to follow any lawful directive of the Board, within the reasonable scope of Executive’s duties; (iv) Executive’s performance of acts materially detrimental to the Company or any affiliate, unless otherwise approved in advance by the Board or the Compensation Committee; (v) Executive’s use of narcotics, alcohol, or illicit drugs in a manner that has or may reasonably be expected to have a detrimental effect on Executive’s performance of his duties as an employee of the Company or on the reputation of the Company or any affiliate; (vi) Executive’s commission of a material violation of any rule or policy sponsored by the Company which results in injury to the Company; or (vii) Executive’s material breach of this Agreement, including, but not limited to, Executive’s material breach of the covenants set forth in Section 9 hereof.

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(d)Good Reason.  Executive may terminate Executive’s employment with the Company for “Good Reason,” and such termination will not be a breach of this Agreement by Executive.  For purposes of this Agreement, “Good Reason” shall mean the occurrence without the written consent of Executive, of one of the events set forth below:

(i)a material diminution in Executive’s authority, duties or responsibilities combined with a demotion in Executive’s pay grade ranking;

(ii)the reduction by the Company of Executive’s Base Salary by more than ten percent (10%) (unless done so for all executive officers of the Company);

(iii)the requirement that Executive be based at any office or location that is more than 50 miles from the Principal Location, except for travel reasonably required in the performance of Executive’s responsibilities; or

(iv)any other action or inaction that constitutes a material breach by the Company of this Agreement such as the failure of any successor to the Company to assume this Agreement pursuant to Section 14.

Notwithstanding the foregoing, Executive will not be deemed to have terminated for Good Reason unless (A) Executive provides written notice to the Company of the existence of one of the conditions described above within ninety (90) days after Executive has knowledge of the initial existence of the condition, (B) the Company fails to remedy the condition so identified within thirty (30) days after receipt of such notice (if capable of correction), (C) Executive provides a Notice of Termination to the Company within thirty (30) days of the expiration of the Company’s period to remedy the condition, and (D) Executive terminates employment within ninety (90) days after Executive provides written notice to the Company of the existence of the condition referred to in clause (A).

(e)Without Cause.  The Company has the right to terminate Executive’s employment under this Agreement without Cause by providing Executive with a Notice of Termination.  For purposes of Section 7 hereto, a “termination without Cause” shall include the Company’s failure to renew this Agreement pursuant to Section 1 prior to a Renewal Date.

(f)Without Good Reason.  Executive may voluntarily terminate employment with the Company without Good Reason at any time by providing the Company with a Notice of Termination.

6.Termination Procedure.

(a)Notice of Termination.  Any termination of Executive’s employment by the Company or by Executive during the Term (other than termination pursuant to Section 5(a)) will be communicated by Notice of Termination to the other party in accordance with Section 15.  For purposes of this Agreement, a “Notice of Termination” means a written notice which indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment.

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(b)Date of Termination.  “Date of Termination” shall mean (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated due to Disability pursuant to Section 5(b), thirty (30) days after Notice of Termination (provided that Executive has not returned to the substantial performance of his duties on a full-time basis during such thirty (30) day period), (iii) if Executive’s employment is terminated for Good Reason pursuant to Section 5(d), the date on which a Notice of Termination provided in accordance with such Section is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination, (iv) if Executive’s employment is terminated voluntarily by Executive without Good Reason pursuant to Section 5(f), thirty (30) days after Notice of Termination, or (v) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination.

7.Obligations of the Company Upon Termination.  In the event Executive’s employment under this Agreement terminates during the Term and such termination constitutes a “separation from service” from the Company (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”), the Company will provide Executive with the payments and benefits set forth below.

(a)Termination by Company Without Cause or by Executive for Good Reason Not Following Change in Control.  If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason at any time that is not within two (2) years after the occurrence of a “Change in Control” (as defined below):

(i)The Company will pay to Executive in a single lump sum payment within thirty (30) days after the Date of Termination, the aggregate amount of (A) any earned but unpaid Base Salary, (B) any Annual Bonus required to be paid to Executive pursuant to Section 4(b) for any fiscal year of the Company that ends on or before the Date of Termination to the extent not previously paid, (C) accrued but unpaid vacation pay through the Date of Termination, and (D) reasonable business expenses incurred but unpaid through the Date of Termination (together, the “Accrued Obligations”);

(ii)Subject to Sections 7(f) and 10 below, the Company will pay to Executive an amount equal to one and one half (the “Severance Multiple”) times the sum of (x) Executive’s Base Salary in effect on the Date of Termination plus (y) the Annual Bonus granted to Executive for the fiscal year of the Company immediately on or preceding the Date of Termination, payable in the form of a salary continuation for a period of months equal to the product of 12 times the Severance Multiple; provided, however, that the first such payment shall not be made until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid pursuant to this Section 7(a)(ii) prior to the First Payroll Date shall instead be paid on the First Payroll Date.  Each payment under this Section 7(a)(ii) shall be treated as a separate payment for purposes of Section 409A of the Code.

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(iii)Subject to Sections 7(f) and 10 below, the Company will maintain in full force and effect, for the continued benefit of Executive (and Executive’s spouse and/or eligible dependents, as applicable) for a period of eighteen (18) months following the Date of Termination, participation by Executive (and Executive’s spouse and/or eligible dependents, as applicable) in the medical, hospitalization, and dental programs maintained by the Company for the benefit of its senior executive officers as in effect on the Date of Termination, at such level and terms and conditions (including, without limitation, contributions required by Executive for such benefits) as in effect on the Date of Termination; provided, if Executive (or his spouse) is eligible for Medicare or a similar type of governmental medical benefit, such benefit shall be the primary provider before Company medical benefits are provided.  However, if Executive becomes reemployed with another employer and is eligible to receive medical, hospitalization and dental benefits under another employer-provided plan, the medical, hospitalization and dental benefits described herein shall cease.  If any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1,409A- 1(a)(5), then an amount equal to each remaining premium payment shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).

(iv)For purposes of this Agreement, “Change in Control” shall mean:

(A)The consummation of any transaction or series of related transactions involving the sale of the Company’s outstanding securities (but excluding a public offering of the Company’s capital stock) for securities or other consideration issued or paid or caused to be issued or paid by such other corporation or an affiliate thereof and which result in this Company’s shareholders (or their affiliates) immediately prior to such transaction not holding at least a majority of the voting power of the surviving or continuing entity following such transaction; or

(B)The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction; provided, however that notwithstanding anything to the contrary, the consummation of the Transactions will not constitute, and shall not be deemed, a Change in Control under this Agreement.

(b)Termination by Company Without Cause or by Executive for Good Reason Following Change in Control.  If at any time within two (2) years after a Change in Control, Executive’s employment is terminated by the Company without Cause or by Executive

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for Good Reason, then Executive shall be entitled to the payments and benefits provided in Section 7(a) hereof, subject to the terms and conditions thereof (including, without limitation, the requirement that a condition to Executive’s right to receive the amounts provided for thereunder is that Executive execute, deliver and not revoke the Release as set forth in Section 10 below), except that for purposes of this Section 7(b), the Severance Multiple shall equal two and a quarter.

(c)Termination by Company for Cause or by Executive Without Good Reason.  If Executive’s employment is terminated by the Company for Cause or by Executive without Good Reason, the Company will pay Executive within thirty (30) days after the Date of Termination the Accrued Obligations; provided, however, the amounts described in Section 7(a)(i)(D) shall not be paid to Executive if Executive’s employment was terminated by the Company for Cause due to Executive’s misappropriation of Company funds.

(d)Disability.  During any period that Executive fails to perform Executive’s duties under this Agreement as a result of incapacity due to physical or mental illness, Executive will continue to receive his full Base Salary set forth in Section 4(a) until his employment is terminated pursuant to Section 5(b).  If Executive’s employment is terminated due to Disability pursuant to Section 5(b), subject to Sections 7(f) and 10 below, the Company will pay Executive within thirty (30) days after the Date of Termination the Accrued Obligations, plus a pro rata share of the Annual Bonus for the fiscal year of the Company in which the Date of Termination occurs.

(e)Death.  If Executive’s employment is terminated by death, the Company will pay to Executive’s beneficiary, or personal or legal representatives or estate, as the case may be, within thirty (30) days after the Date of Termination the Accrued Obligations, plus a pro rata share of the Annual Bonus for the fiscal year of the Company in which the Date of Termination occurs.

(f)Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any severance payments or benefits payable under Section 7 hereof, shall be paid to Executive during the six (6)-month period following Executive’s Separation from Service if the Company determines that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six (6)~ month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without resulting in a prohibited distribution, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such period.

8.Mitigation.  Executive will not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and there will be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein.

9.Confidential Information; Non-Solicitation; Non-Competition.

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(a)Nondisclosure of Confidential Information.  Executive acknowledges that it is the policy of the Company to maintain as secret and confidential (i) all valuable and unique information, (ii) other information heretofore or hereafter acquired by the Company, or any affiliated entity and deemed by it to be confidential, and (iii) information developed or used by the Company or any affiliated entity relating to the business, operations, employees and customers of the Company or any affiliated entity including, but not limited to, any employee information (all such information described in clauses (i), (ii) and (iii) above, other than information which is known to the public or becomes known to the public through no fault of Executive, is hereinafter referred to as “Confidential Information”).  The parties recognize that the services to be performed by Executive pursuant to this Agreement are special and unique and that by reason of his employment by the Company after the date hereof, Executive has acquired and will acquire Confidential Information.  Executive recognizes that all such Confidential Information is the property of the Company.  Accordingly, at any time during or after the Term, Executive shall not, except in the proper performance of his duties under this Agreement, directly or indirectly, without the prior written consent of the Company, disclose to any Person other than the Company, whether or not such Person is a competitor of the Company, and shall use his best efforts to prevent the publication or disclosure of any Confidential Information obtained by, or which has come to the knowledge of, Executive prior or subsequent to the date hereof.  Notwithstanding the foregoing, Executive may disclose to other Persons, as part of his occupation, information with respect to the Company or any affiliated entity, which (i) is of a type generally not considered by standards of the oil and natural gas industry to be proprietary, or (ii) is otherwise consented to in writing by the Company.

(b)Non-Solicitation.  Executive shall not, during the Term and for a period of 18 months following the Date of Termination (the “Non-Solicitation Period”), either personally or by or through his/her agent or by letters, circulars or advertisements and whether for himself/herself or on behalf of any other person or entity, hire, solicit or seek to hire any employee or consultant of the Company or any affiliated entity, or in any other manner attempt, directly or indirectly, to persuade any such employee or consultant to discontinue his/her status of employment or consultancy with the Company or any affiliated entity or to become hired in any business or activities likely to be competitive with the Company’s or an affiliated entity’s business.  Additionally, during the Non-Solicitation Period, Executive shall not, for himself/herself or on behalf of any person or entity, directly or indirectly, solicit, divert or attempt to solicit or divert any customer of the Company or any affiliated entity for the purpose of causing such customer to reduce or refrain from doing any business with the Company or any affiliated entity.  Executive further agrees that, during the Non-Solicitation Period, he/she will not, directly or indirectly, request or advise any customers of the Company or an affiliated entity to withdraw, curtail or cancel their business with the Company or any affiliated entity.  For purposes of this Agreement, a “customer” of the Company or any affiliated entity shall mean those customers of the Company or an affiliated entity who held a deposit account or otherwise transacted business with the Company or an affiliated entity at any time within the twelve (12) months preceding termination of Executive’s employment.  Nothing contained in this Agreement is intended to prohibit general advertising or solicitation not specifically directed at any or all of the Company’s or an affiliated entity’s customers or employees.

(c)Non-Competition.

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(i)As part of the consideration for the compensation and benefits to be paid to Executive hereunder, to protect the trade secrets and Confidential Information of the Company and its customers and clients that have been and will be entrusted to Executive, the business goodwill of the Company and its subsidiaries that will be developed in and through Executive and the business opportunities that will be disclosed or entrusted to Executive by the Company and its subsidiaries, and as an additional incentive for the Company to enter into this Agreement, during the Term and the Covered Period (a defined below), Executive shall not directly or indirectly, individually or on behalf of any other person or entity, manage, participate in, work for, consult with, render services for, or take an interest in (as an owner, stockholder, partner or lender) any Competitor in an area of Competing Business. The “Covered Period” shall mean the period of months following the Date of Termination equal to the product of 12 times the applicable Severance Multiple.  

(ii)For purposes of Section 9(c)(i):

(A)“Competitor” means any business, company or individual which is in, or is actively seeking to be in the Competing Business.

(B)“Competing Business” means the acquisition, exploration, exploitation, development, production and/or operation of oil and gas properties.

(iii)Executive acknowledges that each of the covenants of Section 9(c)(i) are in addition to, and shall not be construed as a limitation upon, any other covenant provided in Section 9.  Executive agrees that the scope of prohibited activities and time duration of each of the covenants set forth in Section 9(c)(i) are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Company’s proprietary and Confidential Information, plans and services and to protect the other legitimate business interests of the Company, including without limitation the goodwill developed by Executive with the Company’s customers, suppliers, licensees and business relations.  It is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with the changing activities, business and locations of the Company throughout the term of this covenant, whether before or after the Date of Termination.  Executive agrees not to challenge the enforceability, scope or reasonableness of the covenants in Section 9(c)(i).  The covenants in Section 9(c)(i) are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.  Moreover, in the event any court of competent jurisdiction shall determine that the scope or duration set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable, and the Agreement shall thereby be reformed.

(iv)If, during any portion of the Covered Period, Executive is not in compliance with the terms of Section 9(c)(i), the Company shall be entitled to, among other remedies, compliance by Executive with the terms of Section 9(c)(i) for an additional period of time (i.e., in addition to the Covered Period) that shall equal the period(s) over which such noncompliance occurred.

(v)Nothing in this Section 9(c) shall prohibit:  (A) direct or indirect ownership of publicly traded securities which are issued by a Competitor involved in or

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conducting a Competing Business, provided that Executive, directly or indirectly, does not own more than 5% of the outstanding equity or voting securities of such Competitor; (B) ownership of royalty interests where Executive owns the surface of the land covered by the royalty interest and the ownership of the royalty interest is incidental to the ownership of such surface estate, provided that any such surface estate does not adjoin, or is not near to, any property ownership interest held directly or indirectly by the Company; (C) direct or indirect ownership of royalty interests or overriding royalty interests owned prior to the Effective Date; or (D) direct or indirect ownership of working interests or other interests in oil and gas owned prior to the Effective Date and disclosed by Executive to the Company in writing.  It is the intent of the Company that during the Term of this Agreement Executive is not acquiring additional oil and gas interests, directly or indirectly.

(d)Obligations of Executive Upon Termination.  Upon termination of Executive’s employment for any reason, Executive shall return to the Company all documents and copies, including hard and electronic copies, of documents in his possession relating to any Confidential Information including, but not limited to, internal and external business forms, manuals, correspondence, notes and computer programs, and Executive shall not make or retain any copy or extract of any of the foregoing.  In addition, Executive shall resign from all positions held with the Company or any affiliated entities.

(e)Remedies.  Executive acknowledges and understands that Sections 9(a), (b) , (c) and (d) and the other provisions of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of this Agreement would cause the Company irreparable harm.  In the event of a breach or threatened breach by Executive of the provisions of this Agreement, the Company shall be entitled to an injunction restraining him from such breach.  Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing, or limiting the Company’s ability to pursue, any other remedies available for any breach or threatened breach of this Agreement by Executive, including the right to cease making any severance payments or providing any benefits as contemplated by Section 7.  The provision of Section 12 hereof relating to arbitration of disputes shall not be applicable to the Company to the extent it seeks an injunction in any court to restrain Executive from violating Sections 9(a), (b), (c) and (d) hereof.

(f)Continuing Operation.  Except as specifically provided in this Section 9, the termination of Executive’s employment or of this Agreement will have no effect on the continuing operation of this Section 9.

(g)Additional Related Agreements.  Executive agrees to sign and to abide by the provisions of any additional agreements, policies or requirements of the Company which are reasonable and related to the subject of this Section 9 which are in writing and are developed by the Company in the ordinary course of business.

10.Release.  Notwithstanding any other provisions of this Agreement, it shall be a condition to Executive’s right to receive the amounts provided for in Section 7(a), 7(b) or 7(d) of this Agreement, that Executive will execute and deliver to the Company a release of claims in substantially the form attached hereto as Exhibit C (the “Release”) within twenty-one (21) days

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following the Date of Termination and that Executive not revoke such release within seven (7) days thereafter.  The form of the Release may be modified as needed to reflect changes in the applicable law or regulations that are needed to provide a legally enforceable and binding Release to all parties at the time of execution.

11.Indemnification and Insurance.  Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management employee or director of the Company with respect to acts or omissions occurring prior to (a) the termination of this Agreement or (b) the termination of employment of Executive.  

12.Arbitration; Legal Fees and Expenses.  The parties agree that Executive’s employment and this Agreement relate to interstate commerce, and that any disputes, claims or controversies between Executive and the Company which may arise out of or relate to Executive’s employment relationship or this Agreement shall be settled by arbitration.  This agreement to arbitrate shall survive the termination of this Agreement.  Any arbitration shall be in accordance with the Rules of the American Arbitration Association and undertaken pursuant to the Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma unless the parties mutually agree on another location.  The decision of the arbitrator(s) will be enforceable in any court of competent jurisdiction.  The parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s) unless such damages would have been awarded by a court of competent jurisdiction.  Nothing in this agreement to arbitrate, however, shall preclude the Company from obtaining injunctive relief from a court of competent jurisdiction prohibiting any ongoing breaches by Executive of this Agreement including, without limitation, violations of Section 9.  If any contest or dispute arises between the Company and Executive regarding any provision of this Agreement, the arbitrator may award to the prevailing party, the reasonable attorney fees, costs and expenses incurred by the prevailing party in connection with such contest or dispute.

13.Maximum Payments by the Company.

(a)It is the objective of this Agreement to maximize Executive’s Net After- Tax Benefit (as defined herein) if payments or benefits provided under this Agreement are subject to excise tax under Section 4999 of the Code.  Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including, by example and not by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment or rate of payment under any plan, program, arrangement or agreement of the Company (all such payments and benefits, including the payments and benefits under Section 7 hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the cash severance payments shall first be reduced, and the non-cash severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments shall be subject to the Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such

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reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

(b)The Total Payments shall be reduced by the Company in the following order:  (i) reduction of any cash severance payments otherwise payable to Executive that are exempt from Section 409A of the Code, (ii) reduction of any other cash payments or benefits otherwise payable to Executive that are exempt from Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting or payments with respect to any equity award with respect to the Company’s common stock that is exempt from Section 409A of the Code, (iii) reduction of any other payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting and payments with respect to any equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code, and (iv) reduction of any payments attributable to the acceleration of vesting or payments with respect to any other equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code.

(c)For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of independent auditors of nationally recognized standing (“Independent Advisors”) selected by the Company, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  The costs of obtaining such determination shall be borne by the Company.

14.Agreement Binding on Successors.

(a)Company’s Successors.  No rights or obligations of the Company under this Agreement may be assigned or transferred except that the Company will require any successor (whether direct or indirect, by purchase, merger, reorganization, sale, transfer of stock, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place.  As used in this Agreement, “Company” means the Company as herein defined, and any successor to its or the Company’s business and/or assets (by merger, purchase or otherwise)

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which executes and delivers the agreement provided for in this Section 14 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b)Executive’s Successors.  No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to payments or benefits under this Agreement, which may be transferred only by will or the laws of descent and distribution.  Upon Executive’s death, this Agreement and all rights of Executive under this Agreement shall inure to the benefit of and be enforceable by Executive’s beneficiary, or personal or legal representatives, or estate, to the extent any such person succeeds to Executive’s interests under this Agreement.  In the event of Executive’s death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his estate or other legal representative(s).  If Executive should die following his Date of Termination while any amounts would still be payable to him under this Agreement if he had continued to live, unless otherwise provided, all such amounts shall be paid in accordance with the terms of this Agreement to his beneficiary or personal or legal representatives or estate.

15.Notice.  For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:
At his last known address
evidenced on the Company’s
payroll records.

If to the Company:
Chaparral Energy, Inc.
701 Cedar Lake Boulevard
Oklahoma City, OK 73114

or to such other address as any party may have furnished to the other in writing in accordance with this Agreement, except that notices of change of address shall be effective only upon receipt.

16.Section 409A.

(a)To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulations or other such guidance that may be issued after the Effective Date (“Section 409A”).  Notwithstanding any provision of this Agreement to the contrary, in the event that following the Effective Date, the Company determines in good faith that any compensation or benefits payable under this Agreement may not be either exempt from or compliant with Section 409A, the Company shall adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effective), or take any other commercially reasonable actions necessary or appropriate to (i) preserve the intended tax treatment of the

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compensation and benefits payable hereunder, to preserve the economic benefits of such compensation and benefits, and/or to avoid less favorable accounting or tax consequences for the Company and/or (ii) to exempt the compensation and benefits payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder; provided, however, that this Section 16(a) does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify Executive for any failure to do so.

(b)Notwithstanding anything herein to the contrary, Executive acknowledges and agrees that in the event that any tax is imposed under Section 409A in respect to any compensation or benefits payable to Executive, whether under this Agreement or otherwise, then (i) the payment of such tax shall be solely Executive’s responsibility, (ii) neither the Company, its affiliates nor any of their respective past or present directors, officers, employees or agents shall have any liability for any such tax and (iii) Executive shall indemnify and hold harmless, to the greatest extent permitted under law, each of the foregoing from and against any claims or liabilities that may arise in respect of any such tax.

17.Withholding.  All payments hereunder will be subject to any required withholding of federal, state and local taxes pursuant to any applicable law or regulation.

18.Miscellaneous.  No provisions of this Agreement may be amended, modified, or waived unless agreed to in writing and signed by Executive and by a duly authorized officer of the Company.  No waiver by either party of any breach by the other party of any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  The respective rights and obligations of the parties under this Agreement shall survive Executive’s termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oklahoma without regard to its conflicts of law principles.

19.Validity.  The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

20.Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

21.Section Headings.  The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and will not affect its interpretation.

22.Entire Agreement.  Except as provided elsewhere herein and except for the other documents and agreements contemplated in accordance herewith, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties,

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whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter, including, without limitation the Change of Control Severance Agreement and the Prior Agreement.

23.Further Assurances.  The parties hereby agree, without further consideration, to execute and deliver such other instruments or to take such other action as may reasonably be required to effectuate the terms and provisions of this Agreement.

* * * *

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first above written.

	CHAPARRAL ENERGY, INC.
By:	/s/ Joseph O. Evans
	Joseph O. Evans
	Chief Financial Officer and Executive Vice President
	“COMPANY”
	/s/ K. Earl Reynolds
	K. Earl Reynolds
	“EXECUTIVE”

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EX-10.4

Exhibit 10.4

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 17th day of March, 2017, is entered into by and between CHAPARRAL ENERGY, INC., a Delaware corporation (the “Company”), CHAPARRAL ENERGY, LLC (the “Employer”) and Joseph O. Evans (“Executive”).

WHEREAS, the Company and Executive entered into an Employment Agreement, dated as of April 12, 2010 (as amended, the “Prior Agreement”), which set forth the terms and conditions for Executive’s employment by the Company and cancelled that certain Change of Control Severance Agreement dated as of July 1, 2007, and amended as of December 31, 2008, and all of Executive’s rights and interest therein and thereunder; and

WHEREAS, the Company and Executive agree that the Prior Agreement should be amended and restated to make changes as the Company and Executive agree are necessary and in the parties mutual best interest in connection with the consummation of the First Amended Joint Plan of Reorganization of Chaparral Energy, Inc. dated as of March 7, 2017 (the “Transactions”).

IN CONSIDERATION of the premises and the mutual covenants set forth below, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.Term.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment with the Company under this Agreement shall be for a term (the “Term”) commencing upon March 17, 2017 (the “Effective Date”) and ending on the third-year anniversary of the Effective Date; provided, however, that commencing on the date that is the third anniversary of the Effective Date, the Term shall be automatically extended so as to terminate on the second anniversary of such date, and the Term shall be automatically extended so as to terminate on each anniversary thereafter (each such anniversary referred to as a “Renewal Date”).  Notwithstanding the foregoing, if at least ninety (90) days prior to any Renewal Date, the Company gives Executive written notice that the Term will not be so extended, this Agreement will continue for the remainder of the then current Term and automatically expire upon its completion.  The Term may be sooner terminated under Section 5 of this Agreement.  It is agreed that upon the Effective Date, this Agreement shall supersede the Prior Agreement in all respects and any obligations, rights or entitlements thereunder shall be terminated and of no further force and effect.

2.Position and Duties.  During the Term, Executive will serve as Executive Vice President-Chief Financial Officer of the Company and will report directly to the Chief Executive Officer of the Company (the “CEO”).  Executive shall devote Executive’s best efforts and full business time and attention to perform all services reasonably required to fully execute the duties and responsibilities associated with the Company, its subsidiaries and its affiliates as directed by the CEO.  Notwithstanding the above, Executive will be permitted, to the extent such activities do not interfere with the performance by Executive of his duties and responsibilities under this Agreement or violate this Agreement, to (i) manage Executive’s personal, financial and legal affairs, and (ii) serve on industry, civic or charitable boards or committees.  Executive agrees to

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observe and comply with the rules and policies of the Company, as in effect from time to time, including, without limitation, any rules and policies relating to Executive obligations to the Company upon a termination of employment.

3.Place of Performance.  During the Term, Executive’s place of employment will be the Company’s principal executive offices in Oklahoma City, Oklahoma (the “Principal Location”), except for travel to other locations as may be necessary to fulfill Executive’s duties and responsibilities hereunder.

4.Compensation and Related Matters.

(a)Base Salary.  During the Term, the Company will pay Executive a base salary of not less than $448,914 per year (“Base Salary”), in accordance with the Company’s customary payroll practices.  Executive’s Base Salary may be increased, but not decreased unless the base salaries for all executive officers of the Company are decreased, pursuant to annual review by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”) in its discretion.  In the event that Executive’s Base Salary is increased, the increased amount will then constitute the Base Salary for all purposes of this Agreement.

(b)Annual Bonus Incentives.  In addition to the Base Salary, Executive shall be eligible to participate in and earn an annual cash bonus under any annual incentive plan established by the Board so long as the terms of any such plan allow participation by the executive officers of the Company (“Annual Bonus”).  The target Annual Bonus for Executive shall be equal to 80% of Executive’s current Base Salary, but the actual Annual Bonus shall be determined by the Compensation Committee, in consultation with the CEO, in accordance with the terms of such plan, in effect at that time, if any.  The terms for the payment of any Annual Bonus shall be determined by the Compensation Committee, in consultation with the CEO, in accordance with the terms of such plan in effect at that time, if any.

(c)Management Incentive Plan. Executive may be eligible to participate in the management incentive plan to be implemented in connection with the Transactions pursuant to the terms and conditions determined by the Board.

(d)Welfare, Pension and Incentive Benefit.  During the Term, Executive (and Executive’s spouse and/or eligible dependents to the extent provided in the applicable plans and programs) will be eligible to participate in and be covered under all the welfare benefit plans or programs maintained by the Company or Employer for the benefit of its senior executive officers pursuant to the terms of such plans and programs including, without limitation, all medical, life, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs.  In addition, during the Term, Executive will be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company or Employer for the benefit of its senior executive officers.

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(e)Vacation.  Executive shall be entitled to paid vacation in accordance with the Employer’s vacation policy during the Term.  Executive may use his vacation in a reasonable manner based upon the business needs of the Company.

(f)Fringe Benefits.  During the Term, the Company will provide Executive with such other fringe benefits as commensurate with Executive’s position.

(g)Expenses.  Executive will be entitled to receive prompt reimbursement for all reasonable business expenses incurred by Executive in accordance with the Company’s and Employer’s expense reimbursement policy during the Term.  All payments under this Section 4(g) shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred such expenses.

5.Termination of Employment.  Executive’s employment under this Agreement may be terminated during the Term under the following circumstances:

(a)Death.  Executive’s employment under this Agreement will terminate upon his death.

(b)Disability.  Upon Executive’s Disability, Executive will receive a Notice of Termination (as defined in Section 6(a)) from the Company.  If Executive does not return to the substantial performance of his duties on a full-time basis within thirty (30) days of such Notice of Termination, the Company has the right to terminate Executive’s employment under this Agreement for Disability, and such termination will not be a breach of this Agreement by the Company.  For purposes of this Agreement, “Disability” means Executive’s incapacity due to physical or mental illness whereby Executive is substantially unable to perform his duties under this Agreement (with or without reasonable accommodation, as defined under the Americans With Disabilities Act) for a period of six (6) consecutive months.

(c)Cause.  The Company has the right to terminate Executive’s employment for Cause by providing Executive with a Notice of Termination, and such termination will not be a breach of this Agreement by the Company.  For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following events: (i) Executive’s conviction of, or entry by Executive of a guilty or no contest plea to a felony or crime involving moral turpitude; (ii) Executive’s willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company or any affiliate; (iii) Executive’s willful failure to substantially perform or gross neglect of Executive’s duties, including, but not limited to, the failure to follow any lawful directive of the CEO, within the reasonable scope of Executive’s duties; (iv) Executive’s performance of acts materially detrimental to the Company or any affiliate, unless otherwise approved in advance by the Board or the Compensation Committee; (v) Executive’s use of narcotics, alcohol, or illicit drugs in a manner that has or may reasonably be expected to have a detrimental effect on Executive’s performance of his duties as an employee of the Company or on the reputation of the Company or any affiliate; (vi) Executive’s commission of a material violation of any rule or policy sponsored by the Company which results in injury to the Company; or (vii) Executive’s material breach of this Agreement, including, but not limited to, Executive’s material breach of the covenants set forth in Section 9 hereof.

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(d)Good Reason.  Executive may terminate Executive’s employment with the Company for “Good Reason,” and such termination will not be a breach of this Agreement by Executive.  For purposes of this Agreement, “Good Reason” shall mean the occurrence without the written consent of Executive, of one of the events set forth below:

(i)a material diminution in Executive’s authority, duties or responsibilities combined with a demotion in Executive’s pay grade ranking;

(ii)the reduction by the Company of Executive’s Base Salary by more than ten percent (10%) (unless done so for all executive officers of the Company);

(iii)the requirement that Executive be based at any office or location that is more than 50 miles from the Principal Location, except for travel reasonably required in the performance of Executive’s responsibilities; or

(iv)any other action or inaction that constitutes a material breach by the Company of this Agreement such as the failure of any successor to the Company to assume this Agreement pursuant to Section 14.

Notwithstanding the foregoing, Executive will not be deemed to have terminated for Good Reason unless (A) Executive provides written notice to the Company of the existence of one of the conditions described above within ninety (90) days after Executive has knowledge of the initial existence of the condition, (B) the Company fails to remedy the condition so identified within thirty (30) days after receipt of such notice (if capable of correction), (C) Executive provides a Notice of Termination to the Company within thirty (30) days of the expiration of the Company’s period to remedy the condition, and (D) Executive terminates employment within ninety (90) days after Executive provides written notice to the Company of the existence of the condition referred to in clause (A).

(e)Without Cause.  The Company has the right to terminate Executive’s employment under this Agreement without Cause by providing Executive with a Notice of Termination.  For purposes of Section 7 hereto, a “termination without Cause” shall include the Company’s failure to renew this Agreement pursuant to Section 1 prior to a Renewal Date.

(f)Without Good Reason.  Executive may voluntarily terminate employment with the Company without Good Reason at any time by providing the Company with a Notice of Termination.

6.Termination Procedure.

(a)Notice of Termination.  Any termination of Executive’s employment by the Company or by Executive during the Term (other than termination pursuant to Section 5(a)) will be communicated by Notice of Termination to the other party in accordance with Section 15.  For purposes of this Agreement, a “Notice of Termination” means a written notice which indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment.

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(b)Date of Termination.  “Date of Termination” shall mean (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated due to Disability pursuant to Section 5(b), thirty (30) days after Notice of Termination (provided that Executive has not returned to the substantial performance of his duties on a full-time basis during such thirty (30) day period), (iii) if Executive’s employment is terminated for Good Reason pursuant to Section 5(d), the date on which a Notice of Termination provided in accordance with such Section is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination, (iv) if Executive’s employment is terminated voluntarily by Executive without Good Reason pursuant to Section 5(f), thirty (30) days after Notice of Termination, or (v) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination.

7.Obligations of the Company Upon Termination.  In the event Executive’s employment under this Agreement terminates during the Term and such termination constitutes a “separation from service” from the Company (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”), the Company will provide Executive with the payments and benefits set forth below.

(a)Termination by Company Without Cause or by Executive for Good Reason Not Following Change in Control.  If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason at any time that is not within two (2) years after the occurrence of a “Change in Control” (as defined below):

(i)The Company will pay to Executive in a single lump sum payment within thirty (30) days after the Date of Termination, the aggregate amount of (A) any earned but unpaid Base Salary, (B) any Annual Bonus required to be paid to Executive pursuant to Section 4(b) for any fiscal year of the Company that ends on or before the Date of Termination to the extent not previously paid, (C) accrued but unpaid vacation pay through the Date of Termination, and (D) reasonable business expenses incurred but unpaid through the Date of Termination (together, the “Accrued Obligations”);

(ii)Subject to Sections 7(f) and 10 below, the Company will pay to Executive an amount equal to one (the “Severance Multiple”) times the sum of (x) Executive’s Base Salary in effect on the Date of Termination plus (y) the Annual Bonus granted to Executive for the fiscal year of the Company immediately on or preceding the Date of Termination, payable in the form of a salary continuation for a period of months equal to the product of 12 times the Severance Multiple; provided, however, that the first such payment shall not be made until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid pursuant to this Section 7(a)(ii) prior to the First Payroll Date shall instead be paid on the First Payroll Date.  Each payment under this Section 7(a)(ii) shall be treated as a separate payment for purposes of Section 409A of the Code.

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(iii)Subject to Sections 7(f) and 10 below, the Company will maintain in full force and effect, for the continued benefit of Executive (and Executive’s spouse and/or eligible dependents, as applicable) for a period of eighteen (18) months following the Date of Termination, participation by Executive (and Executive’s spouse and/or eligible dependents, as applicable) in the medical, hospitalization, and dental programs maintained by the Company for the benefit of its senior executive officers as in effect on the Date of Termination, at such level and terms and conditions (including, without limitation, contributions required by Executive for such benefits) as in effect on the Date of Termination; provided, if Executive (or his spouse) is eligible for Medicare or a similar type of governmental medical benefit, such benefit shall be the primary provider before Company medical benefits are provided.  However, if Executive becomes reemployed with another employer and is eligible to receive medical, hospitalization and dental benefits under another employer-provided plan, the medical, hospitalization and dental benefits described herein shall cease.  If any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1,409A- 1(a)(5), then an amount equal to each remaining premium payment shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).

(iv)For purposes of this Agreement, “Change in Control” shall mean:

(A)The consummation of any transaction or series of related transactions involving the sale of the Company’s outstanding securities (but excluding a public offering of the Company’s capital stock) for securities or other consideration issued or paid or caused to be issued or paid by such other corporation or an affiliate thereof and which result in this Company’s shareholders (or their affiliates) immediately prior to such transaction not holding at least a majority of the voting power of the surviving or continuing entity following such transaction; or

(B)The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction; provided, however that notwithstanding anything to the contrary, the consummation of the Transactions will not constitute, and shall not be deemed, a Change in Control under this Agreement.

(b)Termination by Company Without Cause or by Executive for Good Reason Following Change in Control.  If at any time within two (2) years after a Change in Control, Executive’s employment is terminated by the Company without Cause or by Executive

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for Good Reason, then Executive shall be entitled to the payments and benefits provided in Section 7(a) hereof, subject to the terms and conditions thereof (including, without limitation, the requirement that a condition to Executive’s right to receive the amounts provided for thereunder is that Executive execute, deliver and not revoke the Release as set forth in Section 10 below), except that for purposes of this Section 7(b), the Severance Multiple shall equal one and one half.

(c)Termination by Company for Cause or by Executive Without Good Reason.  If Executive’s employment is terminated by the Company for Cause or by Executive without Good Reason, the Company will pay Executive within thirty (30) days after the Date of Termination the Accrued Obligations; provided, however, the amounts described in Section 7(a)(i)(D) shall not be paid to Executive if Executive’s employment was terminated by the Company for Cause due to Executive’s misappropriation of Company funds.

(d)Disability.  During any period that Executive fails to perform Executive’s duties under this Agreement as a result of incapacity due to physical or mental illness, Executive will continue to receive his full Base Salary set forth in Section 4(a) until his employment is terminated pursuant to Section 5(b).  If Executive’s employment is terminated due to Disability pursuant to Section 5(b), subject to Sections 7(f) and 10 below, the Company will pay Executive within thirty (30) days after the Date of Termination the Accrued Obligations, plus a pro rata share of the Annual Bonus for the fiscal year of the Company in which the Date of Termination occurs.

(e)Death.  If Executive’s employment is terminated by death, the Company will pay to Executive’s beneficiary, or personal or legal representatives or estate, as the case may be, within thirty (30) days after the Date of Termination the Accrued Obligations, plus a pro rata share of the Annual Bonus for the fiscal year of the Company in which the Date of Termination occurs.

(f)Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any severance payments or benefits payable under Section 7 hereof, shall be paid to Executive during the six (6)-month period following Executive’s Separation from Service if the Company determines that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six (6)~ month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without resulting in a prohibited distribution, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such period.

8.Mitigation.  Executive will not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and there will be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein.

9.Confidential Information; Non-Solicitation; Non-Competition.

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(a)Nondisclosure of Confidential Information.  Executive acknowledges that it is the policy of the Company to maintain as secret and confidential (i) all valuable and unique information, (ii) other information heretofore or hereafter acquired by the Company, or any affiliated entity and deemed by it to be confidential, and (iii) information developed or used by the Company or any affiliated entity relating to the business, operations, employees and customers of the Company or any affiliated entity including, but not limited to, any employee information (all such information described in clauses (i), (ii) and (iii) above, other than information which is known to the public or becomes known to the public through no fault of Executive, is hereinafter referred to as “Confidential Information”).  The parties recognize that the services to be performed by Executive pursuant to this Agreement are special and unique and that by reason of his employment by the Company after the date hereof, Executive has acquired and will acquire Confidential Information.  Executive recognizes that all such Confidential Information is the property of the Company.  Accordingly, at any time during or after the Term, Executive shall not, except in the proper performance of his duties under this Agreement, directly or indirectly, without the prior written consent of the Company, disclose to any Person other than the Company, whether or not such Person is a competitor of the Company, and shall use his best efforts to prevent the publication or disclosure of any Confidential Information obtained by, or which has come to the knowledge of, Executive prior or subsequent to the date hereof.  Notwithstanding the foregoing, Executive may disclose to other Persons, as part of his occupation, information with respect to the Company or any affiliated entity, which (i) is of a type generally not considered by standards of the oil and natural gas industry to be proprietary, or (ii) is otherwise consented to in writing by the Company.

(b)Non-Solicitation.  Executive shall not, during the Term and for a period of 12 months following the Date of Termination (the “Non-Solicitation Period”), either personally or by or through his/her agent or by letters, circulars or advertisements and whether for himself/herself or on behalf of any other person or entity, hire, solicit or seek to hire any employee or consultant of the Company or any affiliated entity, or in any other manner attempt, directly or indirectly, to persuade any such employee or consultant to discontinue his/her status of employment or consultancy with the Company or any affiliated entity or to become hired in any business or activities likely to be competitive with the Company’s or an affiliated entity’s business.  Additionally, during the Non-Solicitation Period, Executive shall not, for himself/herself or on behalf of any person or entity, directly or indirectly, solicit, divert or attempt to solicit or divert any customer of the Company or any affiliated entity for the purpose of causing such customer to reduce or refrain from doing any business with the Company or any affiliated entity.  Executive further agrees that, during the Non-Solicitation Period, he/she will not, directly or indirectly, request or advise any customers of the Company or an affiliated entity to withdraw, curtail or cancel their business with the Company or any affiliated entity.  For purposes of this Agreement, a “customer” of the Company or any affiliated entity shall mean those customers of the Company or an affiliated entity who held a deposit account or otherwise transacted business with the Company or an affiliated entity at any time within the twelve (12) months preceding termination of Executive’s employment.  Nothing contained in this Agreement is intended to prohibit general advertising or solicitation not specifically directed at any or all of the Company’s or an affiliated entity’s customers or employees.

(c)Non-Competition.

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(i)As part of the consideration for the compensation and benefits to be paid to Executive hereunder, to protect the trade secrets and Confidential Information of the Company and its customers and clients that have been and will be entrusted to Executive, the business goodwill of the Company and its subsidiaries that will be developed in and through Executive and the business opportunities that will be disclosed or entrusted to Executive by the Company and its subsidiaries, and as an additional incentive for the Company to enter into this Agreement, during the Term and the Covered Period (a defined below), Executive shall not directly or indirectly, individually or on behalf of any other person or entity, manage, participate in, work for, consult with, render services for, or take an interest in (as an owner, stockholder, partner or lender) any Competitor in an area of Competing Business. The “Covered Period” shall mean the period of months following the Date of Termination equal to the product of 12 times the applicable Severance Multiple.  

(ii)For purposes of Section 9(c)(i):

(A)“Competitor” means any business, company or individual which is in, or is actively seeking to be in the Competing Business.

(B)“Competing Business” means the acquisition, exploration, exploitation, development, production and/or operation of oil and gas properties.

(iii)Executive acknowledges that each of the covenants of Section 9(c)(i) are in addition to, and shall not be construed as a limitation upon, any other covenant provided in Section 9.  Executive agrees that the scope of prohibited activities and time duration of each of the covenants set forth in Section 9(c)(i) are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Company’s proprietary and Confidential Information, plans and services and to protect the other legitimate business interests of the Company, including without limitation the goodwill developed by Executive with the Company’s customers, suppliers, licensees and business relations.  It is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with the changing activities, business and locations of the Company throughout the term of this covenant, whether before or after the Date of Termination.  Executive agrees not to challenge the enforceability, scope or reasonableness of the covenants in Section 9(c)(i).  The covenants in Section 9(c)(i) are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.  Moreover, in the event any court of competent jurisdiction shall determine that the scope or duration set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable, and the Agreement shall thereby be reformed.

(iv)If, during any portion of the Covered Period, Executive is not in compliance with the terms of Section 9(c)(i), the Company shall be entitled to, among other remedies, compliance by Executive with the terms of Section 9(c)(i) for an additional period of time (i.e., in addition to the Covered Period) that shall equal the period(s) over which such noncompliance occurred.

(v)Nothing in this Section 9(c) shall prohibit:  (A) direct or indirect ownership of publicly traded securities which are issued by a Competitor involved in or

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conducting a Competing Business, provided that Executive, directly or indirectly, does not own more than 5% of the outstanding equity or voting securities of such Competitor; (B) ownership of royalty interests where Executive owns the surface of the land covered by the royalty interest and the ownership of the royalty interest is incidental to the ownership of such surface estate, provided that any such surface estate does not adjoin, or is not near to, any property ownership interest held directly or indirectly by the Company; (C) direct or indirect ownership of royalty interests or overriding royalty interests owned prior to the Effective Date; or (D) direct or indirect ownership of working interests or other interests in oil and gas owned prior to the Effective Date and disclosed by Executive to the Company in writing.  It is the intent of the Company that during the Term of this Agreement Executive is not acquiring additional oil and gas interests, directly or indirectly.

(d)Obligations of Executive Upon Termination.  Upon termination of Executive’s employment for any reason, Executive shall return to the Company all documents and copies, including hard and electronic copies, of documents in his possession relating to any Confidential Information including, but not limited to, internal and external business forms, manuals, correspondence, notes and computer programs, and Executive shall not make or retain any copy or extract of any of the foregoing.  In addition, Executive shall resign from all positions held with the Company or any affiliated entities.

(e)Remedies.  Executive acknowledges and understands that Sections 9(a), (b) , (c) and (d) and the other provisions of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of this Agreement would cause the Company irreparable harm.  In the event of a breach or threatened breach by Executive of the provisions of this Agreement, the Company shall be entitled to an injunction restraining him from such breach.  Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing, or limiting the Company’s ability to pursue, any other remedies available for any breach or threatened breach of this Agreement by Executive, including the right to cease making any severance payments or providing any benefits as contemplated by Section 7.  The provision of Section 12 hereof relating to arbitration of disputes shall not be applicable to the Company to the extent it seeks an injunction in any court to restrain Executive from violating Sections 9(a), (b), (c) and (d) hereof.

(f)Continuing Operation.  Except as specifically provided in this Section 9, the termination of Executive’s employment or of this Agreement will have no effect on the continuing operation of this Section 9.

(g)Additional Related Agreements.  Executive agrees to sign and to abide by the provisions of any additional agreements, policies or requirements of the Company which are reasonable and related to the subject of this Section 9 which are in writing and are developed by the Company in the ordinary course of business.

10.Release.  Notwithstanding any other provisions of this Agreement, it shall be a condition to Executive’s right to receive the amounts provided for in Section 7(a), 7(b) or 7(d) of this Agreement, that Executive will execute and deliver to the Company a release of claims in substantially the form attached hereto as Exhibit C (the “Release”) within twenty-one (21) days

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following the Date of Termination and that Executive not revoke such release within seven (7) days thereafter.  The form of the Release may be modified as needed to reflect changes in the applicable law or regulations that are needed to provide a legally enforceable and binding Release to all parties at the time of execution.

11.Indemnification and Insurance.  Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management employee or director of the Company with respect to acts or omissions occurring prior to (a) the termination of this Agreement or (b) the termination of employment of Executive.  

12.Arbitration; Legal Fees and Expenses.  The parties agree that Executive’s employment and this Agreement relate to interstate commerce, and that any disputes, claims or controversies between Executive and the Company which may arise out of or relate to Executive’s employment relationship or this Agreement shall be settled by arbitration.  This agreement to arbitrate shall survive the termination of this Agreement.  Any arbitration shall be in accordance with the Rules of the American Arbitration Association and undertaken pursuant to the Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma unless the parties mutually agree on another location.  The decision of the arbitrator(s) will be enforceable in any court of competent jurisdiction.  The parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s) unless such damages would have been awarded by a court of competent jurisdiction.  Nothing in this agreement to arbitrate, however, shall preclude the Company from obtaining injunctive relief from a court of competent jurisdiction prohibiting any ongoing breaches by Executive of this Agreement including, without limitation, violations of Section 9.  If any contest or dispute arises between the Company and Executive regarding any provision of this Agreement, the arbitrator may award to the prevailing party, the reasonable attorney fees, costs and expenses incurred by the prevailing party in connection with such contest or dispute.

13.Maximum Payments by the Company.

(a)It is the objective of this Agreement to maximize Executive’s Net After- Tax Benefit (as defined herein) if payments or benefits provided under this Agreement are subject to excise tax under Section 4999 of the Code.  Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including, by example and not by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment or rate of payment under any plan, program, arrangement or agreement of the Company (all such payments and benefits, including the payments and benefits under Section 7 hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the cash severance payments shall first be reduced, and the non-cash severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments shall be subject to the Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such

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reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

(b)The Total Payments shall be reduced by the Company in the following order:  (i) reduction of any cash severance payments otherwise payable to Executive that are exempt from Section 409A of the Code, (ii) reduction of any other cash payments or benefits otherwise payable to Executive that are exempt from Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting or payments with respect to any equity award with respect to the Company’s common stock that is exempt from Section 409A of the Code, (iii) reduction of any other payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting and payments with respect to any equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code, and (iv) reduction of any payments attributable to the acceleration of vesting or payments with respect to any other equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code.

(c)For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of independent auditors of nationally recognized standing (“Independent Advisors”) selected by the Company, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  The costs of obtaining such determination shall be borne by the Company.

14.Agreement Binding on Successors.

(a)Company’s Successors.  No rights or obligations of the Company under this Agreement may be assigned or transferred except that the Company will require any successor (whether direct or indirect, by purchase, merger, reorganization, sale, transfer of stock, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place.  As used in this Agreement, “Company” means the Company as herein defined, and any successor to its or the Company’s business and/or assets (by merger, purchase or otherwise)

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which executes and delivers the agreement provided for in this Section 14 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b)Executive’s Successors.  No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to payments or benefits under this Agreement, which may be transferred only by will or the laws of descent and distribution.  Upon Executive’s death, this Agreement and all rights of Executive under this Agreement shall inure to the benefit of and be enforceable by Executive’s beneficiary, or personal or legal representatives, or estate, to the extent any such person succeeds to Executive’s interests under this Agreement.  In the event of Executive’s death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his estate or other legal representative(s).  If Executive should die following his Date of Termination while any amounts would still be payable to him under this Agreement if he had continued to live, unless otherwise provided, all such amounts shall be paid in accordance with the terms of this Agreement to his beneficiary or personal or legal representatives or estate.

15.Notice.  For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:
At his last known address
evidenced on the Company’s
payroll records.

If to the Company:
Chaparral Energy, Inc.
701 Cedar Lake Boulevard
Oklahoma City, OK 73114

or to such other address as any party may have furnished to the other in writing in accordance with this Agreement, except that notices of change of address shall be effective only upon receipt.

16.Section 409A.

(a)To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulations or other such guidance that may be issued after the Effective Date (“Section 409A”).  Notwithstanding any provision of this Agreement to the contrary, in the event that following the Effective Date, the Company determines in good faith that any compensation or benefits payable under this Agreement may not be either exempt from or compliant with Section 409A, the Company shall adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effective), or take any other commercially reasonable actions necessary or appropriate to (i) preserve the intended tax treatment of the

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compensation and benefits payable hereunder, to preserve the economic benefits of such compensation and benefits, and/or to avoid less favorable accounting or tax consequences for the Company and/or (ii) to exempt the compensation and benefits payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder; provided, however, that this Section 16(a) does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify Executive for any failure to do so.

(b)Notwithstanding anything herein to the contrary, Executive acknowledges and agrees that in the event that any tax is imposed under Section 409A in respect to any compensation or benefits payable to Executive, whether under this Agreement or otherwise, then (i) the payment of such tax shall be solely Executive’s responsibility, (ii) neither the Company, its affiliates nor any of their respective past or present directors, officers, employees or agents shall have any liability for any such tax and (iii) Executive shall indemnify and hold harmless, to the greatest extent permitted under law, each of the foregoing from and against any claims or liabilities that may arise in respect of any such tax.

17.Withholding.  All payments hereunder will be subject to any required withholding of federal, state and local taxes pursuant to any applicable law or regulation.

18.Miscellaneous.  No provisions of this Agreement may be amended, modified, or waived unless agreed to in writing and signed by Executive and by a duly authorized officer of the Company.  No waiver by either party of any breach by the other party of any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  The respective rights and obligations of the parties under this Agreement shall survive Executive’s termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oklahoma without regard to its conflicts of law principles.

19.Validity.  The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

20.Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

21.Section Headings.  The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and will not affect its interpretation.

22.Entire Agreement.  Except as provided elsewhere herein and except for the other documents and agreements contemplated in accordance herewith, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties,

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whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter, including, without limitation the Change of Control Severance Agreement and the Prior Agreement.

23.Further Assurances.  The parties hereby agree, without further consideration, to execute and deliver such other instruments or to take such other action as may reasonably be required to effectuate the terms and provisions of this Agreement.

* * * *

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first above written.

	CHAPARRAL ENERGY, INC.
By:	/s/ K. Earl Reynolds
	K. Earl Reynolds
	Chief Executive Officer
	“COMPANY”
	/s/ Joseph O. Evans
	Joseph O. Evans
	“EXECUTIVE”

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EX-10.5

Exhibit 10.5

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 17th day of March, 2017, is entered into by and between CHAPARRAL ENERGY, INC., a Delaware corporation (the “Company”), CHAPARRAL ENERGY, LLC (the “Employer”) and James M. Miller (“Executive”).

WHEREAS, the Company and Executive entered into an Employment Agreement, dated as of April 12, 2010 (as amended, the “Prior Agreement”), which set forth the terms and conditions for Executive’s employment by the Company and cancelled that certain Change of Control Severance Agreement dated as of July 1, 2007, and amended as of December 31, 2008, and all of Executive’s rights and interest therein and thereunder; and

WHEREAS, the Company and Executive agree that the Prior Agreement should be amended and restated to make changes as the Company and Executive agree are necessary and in the parties mutual best interest in connection with the consummation of the First Amended Joint Plan of Reorganization of Chaparral Energy, Inc. dated as of March 7, 2017  (the “Transactions”).

IN CONSIDERATION of the premises and the mutual covenants set forth below, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.Term.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment with the Company under this Agreement shall be for a term (the “Term”) commencing upon March 17, 2017 (the “Effective Date”) and ending on the third-year anniversary of the Effective Date; provided, however, that commencing on the date that is the third anniversary of the Effective Date, the Term shall be automatically extended so as to terminate on the second anniversary of such date, and the Term shall be automatically extended so as to terminate on each anniversary thereafter (each such anniversary referred to as a “Renewal Date”).  Notwithstanding the foregoing, if at least ninety (90) days prior to any Renewal Date, the Company gives Executive written notice that the Term will not be so extended, this Agreement will continue for the remainder of the then current Term and automatically expire upon its completion.  The Term may be sooner terminated under Section 5 of this Agreement.  It is agreed that upon the Effective Date, this Agreement shall supersede the Prior Agreement in all respects and any obligations, rights or entitlements thereunder shall be terminated and of no further force and effect.

2.Position and Duties.  During the Term, Executive will serve as Senior Vice President-Operations and Production Engineering of the Company and will report directly to the Chief Executive Officer of the Company (the “CEO”).  Executive shall devote Executive’s best efforts and full business time and attention to perform all services reasonably required to fully execute the duties and responsibilities associated with the Company, its subsidiaries and its affiliates as directed by the CEO.  Notwithstanding the above, Executive will be permitted, to the extent such activities do not interfere with the performance by Executive of his duties and responsibilities under this Agreement or violate this Agreement, to (i) manage Executive’s personal, financial and legal affairs, and (ii) serve on industry, civic or charitable boards or

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committees.  Executive agrees to observe and comply with the rules and policies of the Company, as in effect from time to time, including, without limitation, any rules and policies relating to Executive obligations to the Company upon a termination of employment.

3.Place of Performance.  During the Term, Executive’s place of employment will be the Company’s principal executive offices in Oklahoma City, Oklahoma (the “Principal Location”), except for travel to other locations as may be necessary to fulfill Executive’s duties and responsibilities hereunder.

4.Compensation and Related Matters.

(a)Base Salary.  During the Term, the Company will pay Executive a base salary of not less than $391,540 per year (“Base Salary”), in accordance with the Company’s customary payroll practices.  Executive’s Base Salary may be increased, but not decreased unless the base salaries for all executive officers of the Company are decreased, pursuant to annual review by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”) in its discretion.  In the event that Executive’s Base Salary is increased, the increased amount will then constitute the Base Salary for all purposes of this Agreement.

(b)Annual Bonus Incentives.  In addition to the Base Salary, Executive shall be eligible to participate in and earn an annual cash bonus under any annual incentive plan established by the Board so long as the terms of any such plan allow participation by the executive officers of the Company (“Annual Bonus”).  The target Annual Bonus for Executive shall be equal to 70% of Executive’s current Base Salary, but the actual Annual Bonus shall be determined by the Compensation Committee, in consultation with the CEO, in accordance with the terms of such plan, in effect at that time, if any.  The terms for the payment of any Annual Bonus shall be determined by the Compensation Committee, in consultation with the CEO, in accordance with the terms of such plan in effect at that time, if any.

(c)Management Incentive Plan. Executive may be eligible to participate in the management incentive plan to be implemented in connection with the Transactions pursuant to the terms and conditions determined by the Board.

(d)Welfare, Pension and Incentive Benefit.  During the Term, Executive (and Executive’s spouse and/or eligible dependents to the extent provided in the applicable plans and programs) will be eligible to participate in and be covered under all the welfare benefit plans or programs maintained by the Company or Employer for the benefit of its senior executive officers pursuant to the terms of such plans and programs including, without limitation, all medical, life, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs.  In addition, during the Term, Executive will be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company or Employer for the benefit of its senior executive officers.

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(e)Vacation.  Executive shall be entitled to paid vacation in accordance with the Employer’s vacation policy during the Term.  Executive may use his vacation in a reasonable manner based upon the business needs of the Company.

(f)Fringe Benefits.  During the Term, the Company will provide Executive with such other fringe benefits as commensurate with Executive’s position.

(g)Expenses.  Executive will be entitled to receive prompt reimbursement for all reasonable business expenses incurred by Executive in accordance with the Company’s and Employer’s expense reimbursement policy during the Term.  All payments under this Section 4(g) shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred such expenses.

5.Termination of Employment.  Executive’s employment under this Agreement may be terminated during the Term under the following circumstances:

(a)Death.  Executive’s employment under this Agreement will terminate upon his death.

(b)Disability.  Upon Executive’s Disability, Executive will receive a Notice of Termination (as defined in Section 6(a)) from the Company.  If Executive does not return to the substantial performance of his duties on a full-time basis within thirty (30) days of such Notice of Termination, the Company has the right to terminate Executive’s employment under this Agreement for Disability, and such termination will not be a breach of this Agreement by the Company.  For purposes of this Agreement, “Disability” means Executive’s incapacity due to physical or mental illness whereby Executive is substantially unable to perform his duties under this Agreement (with or without reasonable accommodation, as defined under the Americans With Disabilities Act) for a period of six (6) consecutive months.

(c)Cause.  The Company has the right to terminate Executive’s employment for Cause by providing Executive with a Notice of Termination, and such termination will not be a breach of this Agreement by the Company.  For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following events: (i) Executive’s conviction of, or entry by Executive of a guilty or no contest plea to a felony or crime involving moral turpitude; (ii) Executive’s willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company or any affiliate; (iii) Executive’s willful failure to substantially perform or gross neglect of Executive’s duties, including, but not limited to, the failure to follow any lawful directive of the CEO, within the reasonable scope of Executive’s duties; (iv) Executive’s performance of acts materially detrimental to the Company or any affiliate, unless otherwise approved in advance by the Board or the Compensation Committee; (v) Executive’s use of narcotics, alcohol, or illicit drugs in a manner that has or may reasonably be expected to have a detrimental effect on Executive’s performance of his duties as an employee of the Company or on the reputation of the Company or any affiliate; (vi) Executive’s commission of a material violation of any rule or policy sponsored by the Company which results in injury to the Company; or (vii) Executive’s material breach of this Agreement, including, but not limited to, Executive’s material breach of the covenants set forth in Section 9 hereof.

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(d)Good Reason.  Executive may terminate Executive’s employment with the Company for “Good Reason,” and such termination will not be a breach of this Agreement by Executive.  For purposes of this Agreement, “Good Reason” shall mean the occurrence without the written consent of Executive, of one of the events set forth below:

(i)a material diminution in Executive’s authority, duties or responsibilities combined with a demotion in Executive’s pay grade ranking;

(ii)the reduction by the Company of Executive’s Base Salary by more than ten percent (10%) (unless done so for all executive officers of the Company);

(iii)the requirement that Executive be based at any office or location that is more than 50 miles from the Principal Location, except for travel reasonably required in the performance of Executive’s responsibilities; or

(iv)any other action or inaction that constitutes a material breach by the Company of this Agreement such as the failure of any successor to the Company to assume this Agreement pursuant to Section 14.

Notwithstanding the foregoing, Executive will not be deemed to have terminated for Good Reason unless (A) Executive provides written notice to the Company of the existence of one of the conditions described above within ninety (90) days after Executive has knowledge of the initial existence of the condition, (B) the Company fails to remedy the condition so identified within thirty (30) days after receipt of such notice (if capable of correction), (C) Executive provides a Notice of Termination to the Company within thirty (30) days of the expiration of the Company’s period to remedy the condition, and (D) Executive terminates employment within ninety (90) days after Executive provides written notice to the Company of the existence of the condition referred to in clause (A).

(e)Without Cause.  The Company has the right to terminate Executive’s employment under this Agreement without Cause by providing Executive with a Notice of Termination.  For purposes of Section 7 hereto, a “termination without Cause” shall include the Company’s failure to renew this Agreement pursuant to Section 1 prior to a Renewal Date.

(f)Without Good Reason.  Executive may voluntarily terminate employment with the Company without Good Reason at any time by providing the Company with a Notice of Termination.

6.Termination Procedure.

(a)Notice of Termination.  Any termination of Executive’s employment by the Company or by Executive during the Term (other than termination pursuant to Section 5(a)) will be communicated by Notice of Termination to the other party in accordance with Section 15.  For purposes of this Agreement, a “Notice of Termination” means a written notice which indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment.

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(b)Date of Termination.  “Date of Termination” shall mean (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated due to Disability pursuant to Section 5(b), thirty (30) days after Notice of Termination (provided that Executive has not returned to the substantial performance of his duties on a full-time basis during such thirty (30) day period), (iii) if Executive’s employment is terminated for Good Reason pursuant to Section 5(d), the date on which a Notice of Termination provided in accordance with such Section is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination, (iv) if Executive’s employment is terminated voluntarily by Executive without Good Reason pursuant to Section 5(f), thirty (30) days after Notice of Termination, or (v) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination.

7.Obligations of the Company Upon Termination.  In the event Executive’s employment under this Agreement terminates during the Term and such termination constitutes a “separation from service” from the Company (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”), the Company will provide Executive with the payments and benefits set forth below.

(a)Termination by Company Without Cause or by Executive for Good Reason Not Following Change in Control.  If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason at any time that is not within two (2) years after the occurrence of a “Change in Control” (as defined below):

(i)The Company will pay to Executive in a single lump sum payment within thirty (30) days after the Date of Termination, the aggregate amount of (A) any earned but unpaid Base Salary, (B) any Annual Bonus required to be paid to Executive pursuant to Section 4(b) for any fiscal year of the Company that ends on or before the Date of Termination to the extent not previously paid, (C) accrued but unpaid vacation pay through the Date of Termination, and (D) reasonable business expenses incurred but unpaid through the Date of Termination (together, the “Accrued Obligations”);

(ii)Subject to Sections 7(f) and 10 below, the Company will pay to Executive an amount equal to one (the “Severance Multiple”) times the sum of (x) Executive’s Base Salary in effect on the Date of Termination plus (y) the Annual Bonus granted to Executive for the fiscal year of the Company immediately on or preceding the Date of Termination, payable in the form of a salary continuation for a period of months equal to the product of 12 times the Severance Multiple; provided, however, that the first such payment shall not be made until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid pursuant to this Section 7(a)(ii) prior to the First Payroll Date shall instead be paid on the First Payroll Date.  Each payment under this Section 7(a)(ii) shall be treated as a separate payment for purposes of Section 409A of the Code.

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(iii)Subject to Sections 7(f) and 10 below, the Company will maintain in full force and effect, for the continued benefit of Executive (and Executive’s spouse and/or eligible dependents, as applicable) for a period of eighteen (18) months following the Date of Termination, participation by Executive (and Executive’s spouse and/or eligible dependents, as applicable) in the medical, hospitalization, and dental programs maintained by the Company for the benefit of its senior executive officers as in effect on the Date of Termination, at such level and terms and conditions (including, without limitation, contributions required by Executive for such benefits) as in effect on the Date of Termination; provided, if Executive (or his spouse) is eligible for Medicare or a similar type of governmental medical benefit, such benefit shall be the primary provider before Company medical benefits are provided.  However, if Executive becomes reemployed with another employer and is eligible to receive medical, hospitalization and dental benefits under another employer-provided plan, the medical, hospitalization and dental benefits described herein shall cease.  If any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1,409A- 1(a)(5), then an amount equal to each remaining premium payment shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).

(iv)For purposes of this Agreement, “Change in Control” shall mean:

(A)The consummation of any transaction or series of related transactions involving the sale of the Company’s outstanding securities (but excluding a public offering of the Company’s capital stock) for securities or other consideration issued or paid or caused to be issued or paid by such other corporation or an affiliate thereof and which result in this Company’s shareholders (or their affiliates) immediately prior to such transaction not holding at least a majority of the voting power of the surviving or continuing entity following such transaction; or

(B)The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction; provided, however that notwithstanding anything to the contrary, the consummation of the Transactions will not constitute, and shall not be deemed, a Change in Control under this Agreement.

(b)Termination by Company Without Cause or by Executive for Good Reason Following Change in Control.  If at any time within two (2) years after a Change in Control, Executive’s employment is terminated by the Company without Cause or by Executive

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for Good Reason, then Executive shall be entitled to the payments and benefits provided in Section 7(a) hereof, subject to the terms and conditions thereof (including, without limitation, the requirement that a condition to Executive’s right to receive the amounts provided for thereunder is that Executive execute, deliver and not revoke the Release as set forth in Section 10 below), except that for purposes of this Section 7(b), the Severance Multiple shall equal one and one half.

(c)Termination by Company for Cause or by Executive Without Good Reason.  If Executive’s employment is terminated by the Company for Cause or by Executive without Good Reason, the Company will pay Executive within thirty (30) days after the Date of Termination the Accrued Obligations; provided, however, the amounts described in Section 7(a)(i)(D) shall not be paid to Executive if Executive’s employment was terminated by the Company for Cause due to Executive’s misappropriation of Company funds.

(d)Disability.  During any period that Executive fails to perform Executive’s duties under this Agreement as a result of incapacity due to physical or mental illness, Executive will continue to receive his full Base Salary set forth in Section 4(a) until his employment is terminated pursuant to Section 5(b).  If Executive’s employment is terminated due to Disability pursuant to Section 5(b), subject to Sections 7(f) and 10 below, the Company will pay Executive within thirty (30) days after the Date of Termination the Accrued Obligations, plus a pro rata share of the Annual Bonus for the fiscal year of the Company in which the Date of Termination occurs.

(e)Death.  If Executive’s employment is terminated by death, the Company will pay to Executive’s beneficiary, or personal or legal representatives or estate, as the case may be, within thirty (30) days after the Date of Termination the Accrued Obligations, plus a pro rata share of the Annual Bonus for the fiscal year of the Company in which the Date of Termination occurs.

(f)Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any severance payments or benefits payable under Section 7 hereof, shall be paid to Executive during the six (6)-month period following Executive’s Separation from Service if the Company determines that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six (6)~ month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without resulting in a prohibited distribution, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such period.

8.Mitigation.  Executive will not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and there will be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein.

9.Confidential Information; Non-Solicitation; Non-Competition.

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(a)Nondisclosure of Confidential Information.  Executive acknowledges that it is the policy of the Company to maintain as secret and confidential (i) all valuable and unique information, (ii) other information heretofore or hereafter acquired by the Company, or any affiliated entity and deemed by it to be confidential, and (iii) information developed or used by the Company or any affiliated entity relating to the business, operations, employees and customers of the Company or any affiliated entity including, but not limited to, any employee information (all such information described in clauses (i), (ii) and (iii) above, other than information which is known to the public or becomes known to the public through no fault of Executive, is hereinafter referred to as “Confidential Information”).  The parties recognize that the services to be performed by Executive pursuant to this Agreement are special and unique and that by reason of his employment by the Company after the date hereof, Executive has acquired and will acquire Confidential Information.  Executive recognizes that all such Confidential Information is the property of the Company.  Accordingly, at any time during or after the Term, Executive shall not, except in the proper performance of his duties under this Agreement, directly or indirectly, without the prior written consent of the Company, disclose to any Person other than the Company, whether or not such Person is a competitor of the Company, and shall use his best efforts to prevent the publication or disclosure of any Confidential Information obtained by, or which has come to the knowledge of, Executive prior or subsequent to the date hereof.  Notwithstanding the foregoing, Executive may disclose to other Persons, as part of his occupation, information with respect to the Company or any affiliated entity, which (i) is of a type generally not considered by standards of the oil and natural gas industry to be proprietary, or (ii) is otherwise consented to in writing by the Company.

(b)Non-Solicitation.  Executive shall not, during the Term and for a period of 12 months following the Date of Termination (the “Non-Solicitation Period”), either personally or by or through his/her agent or by letters, circulars or advertisements and whether for himself/herself or on behalf of any other person or entity, hire, solicit or seek to hire any employee or consultant of the Company or any affiliated entity, or in any other manner attempt, directly or indirectly, to persuade any such employee or consultant to discontinue his/her status of employment or consultancy with the Company or any affiliated entity or to become hired in any business or activities likely to be competitive with the Company’s or an affiliated entity’s business.  Additionally, during the Non-Solicitation Period, Executive shall not, for himself/herself or on behalf of any person or entity, directly or indirectly, solicit, divert or attempt to solicit or divert any customer of the Company or any affiliated entity for the purpose of causing such customer to reduce or refrain from doing any business with the Company or any affiliated entity.  Executive further agrees that, during the Non-Solicitation Period, he/she will not, directly or indirectly, request or advise any customers of the Company or an affiliated entity to withdraw, curtail or cancel their business with the Company or any affiliated entity.  For purposes of this Agreement, a “customer” of the Company or any affiliated entity shall mean those customers of the Company or an affiliated entity who held a deposit account or otherwise transacted business with the Company or an affiliated entity at any time within the twelve (12) months preceding termination of Executive’s employment.  Nothing contained in this Agreement is intended to prohibit general advertising or solicitation not specifically directed at any or all of the Company’s or an affiliated entity’s customers or employees.

(c)Non-Competition.

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(i)As part of the consideration for the compensation and benefits to be paid to Executive hereunder, to protect the trade secrets and Confidential Information of the Company and its customers and clients that have been and will be entrusted to Executive, the business goodwill of the Company and its subsidiaries that will be developed in and through Executive and the business opportunities that will be disclosed or entrusted to Executive by the Company and its subsidiaries, and as an additional incentive for the Company to enter into this Agreement, during the Term and the Covered Period (a defined below), Executive shall not directly or indirectly, individually or on behalf of any other person or entity, manage, participate in, work for, consult with, render services for, or take an interest in (as an owner, stockholder, partner or lender) any Competitor in an area of Competing Business. The “Covered Period” shall mean the period of months following the Date of Termination equal to the product of 12 times the applicable Severance Multiple.  

(ii)For purposes of Section 9(c)(i):

(A)“Competitor” means any business, company or individual which is in, or is actively seeking to be in the Competing Business.

(B)“Competing Business” means the acquisition, exploration, exploitation, development, production and/or operation of oil and gas properties.

(iii)Executive acknowledges that each of the covenants of Section 9(c)(i) are in addition to, and shall not be construed as a limitation upon, any other covenant provided in Section 9.  Executive agrees that the scope of prohibited activities and time duration of each of the covenants set forth in Section 9(c)(i) are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Company’s proprietary and Confidential Information, plans and services and to protect the other legitimate business interests of the Company, including without limitation the goodwill developed by Executive with the Company’s customers, suppliers, licensees and business relations.  It is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with the changing activities, business and locations of the Company throughout the term of this covenant, whether before or after the Date of Termination.  Executive agrees not to challenge the enforceability, scope or reasonableness of the covenants in Section 9(c)(i).  The covenants in Section 9(c)(i) are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.  Moreover, in the event any court of competent jurisdiction shall determine that the scope or duration set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable, and the Agreement shall thereby be reformed.

(iv)If, during any portion of the Covered Period, Executive is not in compliance with the terms of Section 9(c)(i), the Company shall be entitled to, among other remedies, compliance by Executive with the terms of Section 9(c)(i) for an additional period of time (i.e., in addition to the Covered Period) that shall equal the period(s) over which such noncompliance occurred.

(v)Nothing in this Section 9(c) shall prohibit:  (A) direct or indirect ownership of publicly traded securities which are issued by a Competitor involved in or

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conducting a Competing Business, provided that Executive, directly or indirectly, does not own more than 5% of the outstanding equity or voting securities of such Competitor; (B) ownership of royalty interests where Executive owns the surface of the land covered by the royalty interest and the ownership of the royalty interest is incidental to the ownership of such surface estate, provided that any such surface estate does not adjoin, or is not near to, any property ownership interest held directly or indirectly by the Company; (C) direct or indirect ownership of royalty interests or overriding royalty interests owned prior to the Effective Date; or (D) direct or indirect ownership of working interests or other interests in oil and gas owned prior to the Effective Date and disclosed by Executive to the Company in writing.  It is the intent of the Company that during the Term of this Agreement Executive is not acquiring additional oil and gas interests, directly or indirectly.

(d)Obligations of Executive Upon Termination.  Upon termination of Executive’s employment for any reason, Executive shall return to the Company all documents and copies, including hard and electronic copies, of documents in his possession relating to any Confidential Information including, but not limited to, internal and external business forms, manuals, correspondence, notes and computer programs, and Executive shall not make or retain any copy or extract of any of the foregoing.  In addition, Executive shall resign from all positions held with the Company or any affiliated entities.

(e)Remedies.  Executive acknowledges and understands that Sections 9(a), (b) , (c) and (d) and the other provisions of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of this Agreement would cause the Company irreparable harm.  In the event of a breach or threatened breach by Executive of the provisions of this Agreement, the Company shall be entitled to an injunction restraining him from such breach.  Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing, or limiting the Company’s ability to pursue, any other remedies available for any breach or threatened breach of this Agreement by Executive, including the right to cease making any severance payments or providing any benefits as contemplated by Section 7.  The provision of Section 12 hereof relating to arbitration of disputes shall not be applicable to the Company to the extent it seeks an injunction in any court to restrain Executive from violating Sections 9(a), (b), (c) and (d) hereof.

(f)Continuing Operation.  Except as specifically provided in this Section 9, the termination of Executive’s employment or of this Agreement will have no effect on the continuing operation of this Section 9.

(g)Additional Related Agreements.  Executive agrees to sign and to abide by the provisions of any additional agreements, policies or requirements of the Company which are reasonable and related to the subject of this Section 9 which are in writing and are developed by the Company in the ordinary course of business.

10.Release.  Notwithstanding any other provisions of this Agreement, it shall be a condition to Executive’s right to receive the amounts provided for in Section 7(a), 7(b) or 7(d) of this Agreement, that Executive will execute and deliver to the Company a release of claims in substantially the form attached hereto as Exhibit C (the “Release”) within twenty-one (21) days

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following the Date of Termination and that Executive not revoke such release within seven (7) days thereafter.  The form of the Release may be modified as needed to reflect changes in the applicable law or regulations that are needed to provide a legally enforceable and binding Release to all parties at the time of execution.

11.Indemnification and Insurance.  Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management employee or director of the Company with respect to acts or omissions occurring prior to (a) the termination of this Agreement or (b) the termination of employment of Executive.  

12.Arbitration; Legal Fees and Expenses.  The parties agree that Executive’s employment and this Agreement relate to interstate commerce, and that any disputes, claims or controversies between Executive and the Company which may arise out of or relate to Executive’s employment relationship or this Agreement shall be settled by arbitration.  This agreement to arbitrate shall survive the termination of this Agreement.  Any arbitration shall be in accordance with the Rules of the American Arbitration Association and undertaken pursuant to the Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma unless the parties mutually agree on another location.  The decision of the arbitrator(s) will be enforceable in any court of competent jurisdiction.  The parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s) unless such damages would have been awarded by a court of competent jurisdiction.  Nothing in this agreement to arbitrate, however, shall preclude the Company from obtaining injunctive relief from a court of competent jurisdiction prohibiting any ongoing breaches by Executive of this Agreement including, without limitation, violations of Section 9.  If any contest or dispute arises between the Company and Executive regarding any provision of this Agreement, the arbitrator may award to the prevailing party, the reasonable attorney fees, costs and expenses incurred by the prevailing party in connection with such contest or dispute.

13.Maximum Payments by the Company.

(a)It is the objective of this Agreement to maximize Executive’s Net After- Tax Benefit (as defined herein) if payments or benefits provided under this Agreement are subject to excise tax under Section 4999 of the Code.  Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including, by example and not by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment or rate of payment under any plan, program, arrangement or agreement of the Company (all such payments and benefits, including the payments and benefits under Section 7 hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the cash severance payments shall first be reduced, and the non-cash severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments shall be subject to the Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such

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reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

(b)The Total Payments shall be reduced by the Company in the following order:  (i) reduction of any cash severance payments otherwise payable to Executive that are exempt from Section 409A of the Code, (ii) reduction of any other cash payments or benefits otherwise payable to Executive that are exempt from Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting or payments with respect to any equity award with respect to the Company’s common stock that is exempt from Section 409A of the Code, (iii) reduction of any other payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting and payments with respect to any equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code, and (iv) reduction of any payments attributable to the acceleration of vesting or payments with respect to any other equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code.

(c)For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of independent auditors of nationally recognized standing (“Independent Advisors”) selected by the Company, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  The costs of obtaining such determination shall be borne by the Company.

14.Agreement Binding on Successors.

(a)Company’s Successors.  No rights or obligations of the Company under this Agreement may be assigned or transferred except that the Company will require any successor (whether direct or indirect, by purchase, merger, reorganization, sale, transfer of stock, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place.  As used in this Agreement, “Company” means the Company as herein defined, and any successor to its or the Company’s business and/or assets (by merger, purchase or otherwise)

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which executes and delivers the agreement provided for in this Section 14 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b)Executive’s Successors.  No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to payments or benefits under this Agreement, which may be transferred only by will or the laws of descent and distribution.  Upon Executive’s death, this Agreement and all rights of Executive under this Agreement shall inure to the benefit of and be enforceable by Executive’s beneficiary, or personal or legal representatives, or estate, to the extent any such person succeeds to Executive’s interests under this Agreement.  In the event of Executive’s death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his estate or other legal representative(s).  If Executive should die following his Date of Termination while any amounts would still be payable to him under this Agreement if he had continued to live, unless otherwise provided, all such amounts shall be paid in accordance with the terms of this Agreement to his beneficiary or personal or legal representatives or estate.

15.Notice.  For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:
At his last known address
evidenced on the Company’s
payroll records.

If to the Company:
Chaparral Energy, Inc.
701 Cedar Lake Boulevard
Oklahoma City, OK 73114

or to such other address as any party may have furnished to the other in writing in accordance with this Agreement, except that notices of change of address shall be effective only upon receipt.

16.Section 409A.

(a)To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulations or other such guidance that may be issued after the Effective Date (“Section 409A”).  Notwithstanding any provision of this Agreement to the contrary, in the event that following the Effective Date, the Company determines in good faith that any compensation or benefits payable under this Agreement may not be either exempt from or compliant with Section 409A, the Company shall adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effective), or take any other commercially reasonable actions necessary or appropriate to (i) preserve the intended tax treatment of the

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compensation and benefits payable hereunder, to preserve the economic benefits of such compensation and benefits, and/or to avoid less favorable accounting or tax consequences for the Company and/or (ii) to exempt the compensation and benefits payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder; provided, however, that this Section 16(a) does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify Executive for any failure to do so.

(b)Notwithstanding anything herein to the contrary, Executive acknowledges and agrees that in the event that any tax is imposed under Section 409A in respect to any compensation or benefits payable to Executive, whether under this Agreement or otherwise, then (i) the payment of such tax shall be solely Executive’s responsibility, (ii) neither the Company, its affiliates nor any of their respective past or present directors, officers, employees or agents shall have any liability for any such tax and (iii) Executive shall indemnify and hold harmless, to the greatest extent permitted under law, each of the foregoing from and against any claims or liabilities that may arise in respect of any such tax.

17.Withholding.  All payments hereunder will be subject to any required withholding of federal, state and local taxes pursuant to any applicable law or regulation.

18.Miscellaneous.  No provisions of this Agreement may be amended, modified, or waived unless agreed to in writing and signed by Executive and by a duly authorized officer of the Company.  No waiver by either party of any breach by the other party of any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  The respective rights and obligations of the parties under this Agreement shall survive Executive’s termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oklahoma without regard to its conflicts of law principles.

19.Validity.  The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

20.Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

21.Section Headings.  The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and will not affect its interpretation.

22.Entire Agreement.  Except as provided elsewhere herein and except for the other documents and agreements contemplated in accordance herewith, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties,

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whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter, including, without limitation the Change of Control Severance Agreement and the Prior Agreement.

23.Further Assurances.  The parties hereby agree, without further consideration, to execute and deliver such other instruments or to take such other action as may reasonably be required to effectuate the terms and provisions of this Agreement.

* * * *

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first above written.

	CHAPARRAL ENERGY, INC.
By:	/s/ K. Earl Reynolds
	K. Earl Reynolds
	Chief Executive Officer
	“COMPANY”
	/s/ James M. Miller
	James M. Miller
	“EXECUTIVE”

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, K. Earl Reynolds, Chief Executive Officer of Chaparral Energy, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Chaparral Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2017  

/s/ K. Earl Reynolds

K. Earl Reynolds

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Joseph O. Evans, Chief Financial Officer of Chaparral Energy, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Chaparral Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2017

/s/ Joseph O. Evans

Joseph O. Evans

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT

I, K. Earl Reynolds, Chief Executive Officer of Chaparral Energy Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 15, 2017 

/s/ K. Earl Reynolds

K. Earl Reynolds

Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PERIODIC REPORT

I, Joseph O. Evans, Chief Financial Officer of Chaparral Energy Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the year ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 15, 2017

/s/ Joseph O. Evans

Joseph O. Evans

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 15, 2017
Entity Information [Line Items]
Entity Registrant Name	Chaparral Energy, Inc.
Entity Central Index Key	0001346980
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Class A
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		37,110,630
Common Class B
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		7,871,512

XML

Consolidated balance sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 32,494
Accounts receivable, net	50,418
Inventories, net	6,847
Prepaid expenses	4,319
Derivative instruments	10,001
Total current assets	104,079
Property and equipment, net	56,136
Oil and natural gas properties, using the full cost method:
Proved	608,789
Unevaluated (excluded from the amortization base)	586,672
Accumulated depreciation, depletion, amortization and impairment	(3,034)
Total oil and natural gas properties	1,192,427
Derivative instruments	9,544
Other assets	5,988
Total assets	1,368,174
Current liabilities:
Accounts payable and accrued liabilities	60,262
Accrued payroll and benefits payable	7,358
Accrued interest payable	0
Revenue distribution payable	12,535
Long-term debt and capital leases, classified as current	4,588
Derivative instruments	0
Total current liabilities	84,743
Long-term debt and capital leases, less current maturities	288,991
Derivative instruments	0
Deferred compensation	529
Asset retirement obligations	64,531
Liabilities subject to compromise	0
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Preferred stock	0
Additional paid in capital	948,613
Accumulated deficit	(19,683)
Total stockholders' equity (deficit)	929,380
Total liabilities and stockholders' equity (deficit)	1,368,174
Common Class A
Stockholders’ equity (deficit):
Common stock	371
Common Class B
Stockholders’ equity (deficit):
Common stock	$ 79
Predecessor
Current assets:
Cash and cash equivalents		$ 186,480
Accounts receivable, net		46,226
Inventories, net		7,351
Prepaid expenses		3,886
Derivative instruments		0
Total current assets		243,943
Property and equipment, net		41,347
Oil and natural gas properties, using the full cost method:
Proved		4,323,964
Unevaluated (excluded from the amortization base)		20,353
Accumulated depreciation, depletion, amortization and impairment		(3,789,133)
Total oil and natural gas properties		555,184
Derivative instruments		0
Other assets		5,513
Total assets		845,987
Current liabilities:
Accounts payable and accrued liabilities		42,442
Accrued payroll and benefits payable		3,459
Accrued interest payable		732
Revenue distribution payable		9,426
Long-term debt and capital leases, classified as current		469,112
Derivative instruments		7,525
Total current liabilities		532,696
Long-term debt and capital leases, less current maturities		0
Derivative instruments		5,844
Deferred compensation		0
Asset retirement obligations		65,456
Liabilities subject to compromise		1,284,144
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Preferred stock		0
Additional paid in capital		425,231
Accumulated deficit		(1,467,398)
Total stockholders' equity (deficit)		(1,042,153)
Total liabilities and stockholders' equity (deficit)		845,987
Predecessor | Common Class A
Stockholders’ equity (deficit):
Common stock		4
Predecessor | Common Class B
Stockholders’ equity (deficit):
Common stock		3
Predecessor | Common Class C
Stockholders’ equity (deficit):
Common stock		2
Predecessor | Common Class E
Stockholders’ equity (deficit):
Common stock		5
Predecessor | Common Class F
Stockholders’ equity (deficit):
Common stock		0
Predecessor | Common Class G
Stockholders’ equity (deficit):
Common stock		$ 0

XML

Consolidated balance sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Preferred stock, shares authorized	5,000,000
Preferred stock, shares issued	0
Preferred stock, shares outstanding	0
Predecessor
Preferred stock, shares authorized		600,000
Preferred stock, shares issued		0
Preferred stock, shares outstanding		0
Common Class A
Common stock, par value (in dollars per share)	$ 0.01
Common stock, shares authorized	180,000,000
Common stock, shares issued	37,110,630
Common stock, shares outstanding	37,110,630
Common Class A | Predecessor
Common stock, par value (in dollars per share)		$ 0.01
Common stock, shares authorized		10,000,000
Common stock, shares issued		333,686
Common stock, shares outstanding		333,686
Common Class B
Common stock, par value (in dollars per share)	$ 0.01
Common stock, shares authorized	20,000,000
Common stock, shares issued	7,871,512
Common stock, shares outstanding	7,871,512
Common Class B | Predecessor
Common stock, par value (in dollars per share)		$ 0.01
Common stock, shares authorized		10,000,000
Common stock, shares issued		344,859
Common stock, shares outstanding		344,859
Common Class C | Predecessor
Common stock, par value (in dollars per share)		$ 0.01
Common stock, shares authorized		10,000,000
Common stock, shares issued		209,882
Common stock, shares outstanding		209,882
Common Class E | Predecessor
Common stock, par value (in dollars per share)		$ 0.01
Common stock, shares authorized		10,000,000
Common stock, shares issued		504,276
Common stock, shares outstanding		504,276
Common Class F | Predecessor
Common stock, par value (in dollars per share)		$ 0.01
Common stock, shares authorized		1
Common stock, shares issued		1
Common stock, shares outstanding		1
Common Class G | Predecessor
Common stock, par value (in dollars per share)		$ 0.01
Common stock, shares authorized		3
Common stock, shares issued		2
Common stock, shares outstanding		2

XML

Consolidated statements of operations - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016
Revenues - commodity sales	$ 7,808
Costs and expenses:
Lease operating	4,259
Transportation and processing	361
Production taxes	316
Depreciation, depletion and amortization	3,414
Loss on impairment of oil and gas assets	0
General and administrative	5,744
Liability management	0
Cost reduction initiatives	6
Total costs and expenses	14,100
Operating (loss) income	(6,292)
Non-operating (expense) income:
Interest expense	(650)
Derivative (losses) gains	(12,115)
Write-off of Senior Note issuance costs, discount and premium	0		$ (16,970)
Other (expense) income, net	(5)
Net non-operating (expense) income	(12,770)
Reorganization items, net	(620)
(Loss) income before income taxes	(19,682)
Income tax expense	1
Net (loss) income	$ (19,683)
Predecessor
Revenues - commodity sales		$ 66,531	48,239
Costs and expenses:
Lease operating		19,941	23,415
Transportation and processing		2,034	1,879
Production taxes		2,417	1,756
Depreciation, depletion and amortization		24,915	31,808
Loss on impairment of oil and gas assets		0	77,896
General and administrative		6,843	6,489
Liability management		0	5,589
Cost reduction initiatives		629	3,125
Total costs and expenses		56,779	151,957
Operating (loss) income		9,752	(103,718)
Non-operating (expense) income:
Interest expense		(5,862)	(29,654)
Derivative (losses) gains		48,006	11,932
Write-off of Senior Note issuance costs, discount and premium		0	(16,970)
Other (expense) income, net		1,373	136
Net non-operating (expense) income		43,517	(34,556)
Reorganization items, net		988,727	0
(Loss) income before income taxes		1,041,996	(138,274)
Income tax expense		37	132
Net (loss) income		$ 1,041,959	$ (138,406)

XML

Consolidated statements of stockholders' equity (deficit) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)
Stockholders' equity, balance at beginning of the period (Predecessor) at Dec. 31, 2016	$ (1,042,153)	$ 14	$ 425,231	$ (1,467,398)
Balance at beginning of period (in shares) (Predecessor) at Dec. 31, 2016		1,392,706
Restricted stock forfeited | Predecessor		(1,454)
Restricted stock cancelled | Predecessor		(8,964)
Stock-based compensation | Predecessor	194		194
Net income (loss) | Predecessor	1,041,959			1,041,959
Stockholders' equity, balance at end of the period (Predecessor) at Mar. 21, 2017	(1,012,089)	$ 14	425,425	(425,439)
Stockholders' equity, balance at end of the period at Mar. 21, 2017	$ 949,063	$ 450	948,613
Balance at end of period (in shares) (Predecessor) at Mar. 21, 2017		1,382,288
Balance at end of period (in shares) at Mar. 21, 2017	44,982,142	44,982,142
Net income (loss)	$ (19,683)			(19,683)
Stockholders' equity, balance at end of the period at Mar. 31, 2017	929,380	$ 450	948,613	(19,683)
Balance at end of period (in shares) at Mar. 31, 2017		44,982,142
Cancellation of equity | Predecessor		$ (14)	(425,425)	$ 425,439
Cancellation of equity (in shares) | Predecessor		(1,382,288)
Issuance of Successor common stock - rights offering	50,027	$ 42	49,985
Issuance of Successor common stock - rights offering (in shares)		4,197,210
Issuance of Successor common stock - backstop premium	4	$ 4
Issuance of Successor common stock - backstop premium (in shares)		367,030
Issuance of Successor common stock - settlement of claims	898,914	$ 404	898,510
Issuance of Successor common stock - settlement of claims (in shares)		40,417,902
Issuance of Successor warrants	$ 118		$ 118

XML

Consolidated statements of cash flows - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016
Cash flows from operating activities
Net income (loss)	$ (19,683)
Adjustments to reconcile net loss to net cash provided by operating activities
Non-cash reorganization items	0
Depreciation, depletion and amortization	3,414
Loss on impairment of assets	0
Write-off of Senior Note issuance costs, discount and premium	0		$ 16,970
Derivative losses (gains)	12,115
Gain on sale of assets	0
Other	1,012
Change in assets and liabilities
Accounts receivable	(3,577)
Inventories	38
Prepaid expenses and other assets	180
Accounts payable and accrued liabilities	(3,423)
Revenue distribution payable	1,510
Deferred compensation	13
Net cash (used in) provided by operating activities	(8,401)
Cash flows from investing activities
Expenditures for property, plant, and equipment and oil and natural gas properties	(5,832)
Proceeds from asset dispositions	0
Proceeds from derivative instruments	1,692
Net cash (used in) provided by investing activities	(4,140)
Cash flows from financing activities
Proceeds from long-term debt	0
Repayment of long-term debt	(19)
Proceeds from rights offering, net	0
Principal payments under capital lease obligations	(69)
Payment of other financing fees	0
Net cash (used in) provided by financing activities	(88)
Net (decrease) increase in cash and cash equivalents	(12,629)
Cash and cash equivalents at beginning of period	45,123
Cash and cash equivalents at end of period	32,494	$ 45,123
Predecessor
Cash flows from operating activities
Net income (loss)		1,041,959	(138,406)
Adjustments to reconcile net loss to net cash provided by operating activities
Non-cash reorganization items		(1,012,090)	0
Depreciation, depletion and amortization		24,915	31,808
Loss on impairment of assets		0	77,896
Write-off of Senior Note issuance costs, discount and premium		0	16,970
Derivative losses (gains)		(48,006)	(11,932)
Gain on sale of assets		(206)	(68)
Other		645	1,554
Change in assets and liabilities
Accounts receivable		198	6,262
Inventories		466	1,285
Prepaid expenses and other assets		(497)	159
Accounts payable and accrued liabilities		8,733	7,939
Revenue distribution payable		(1,875)	(2,763)
Deferred compensation		143	(955)
Net cash (used in) provided by operating activities		14,385	(10,251)
Cash flows from investing activities
Expenditures for property, plant, and equipment and oil and natural gas properties		(31,179)	(47,087)
Proceeds from asset dispositions		1,884	471
Proceeds from derivative instruments		1,285	47,486
Net cash (used in) provided by investing activities		(28,010)	870
Cash flows from financing activities
Proceeds from long-term debt		270,000	181,000
Repayment of long-term debt		(444,785)	(597)
Proceeds from rights offering, net		50,031	0
Principal payments under capital lease obligations		(568)	(614)
Payment of other financing fees		(2,410)	0
Net cash (used in) provided by financing activities		(127,732)	179,789
Net (decrease) increase in cash and cash equivalents		(141,357)	170,408
Cash and cash equivalents at beginning of period	$ 45,123	186,480	17,065
Cash and cash equivalents at end of period		$ 45,123	$ 187,473

XML

Nature of operations and summary of significant accounting policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Nature of operations and summary of significant accounting policies

Note 1: Nature of operations and summary of significant accounting policies

Nature of operations

Chaparral Energy, Inc. and its subsidiaries, (collectively, “we”, “our”, “us”, or the “Company”) are involved in the acquisition, exploration, development, production and operation of oil and natural gas properties. Our properties are located primarily in Oklahoma and Texas. To facilitate our financial statement presentations, we refer to the post-emergence reorganized company in these consolidated financial statements and footnotes as the “Successor” for periods subsequent to March 21, 2017, and to the pre-emergence company as “Predecessor” for periods prior to March 21, 2017. As discussed in “Note 2—Chapter 11 Reorganization,” we filed voluntary petitions for bankruptcy relief and subsequently operated as debtor in possession, in accordance with the applicable provisions of the Bankruptcy Code, until our emergence from bankruptcy on March 21, 2017. The cancellation of all existing shares outstanding followed by the issuance of new shares in the reorganized Company upon our emergence from bankruptcy caused a related change of control under US GAAP. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Reorganization Plan, the Company’s consolidated financial statements on or after March 21, 2017, are not comparable with the consolidated financial statements prior to that date.

Interim financial statements

The accompanying unaudited consolidated interim financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC and do not include all of the financial information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) 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, 2016.

The financial information as of March 31, 2017, and for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), and the three months ended March 31, 2016, is unaudited. The financial information as of December 31, 2016, has been derived from the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. In management’s opinion, such information contains all adjustments considered necessary for a fair presentation of the results of the interim periods. The results of operations for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), are not necessarily indicative of the results of operations that will be realized for the year ended December 31, 2017.

Cash and cash equivalents

We maintain cash and cash equivalents in bank deposit accounts and money market funds which may not be federally insured. As of March 31, 2017, cash with a recorded balance totaling approximately $27,600 was held at JP Morgan Chase Bank, N.A. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk on such accounts.

As of March 31, 2017 we had restricted cash of $14,200 which is included in “Cash and cash equivalents” in our consolidated balance sheets. The restricted funds were maintained primarily to pay debtor related professional fees associated with our reorganization as well as certain convenience class unsecured claims upon our emergence from bankruptcy. As of December 31, 2016, we had restricted cash of $1,400 which was required to be maintained during the pendency of our bankruptcy.

Accounts receivable

We have receivables from joint interest owners and oil and natural gas purchasers which are generally uncollateralized. Accounts receivable consisted of the following at March 31, 2017, and December 31, 2016:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
Joint interests	$	13,304		$	13,818
Accrued commodity sales		32,460			31,304
Derivative settlements		3,231			—
Other		2,016			1,657
Allowance for doubtful accounts		(593	)		(553	)
	$	50,418		$	46,226

Inventories

Inventories consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Equipment inventory	$	5,326	$	8,165
Commodities		1,521		1,418
Inventory valuation allowance		—		(2,232	)
	$	6,847	$	7,351

Oil and natural gas properties

Costs associated with unevaluated oil and natural gas properties are excluded from the amortizable base until a determination has been made as to the existence of proved reserves. Unevaluated leasehold costs are transferred to the amortization base with the costs of drilling the related well upon proving up reserves of a successful well or upon determination of a dry or uneconomic well, under a process that is conducted each quarter. Furthermore, unevaluated oil and natural gas properties are reviewed for impairment if events and circumstances exist that indicate a possible decline in the recoverability of the carrying amount of such property. The impairment assessment is conducted at least once annually and whenever there are indicators that an impairment has occurred. In assessing whether an impairment has occurred, we consider factors such as intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. Upon determination of an impairment, all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. The processes above are applied to unevaluated oil and natural gas properties on an individual basis or as a group if properties are individually insignificant.

In the past, the costs associated with unevaluated properties typically relate to acquisition costs of unproved acreage. However, as a result of fresh start accounting, substantially all of the carrying value of our unevaluated properties are the result of a fair value increase to reflect the value of our acreage in our STACK play (see “Note 3—Fresh start accounting”).

The costs of unevaluated oil and natural gas properties consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Leasehold acquisitions	$	579,151	$	15,455
Capitalized interest		54		1,894
Wells and facilities in progress of completion		7,467		3,004
Total unevaluated oil and natural gas properties excluded from amortization	$	586,672	$	20,353

Ceiling Test. In accordance with the full cost method of accounting, the net capitalized costs of oil and natural gas properties are not to exceed their related PV-10 value, net of tax considerations, plus the cost of unproved properties not being amortized.

Our estimates of oil and natural gas reserves as of March 31, 2017, were prepared using an average price for oil and natural gas on the first day of each month for the prior twelve months as required by the SEC. As discussed in “Note 3—Fresh start accounting,” our application of fresh start accounting to our balance sheet on March 21, 2017,  resulted in the carrying value of our oil and natural gas properties being restated based on their fair value. The estimated fresh start fair value along with adjustments for activity between March 21, 2017, and the end of the first quarter of 2017 as well as the increase in SEC average prices resulted in a carrying value that was below the full cost ceiling at quarter-end and thus a ceiling test write-down was not required.

Income taxes

We recorded income tax expense during the Successor and Predecessor periods in 2017 to reflect our obligation for current Texas margin tax on gross revenues less certain deductions. We did not record any net deferred tax benefit in the Successor or Predecessor periods in 2017 as any deferred tax asset arising from the benefit is reduced by a valuation allowance.

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, as well as the jurisdiction in which such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

As of the bankruptcy emergence date of March 21, 2017, we are in a net deferred tax asset position and based on our anticipated operating results in subsequent quarters, we project being in a net deferred tax asset position at December 31, 2017. We believe it is more likely than not that these deferred tax assets will not be realized, and accordingly, recorded a full valuation allowance against our net deferred tax assets as of March 21, 2017, and as of March 31, 2017.

We will continue to evaluate whether the valuation allowance is needed in future reporting periods. The valuation allowance will remain until we can determine that the net deferred tax assets are more likely than not to be realized. Future events or new evidence which may lead us to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings,  improvements in oil prices, and taxable events that could result from one or more transactions. The valuation allowance does not prevent future utilization of the tax attributes if we recognize taxable income. As long as we conclude that the valuation allowance against its net deferred tax assets is necessary, we likely will not have any additional deferred income tax expense or benefit.

The benefit of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the consolidated financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Interest and penalties, if any, related to uncertain tax positions would be recorded in interest expense and other expense, respectively. There were no uncertain tax positions at March 31, 2017, and December 31, 2016.

As described in “Note 2—Chapter 11 Reorganization,” elements of the Reorganization Plan provided that our indebtedness related to Senior Notes and certain general unsecured claims were exchanged Successor common stock in settlement of those claims. Absent an exception, a debtor recognizes cancellation of indebtedness income (“CODI”) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code of 1986, as amended (“IRC”), provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from Chapter 11 bankruptcy proceedings, the estimated amount of CODI is approximately $61,000, which will reduce the value of the Company’s net operating losses. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of emergence, or January 1, 2018. The reduction of net operating losses is expected to be fully offset by a corresponding decrease in valuation allowance.

The IRC provides an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future taxable income in the event of a change in ownership. Emergence from Chapter 11 bankruptcy proceedings resulted in a change in ownership for purposes of the IRC Section 382. We analyzed alternatives available within the IRC to taxpayers in Chapter 11 bankruptcy proceedings in order to minimize the impact of the ownership change and cancellation of indebtedness income on its tax attributes. Upon filing its 2017 U.S. Federal income tax return, we plan to elect an available alternative which would likely result in the Company experiencing a limitation that subjects existing tax attributes at emergence to an IRC Section 382 limitation that could result in some or all of the remaining net operating loss carryforwards expiring unused. However, we will continue to evaluate the remaining available alternatives which would not subject existing tax attributes to an IRC Section 382 limitation.

Liability management

Liability management expense includes third party legal and professional service fees incurred from our activities to restructure our debt and in preparation for our bankruptcy petition. As a result of our Chapter 11 petition, such expenses, to the extent that they are incremental and directly related to our bankruptcy reorganization, are reflected in “Reorganization items” in our consolidated statements of operations.

Cost reduction initiatives

Cost reduction initiatives include expenses related to our efforts to reduce our capital, operating and administrative costs in response to the depressed commodity pricing environment. The expense consists of costs for one-time severance and termination benefits in connection with our reductions in force and third party legal and professional services we have engaged to assist in our cost savings initiatives as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
One-time severance and termination benefits	$	1	$	608	$	3,036
Professional fees		5		21		89
Total cost reduction initiatives expense	$	6	$	629	$	3,125

Recently adopted accounting pronouncements

In March 2016, the FASB issued authoritative guidance with the objective to simplify several aspects of the accounting for share-based payments, including accounting for income taxes when awards vest or are settled, statutory withholdings and accounting for forfeitures. Classification of these aspects on the statement of cash flows is also addressed. We have adopted this guidance, which was effective for fiscal periods beginning after December 15, 2016, and interim periods thereafter, in the current quarter, with no material impact to our financial statements of results of operation. We did not have any previously unrecognized excess tax benefits that required an adjustment to the opening balance of retained earnings under the modified retrospective transition method required by the guidance.

In March 2016, the FASB issued authoritative guidance that clarifies that the assessment of whether an embedded contingent put or call option in a financial instrument is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence described in ASC 815. We adopted this guidance, which was effective for fiscal periods beginning after December 15, 2016, and interim periods thereafter, in the current quarter, with no material impact to our financial statements or results of operations.

In August 2014, the FASB issued authoritative guidance that required entities to evaluate whether there is substantial doubt about their ability to continue as a going concern and required additional disclosures if certain criteria were met. The guidance was adopted on December 31, 2016, and other than discussions regarding our emergence from bankruptcy and the related exit financing in “Note 2 — Chapter 11 reorganization” and “Note 6—Debt”, there were no additional required disclosures as contemplated by this guidance.

Recently issued accounting pronouncements

In January 2017, the FASB issued authoritative guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities constitutes a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described under updated revenue recognition guidance. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We expect that adoption of the new guidance may reduce the likelihood that a future transaction would be accounted for as a business combination although such a determination may require a greater degree of judgment.

In May 2014, the FASB issued authoritative guidance that supersedes previous revenue recognition requirements and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The new standard allows for either full retrospective adoption, meaning the standard is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning the standard is applied only to the most current period presented. During 2015 and 2016, the FASB released further updates that, among others, provided supplemental guidance and clarification to this topic including clarification on principal vs. agent considerations and identifying performance obligations and licensing. We are currently evaluating the effect the new standard and its subsequent updates will have on our financial statements and results of operations. In 2017, we established an implementation team and engaged external advisers to develop a multi-phase plan to assess our business and contracts, as well as any changes to processes to adopt the requirements of the new standard and its related updates.

In January 2016, the FASB issued authoritative guidance that amends existing requirements on the classification and measurement of financial instruments. The standard principally affects accounting for equity investments and financial liabilities where the fair value option has been elected. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods thereafter. Early adoption of certain provisions is permitted. We do not expect this guidance to materially impact our financial statements or results of operations.

In February 2016, the FASB issued authoritative guidance significantly amending the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. Furthermore, all leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, a sale will only be recognized if the criteria in the new revenue recognition standard are met. For public business entities, this guidance is effective for fiscal periods beginning after December 15, 2018 and interim periods thereafter, and should be applied using a modified retrospective approach. Early adoption is permitted. Based on an assessment of our current operating leases, which are predominantly comprised of leases for CO₂ compressors, we do not expect this guidance to materially impact our balance sheet or results of operations. However, we also enter into contractual arrangements relating to rights of ways or surface use that are typical of upstream oil and gas operations. We are currently assessing whether such arrangements are included in the new guidance and the potential impact, if any, on our financial statements or results of operations from these arrangements.

In June 2016, the FASB issued authoritative guidance which modifies the measurement of expected credit losses of certain financial instruments. The guidance is effective for fiscal years beginning after December 15, 2020, however early adoption is permitted for fiscal years beginning after December 15, 2018. The updated guidance impacts our financial statements primarily due to its effect on our accounts receivables. Our history of accounts receivable credit losses almost entirely relates to receivables from joint interest owners in our operated oil and natural gas wells. Based on this history and on mitigating actions we are permitted to take    such as netting past due amounts against revenue and assuming title to the working interest, we do not expect this guidance to materially impact our financial statements or results of operations.

In August 2016, the FASB issued authoritative guidance which provides clarification on how certain cash receipts and cash payments are presented and classified on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and is required to be adopted using a retrospective approach if practicable. Early adoption is permitted. We do not expect this guidance to have a material impact on our consolidated statement of cash flows.

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Chapter 11 Reorganization

3 Months Ended

Mar. 31, 2017

Reorganizations [Abstract]

Chapter 11 Reorganization

Note 2: Chapter 11 reorganization

Bankruptcy petition and emergence. On May 9, 2016 (the “Petition Date”), Chaparral Energy, Inc. and its subsidiaries including Chaparral Energy, L.L.C., Chaparral Resources, L.L.C., Chaparral Real Estate, L.L.C., Chaparral CO₂ , L.L.C., CEI Pipeline, L.L.C., CEI Acquisition, L.L.C., Green Country Supply, Inc., Chaparral Biofuels, L.L.C., Chaparral Exploration, L.L.C., Roadrunner Drilling, L.L.C. (collectively, the “Chapter 11 Subsidiaries” and, together with Chaparral Energy, Inc., the “Debtors”) filed voluntary petitions seeking relief under Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) commencing cases for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”).

On March 10, 2017 (the “Confirmation Date”), the Bankruptcy Court confirmed our Reorganization Plan and on March 21, 2017 (the “Effective Date”), the Reorganization Plan became effective and we emerged from bankruptcy.

Debtor-In-Possession.  During the pendency of the Chapter 11 Cases, we operated our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted all first day motions filed by us which were designed primarily to minimize the impact of the Chapter 11 Cases on our normal day-to-day operations, our customers, regulatory agencies, including taxing authorities, and employees. As a result, we were able to conduct normal business activities and pay all associated obligations for the post-petition period and we were also authorized to pay and have paid (subject to limitations applicable to payments of certain pre-petition obligations) pre-petition employee wages and benefits, pre-petition amounts owed to certain lienholders and critical vendors, amounts due to taxing authorities for production and other related taxes and funds belonging to third parties, including royalty and working interest holders. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of our business required the approval of the Bankruptcy Court.

Automatic Stay. Subject to certain exceptions, under the Bankruptcy Code, the filing of the bankruptcy petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or the filing of other actions against us or our property to recover, collect or secure a claim arising prior to the Petition Date. Absent an order from the Bankruptcy Court, substantially all of our pre-petition liabilities were subject to settlement under the Bankruptcy Code.

Plan of Reorganization. Pursuant to the terms of the Reorganization Plan, which was supported by us, certain lenders under our Prior Credit Facility (collectively, the “Lenders”) and certain holders of our Senior Notes (collectively, the “Noteholders”), the following transactions occurred on or around the Effective Date:

• On or around the Effective Date, we issued 44,982,142 shares of common stock of the reorganized company (“New Common Stock”), which were the result of the transactions described below. We also entered into a stockholders agreement and a Registration Rights Agreement and amended our certificate of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions.

• Our Predecessor common stock was cancelled, extinguished and discharged and the Predecessor equity holders did not receive any consideration in respect of their equity interests;

• The $1,267,410 of indebtedness, including accrued interest, attributable to our Senior Notes were exchanged for New Common Stock. In addition, we issued or reserved shares of New Common Stock to be exchanged in settlement of $2,439 of certain general unsecured claims. In aggregate, the shares of New Common Stock issued or to be issued in settlement of the Senior Note and these general unsecured claims represented approximately 90% percent of outstanding Successor common shares;

• We completed a rights offering backstopped by certain holders of our Senior Notes (the “Backstop Parties”) which generated $50,031 of gross proceeds. The rights offering resulted in the issuance of New Common Stock, representing approximately nine percent of outstanding Successor common shares, to holders of claims arising under the Senior Notes and to the Backstop Parties;

• In connection with the rights offering described above, the Backstop Parties received approximately one percent of outstanding Successor common shares as a backstop fee;

• Additional shares, representing seven percent of outstanding Successor common shares on a fully diluted basis, were authorized for issuance under a new management incentive plan;

• Warrants to purchase 140,023 shares of New Common Stock were issued to Mr. Mark Fischer, our founder and former Chief Executive Officer, with an exercise price of $36.78 per share and expiring on June 30, 2018. The warrants were issued in exchange for consulting services provided by Mr. Fischer;

• Our Prior Credit Facility, previously consisting of a senior secured revolving credit facility was restructured into a New Credit Facility consisting of a first-out revolving facility (“New Revolver”) and a second-out term loan (“New Term Loan”). On the Effective Date, the entire balance on the Prior Credit Facility in the amount of $444,440 was repaid while we received gross proceeds representing the opening balances on our New Revolver of $120,000 and a New Term Loan of $150,000. For more information refer to “Note 5—Debt;”

• We paid $6,954 for creditor-related professional fees and also funded a $11,000 segregated account for debtor-related professional fees in connection with the reorganization related transactions above;

• Certain other priority or convenience class claims were paid in full in cash, reinstated or otherwise treated in a manner acceptable to the creditor claimholders;

• Plaintiffs to one of our royalty owner litigation cases, which were identified as a separate class of creditors (Class 8) in our bankruptcy case, rejected the Reorganization Plan. If the claimants under Class 8 are permitted to file a class of proof claim on behalf of the putative class, certified on a class basis, and the plaintiffs ultimately prevail on the merits of their claims, any liability arising under judgement or settlement of the claims would be satisfied through issuance of Successor common shares.

In support of the Reorganization Plan, the Company estimated the enterprise value of the Successor to be in the range of $1,050,000 to $1,350,000, which was subsequently approved by the Bankruptcy Court. In accordance with the Reorganization Plan, our post-emergence board of directors is made up of seven directors consisting of the Chief Executive Officer of the post-emergence Company (K. Earl Reynolds) and six non-employee members. Our new board members are Mr. Robert Heineman (Chairman of the Board), Mr. Douglas Brooks, Mr. Kenneth Moore, Mr. Matthew Cabell, Mr. Samuel Langford and Mr. Gysle Shellum.

Liabilities Subject to Compromise. In accordance with ASC 852 “Reorganizations,” our financial statements include amounts classified as liabilities subject to compromise which represent estimates of pre-petition obligations that were allowed as claims in our bankruptcy case. These liabilities are reported at the amounts allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. The amounts disclosed below as of March 21, 2017, reflect the liabilities immediately prior to our Reorganization Plan becoming effective:

	Predecessor
	March 21, 2017		December 31, 2016
Accounts payable and accrued liabilities	$	6,687	$	9,212
Accrued payroll and benefits payable		3,949		4,048
Revenue distribution payable		3,050		3,474
Senior Notes and associated accrued interest		1,267,410		1,267,410
Liabilities subject to compromise	$	1,281,096	$	1,284,144

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Fresh start accounting

3 Months Ended

Mar. 31, 2017

Fresh Start Accounting [Abstract]

Fresh start accounting

Note 3: Fresh start accounting

Upon emergence from bankruptcy, we qualified for and applied fresh start accounting to our financial statements in accordance with the provisions set forth in ASC 852 as (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Reorganization Plan was less than the post-petition liabilities and allowed claims.

Adopting fresh start accounting results in a new reporting entity for financial reporting purposes with no beginning retained earnings or deficit. The cancellation of all existing shares outstanding on the Effective Date and issuance of new shares in the reorganized Company caused a related change of control under US GAAP. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Reorganization Plan, the Predecessor and Successor periods may lack comparability, as required in Accounting Standards Codification Topic 205, Presentation of Financial Statements (“ASC 205”). ASC 205 states financial statements are required to be presented comparably from year to year, with any exceptions to comparability clearly disclosed. Therefore, "black-line" financial statements are presented to distinguish between the Predecessor and Successor periods.

Enterprise Value and Reorganization Value

Reorganization value represents the fair value of the Company's total assets prior to the consideration of liabilities and is intended to approximate the amount a willing buyer would pay for the Company's assets immediately after restructuring. The reorganization value was allocated to the Company's individual assets based on their estimated fair values.

The Company's reorganization value was derived from enterprise value. Enterprise value represents the estimated fair value of an entity's long-term debt and equity. The enterprise value of the Company on the Effective Date, as approved by the Bankruptcy Court in support of the Plan, was estimated to be within a range of $1,050,000 to $1,350,000 with a mid-point value of $1,200,000. Based upon the various estimates and assumptions necessary for fresh start accounting, as further discussed below, the estimated enterprise value was determined to be $1,200,000 before consideration of cash and cash equivalents and outstanding debt at the Effective Date.

The following table reconciles the enterprise value to the estimated fair value of the Successor’s common stock as of the Effective Date:

Enterprise value	$	1,200,000
Plus: cash and cash equivalents		45,123
Less: fair value of outstanding debt		(296,061	)
Less: fair value of warrants (consideration for previously accrued consulting fees)		(118	)
Fair value of Successor common stock on the Effective Date	$	948,944
Total shares issued under the Reorganization Plan		44,982,142
Per share value (1)	$	21.10

____________________________________________________________

(1) The per share value shown above is calculated based upon the financial information determined using US GAAP at the Effective Date.

The following table reconciles the enterprise value to the estimated reorganization value of the Successor’s assets as of the Effective Date:

Enterprise value	$	1,200,000
Plus: cash and cash equivalents		45,123
Plus: current liabilities		82,254
Plus: noncurrent liabilities excluding long-term debt		64,735
Reorganization value of Successor assets	$	1,392,112

Valuation of Oil and Gas Properties

The Company’s principal assets are its oil and gas properties, which are accounted for under the full cost method of accounting. The oil and gas properties include proved reserves and unevaluated leasehold acreage. With the assistance of valuation consultants, the Company estimated the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the Effective Date.

The fair value analysis was based on the Company’s estimates of proved, probable and possible reserves developed internally by the Company’s reservoir engineers. Discounted cash flow models were prepared using the estimated future revenues and development and operating costs for all developed wells and undeveloped locations comprising the proved, probable and possible reserves. The value estimated for probable and possible reserves was utilized as an estimate of the fair value of the Company’s unevaluated leasehold acreage, which was further corroborated against comparable market transactions. Future revenues were based upon the forward NYMEX strip for oil and natural gas prices as of the Effective Date, adjusted for differentials realized by the Company. Development and operating cost estimates for the oil and gas properties were adjusted for inflation. The after-tax cash flows were discounted to the Effective Date at discount rate of 8.5%. This discount rate was derived from a weighted average cost of capital computation which utilized a blended expected cost of debt and expected return on equity for similar industry participants. Risk adjustment factors were applied to the values derived for the proved non-producing, proved undeveloped, probable and possible reserve categories based on consideration of the risks associated with geology, drilling success rates, development costs and the timing of development and extraction. The discounted cash flow models also included depletion, depreciation and income tax expense associated with an after-tax valuation analysis.

From this analysis the Company estimated the fair value of its proved reserves and undeveloped leasehold acreage to be $604,065 and $585,574, respectively, as of the Effective Date. These amounts are reflected in the Fresh Start Adjustments item (i) below.

Other valuations

Our adoption of fresh start accounting also required adjustments to certain other assets and liabilities on our balance sheet including property and equipment, other assets and asset retirement obligations.

Property and equipment — consists of real property which includes our headquarters, field offices and pasture land, and personal property which includes vehicles, machinery and equipment, office equipment and fixtures and a natural gas pipeline. These assets were valued using a combination of cost, income and market approaches with the exception of pasture land where we relied on government data to determine fair value.

Other assets — includes, among others, an equity investment in a company that operates ethanol plants. The equity investment was valued utilizing a combination of the market approaches such as the guideline public company method and the similar transactions method.

Asset retirement obligations — our fresh start updates to these obligations included application of the Successor’s credit adjusted risk free rate, which now incorporates a term structure based on the estimated timing of plugging activity, and resetting all obligations to a single layer.

Consolidated Balance Sheet

The following consolidated balance sheet is as of March 21, 2017. This consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Reorganization Plan (reflected in the column "Reorganization Adjustments") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments") as of the Effective Date:

				Reorganization				Fresh Start
	Predecessor			Adjustments				Adjustments				Successor
Assets
Current assets:
Cash and cash equivalents	$	180,456		$	(135,333	)	(a)	$	—			$	45,123
Accounts receivable, net		46,837			—				—				46,837
Inventories, net		6,885			—				—				6,885
Prepaid expenses		4,933			(535	)	(b)		—				4,398
Derivative instruments		19,058			—				—				19,058
Total current assets		258,169			(135,868	)			—				122,301
Property and equipment		38,391			—				18,987		(i)		57,378
Oil and natural gas properties, using the full cost method:
Proved		4,355,576			—				(3,751,511	)	(i)		604,065
Unevaluated (excluded from the amortization base)		26,039			—				559,535		(i)		585,574
Accumulated depreciation, depletion, amortization and impairment		(3,811,326	)		—				3,811,326		(i)		—
Total oil and natural gas properties		570,289			—				619,350		(i)		1,189,639
Derivative instruments		14,295			—				—				14,295
Other assets		5,499			2,410		(c)		590		(i)		8,499
Total assets	$	886,643		$	(133,458	)		$	638,927			$	1,392,112
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and accrued liabilities	$	64,413		$	(2,737	)	(a)(d)	$	—			$	61,676
Accrued payroll and benefits payable		7,366			2,186		(d)		—				9,552
Accrued interest payable		2,095			(2,095	)	(a)		—				—
Revenue distribution payable		7,975			3,050		(d)		—				11,025
Long-term debt and capital leases, classified as current		468,814			(464,182	)	(e)		—				4,632
Total current liabilities		550,663			(463,778	)			—				86,885
Long-term debt and capital leases, less current maturities		—			291,429		(f)		—				291,429
Deferred compensation		—			519		(d)		—				519
Asset retirement obligations		66,973			—				(2,757	)	(i)		64,216
Liabilities subject to compromise		1,281,096			(1,281,096	)	(d)		—				—
Commitments and contingencies
Stockholders’ (deficit) equity:
Predecessor common stock		14			(14	)	(g)		—				—
Predecessor additional paid in capital		425,425			(425,425	)	(g)		—				—
Successor common stock		—			450		(g)		—				450
Successor additional paid in capital		—			948,613		(g)		—				948,613
(Accumulated deficit) retained earnings		(1,437,528	)		795,844		(h)		641,684		(j)		—
Total stockholders' (deficit) equity		(1,012,089	)		1,319,468				641,684				949,063
Total liabilities and stockholders' equity (deficit)	$	886,643		$	(133,458	)		$	638,927			$	1,392,112

Reorganization adjustments

(a) Adjustments reflect the following net cash payments recorded as of the Effective Date from implementation of the Plan:

Cash proceeds from rights offering	$	50,031
Cash proceeds from New Term Loan		150,000
Cash proceeds from New Revolver		120,000
Fees paid to lender for New Term Loan		(750	)
Fees paid to lender for New Revolver		(1,125	)
Payment in full to extinguish Prior Credit Facility		(444,440	)
Payment of accrued interest on Prior Credit Facility		(2,095	)
Payment of previously accrued creditor-related professional fees		(6,954	)
Net cash used	$	(135,333	)

(b) Reclassification of previously prepaid professional fees to debt issuance costs associated with the New Credit Facility.

(c) Reflects issuance costs related to the New Credit Facility:

Fees paid to lender for New Term Loan	$	750
Fees paid to lender for New Revolver		1,125
Professional fees related to debt issuance costs on the New Credit Facility		535
Total issuance costs on New Credit Facility	$	2,410

(d) As part of the Plan, the Bankruptcy Court approved the settlement of certain allowable claims, reported as liabilities subject to compromise in the Company’s historical consolidated balance sheet. As a result, a gain was recognized on the settlement of liabilities subject to compromise calculated as follows:

Senior Notes including interest	$	1,267,410
Accounts payable and accrued liabilities		6,687
Accrued payroll and benefits payable		3,949
Revenue distribution payable		3,050
Total liabilities subject to compromise		1,281,096
Amounts settled in cash, reinstated or otherwise reserved at emergence		(10,089	)
Fair value of equity issued in settlement of Senior Notes and certain general unsecured creditors		(898,914	)
Gain on settlement of liabilities subject to compromise	$	372,093

(e) Reflects extinguishment of Prior Credit Facility along with associated unamortized issuance costs, establishment of New Credit Facility and adjustments to reclassify existing debt back to their scheduled maturities:

Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default	$	(22,612	)
Establishment of New Term Loan - current portion		1,183
Payment in full to extinguish Prior Credit Facility		(444,440	)
Write-off unamortized issuance costs associated with Prior Credit Facility		1,687
	$	(464,182	)

(f) Reflects establishment of our New Credit Facility pursuant to our Reorganization Plan, net of issuance costs, as well as adjustments to reclassify existing debt back to their scheduled maturities:

Origination of the New Term Loan, net of current portion	$	148,817
Origination of the New Revolver		120,000
Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default		22,612
	$	291,429

(g) Adjustment represents (i) the cancellation of Predecessor equity on the Effective Date, (ii) the issuance of 44,982,142 shares of Successor common stock on the Effective Date and (iii) the issuance of 140,023 warrants on the Effective Date (see “Note 2—Chapter 11 reorganization”)

Cancellation of predecessor equity - par value	$	(14	)
Cancellation of predecessor equity - paid in capital		(425,425	)
Issuance of successor common stock in settlement of claims		898,914
Issuance of successor common stock under rights offering		50,031
Issuance of warrants		118
Net impact to common stock-par and additional paid in capital	$	523,624

(h) Reflects the cumulative impact of the following reorganization adjustments:

Gain on settlement of liabilities subject to compromise	$	372,093
Cancellation of predecessor equity		425,438
Write-off unamortized issuance costs associated with Prior Credit Facility		(1,687	)
Net impact to retained earnings	$	795,844

Fresh start adjustments

(i) Represents fresh start accounting adjustments primarily to (i) remove accumulated depreciation, depletion, amortization and impairment, (ii) increase the value of proved oil and gas properties, (iii) increase the value of unevaluated oil and gas properties primarily to capture the value of our acreage in the STACK, (iv) increase other property and equipment primarily due to increases to land, vehicles, machinery and equipment and (v) decrease asset retirement obligations. These fair value measurements giving rise to these adjustments are primarily based on Level 3 inputs under the fair value hierarchy (See “Note 7—Fair value measurements”).

(j) Reflects the cumulative impact of the fresh start adjustments discussed herein.

Reorganization Items

We use this category to reflect, where applicable, post-petition revenues, expenses, gains and losses that are direct and incremental as a result of the reorganization of the business. Reorganization items are as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017
	through		through
	March 31, 2017		March 21, 2017
Gains on the settlement of liabilities subject to compromise	$	—	$	(372,093	)
Fresh start accounting adjustments		—		(641,684	)
Professional fees		620		18,790
Rejection of employment contracts		—		4,573
Write off unamortized issuance costs on Prior Credit Facility		—		1,687
Total reorganization items	$	620	$	(988,727	)

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Supplemental disclosures to the consolidated statements of cash flows

3 Months Ended

Mar. 31, 2017

Supplemental Cash Flow Elements [Abstract]

Supplemental disclosures to the consolidated statements of cash flows

Note 4: Supplemental disclosures to the consolidated statements of cash flows

Supplemental disclosures to the consolidated statements of cash flows are presented below:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
	March 31, 2017			March 21, 2017			March 31, 2016
Net cash provided by operating activities included:
Cash payments for interest	$	2,768		$	4,105		$	3,639
Interest capitalized		(54	)		(248	)		(1,076	)
Cash payments for interest, net of amounts capitalized	$	2,714		$	3,857		$	2,563
Cash payments for reorganization items	$	—		$	11,405		$	—
Non-cash investing activities included:
Asset retirement obligation additions and revisions	$	—		$	716		$	100
Change in accrued oil and gas capital expenditures	$	—		$	5,387		$	(11,045	)

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Debt

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Debt

Note 5: Debt

As of the dates indicated, debt consisted of the following:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
New Revolver	$	120,000		$	—
New Term Loan, net of discount of $745 and $0, respectively		149,255			—
Prior Credit Facility		—			444,440
Real estate mortgage note		9,454			9,595
Installment notes payable		211			434
Capital lease obligations		16,308			16,946
Unamortized debt issuance costs (1)		(1,649	)		(2,303	)
Total debt, net		293,579			469,112
Less current portion		4,588			469,112
Total long-term debt, net	$	288,991		$	—

(1) Debt issuance costs are presented as a direct deduction from debt rather than an asset pursuant to recent accounting guidance. See table below.

	Successor		Predecessor
	March 31,		December 31,
Unamortized debt issuance costs	2017		2016
New Revolver	$	1,649	$	—
Prior Credit Facility		—		2,303
Total unamortized debt issuance costs	$	1,649	$	2,303

Prior to our emergence from bankruptcy, our debt consisted of the Prior Credit Facility and our Senior Notes. On the Effective Date, our obligations under the Senior Notes, including principal and accrued interest, were fully extinguished in exchange for equity in the Successor. In addition, our Prior Credit Facility, previously consisting of a senior secured revolving credit facility, was restructured into the New Credit Facility consisting of the New Revolver and the New Term Loan. On the Effective Date, the entire balance on the Prior Credit Facility in the amount of $444,440 was repaid while we received gross proceeds, before lender fees, representing the opening balances on our New Revolver of $120,000 and a New Term Loan of $150,000. See “Note6—Debt” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016, for further details on our pre-emergence debt facilities.

New Term Loan

The New Term Loan, which is collateralized by our oil and natural gas properties, is scheduled to mature on March 21, 2021. Interest on the outstanding amount of the New Term Loan will accrue at an interest rate equal to either: (a) the Alternate Base Rate (as defined in the New Credit Facility) plus a 6.75% margin or (b) the Adjusted LIBO Rate (as defined in the New Credit Facility), plus a 7.75% margin with a 1.00% floor on the Adjusted LIBO Rate. As of March 31, 2017, our outstanding borrowings were accruing interest at the Alternate Base Rate which resulted in an interest rate of 10.75%. In early April 2017 our outstanding borrowings began accruing interest at the Adjusted LIBO Rate which lowered the interest rate to 8.78%.

We are required to make scheduled, mandatory principal payments in respect of the New Term Loan according to the schedule below, with the remaining outstanding balance due upon maturity:

Total payments for 2017	$	1,183
Total payments for 2018		1,500
Total payments for 2019		3,750
Total payments for 2020		6,750
Total mandatory prepayments	$	13,183

New Revolver

The New Revolver is a $400,000 facility collateralized by our oil and natural gas properties and is scheduled to mature on March 21, 2021. Availability under our New Revolver is subject to a borrowing base based on the value of our oil and natural gas properties and set by the banks semi-annually on May 1 and November 1 of each year. In addition, the lenders may request an additional borrowing base redetermination once between each scheduled redetermination or upon the occurrence of certain specified events. The banks establish a borrowing base by making an estimate of the collateral value of our oil and natural gas properties. If oil and natural gas prices decrease from the amounts used in estimating the collateral value of our oil and natural gas properties, the borrowing base may be reduced, thus reducing funds available under the borrowing base. The initial borrowing base on the Effective Date was $225,000 and the first borrowing base redetermination has been set for on or about May 1, 2018. Availability on the New Revolver as of March 31, 2017, after taking into account outstanding borrowings and letters of credit on that date, was $104,172.

Interest on the outstanding amounts under the New Revolver will accrue at an interest rate equal to either (i) the Alternate Base Rate plus a margin that ranges between 2.00% to 3.00% depending on utilization or (ii) the Adjusted LIBO Rate applicable to one, two, three or six month borrowings plus a margin that ranges between 3.00% to 4.00% depending on utilization. In the case that an Event of Default (as defined under the New Credit Facility) occurs, the applicable rate while in default will be the Alternate Base Rate plus an additional 2.00% and plus the applicable margin. As of March 31, 2017, our outstanding borrowings were accruing interest at the Alternate Base Rate which resulted in an interest rate of 6.50%. In early April 2017 our outstanding borrowings began accruing interest at the Adjusted LIBO Rate which lowered the interest rate to 4.53%.

Commitment fees of 0.50% accrue on the unused portion of the borrowing base amount, based on the utilization percentage, and are included as a component of interest expense. We generally have the right to make prepayments of the borrowings at any time without penalty or premium. Letter of credit fees will accrue at 0.125% plus the margin used to determine the interest rate applicable to New Revolver borrowings that are based on Adjusted LIBO Rate.

Covenants

The New Credit Facility contains covenants and events of default customary for oil and natural gas reserve-based lending facilities including restrictions on additional debt, guarantees, liens, restricted payments, investments and hedging activity. Additionally, our New Credit Facility specifies events of default, including non-payment, breach of warranty, non-performance of covenants, default on other indebtedness or swap agreements, certain adverse judgments, bankruptcy events and change of control, among others.

The financial covenants require that we maintain: (1) a Current Ratio (as defined in the New Credit Facility) of no less than 1.00 to 1.00, (2) an Asset Coverage Ratio (as defined in the New Credit Facility) of no less than 1.35 to 1.00, (3) Liquidity (as defined in the New Credit Facility) of at least $25,000 and (4) a Ratio Total Debt to EBITDAX (as defined in the New Credit Facility) of no greater than 3.5 to 1.0 calculated on a trailing four-quarter basis. We are required to comply with these covenants for each fiscal quarter ending on and after March 31, 2017, except for the Asset Coverage Ratio, for which compliance is required semiannually.

Write-off of Senior Note issuance costs, discount and premium

In March 2016 we wrote off the remaining unamortized issuance costs, premium and discount related to our Senior Notes for a net charge of $16,970. These deferred items are typically amortized over the life of the corresponding bond. However, as a result of not paying the interest due on our 2021 Senior Notes by the end of our grace period on March 31, 2016, we triggered an Event of Default on our Senior Notes. While uncured, the Event of Default effectively allowed the lender to demand immediate repayment, thus shortening the life of our Senior Notes. As a result, we wrote off the remaining balance of unamortized issuance costs, premium and discount on March 31, 2016, as follows:

Non-cash expense for write-off of debt issuance costs on Senior Notes	$	17,756
Non-cash expense for write-off of debt discount costs on Senior Notes		4,014
Non-cash gain for write-off of debt premium on Senior Notes		(4,800	)
Total	$	16,970

Capital Leases

During 2013, we entered into lease financing agreements with U.S. Bank National Association for $24,500 through the sale and subsequent leaseback of existing compressors owned by us. The carrying value of these compressors is included in our oil and natural gas full cost pool. The lease financing obligations are for 84-month terms and include the option to purchase the equipment for a specified price at 72 months as well as an option to purchase the equipment at the end of the lease term for its then-current fair market value. Lease payments related to the equipment are recognized as principal and interest expense based on a weighted average implicit interest rate of 3.8%. Minimum lease payments are approximately $3,181 annually. As discussed previously, our debt defaults and the commencement of the Chapter 11 Cases are events of default under our capital leases.

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Derivative instruments

3 Months Ended

Mar. 31, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative instruments

Note 6: Derivative instruments

Overview

Our results of operations, financial condition and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil, natural gas and natural gas liquids. These commodity prices are subject to wide fluctuations and market uncertainties. To mitigate a portion of this exposure, we enter into various types of derivative instruments, including commodity price swaps, collars, put options, enhanced swaps and basis protection swaps. See “Note 7—Derivative Instruments” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016, for a description of the various kinds of derivatives we may enter into.

The following table summarizes our crude oil derivatives outstanding as of March 31, 2017:

			Weighted average fixed price per Bbl
Period and type of contract	Volume MBbls		Swaps		Purchased puts		Sold calls
2017
Swaps		2,704	$	54.97	$	—	$	—
2018
Swaps		2,116	$	54.92	$	—	$	—
Collars		183	$	—	$	50.00	$	60.50
2019
Swaps		1,312	$	54.26	$	—	$	—

The following table summarizes our natural gas derivatives outstanding as of March 31, 2017:

Period and type of contract	Volume BBtu		Weighted average fixed price per MMBtu
2017
Swaps		7,091	$	3.34
2018
Swaps		5,861	$	3.03
2019
Swaps		3,322	$	2.86

Effect of derivative instruments on the consolidated balance sheets

All derivative financial instruments are recorded on the balance sheet at fair value. See “Note 7—Fair value measurements” for additional information regarding fair value measurements. The estimated fair values of derivative instruments are provided below. The carrying amounts of these instruments are equal to the estimated fair values.

	Successor							Predecessor
	March 31, 2017							December 31, 2016
	Assets		Liabilities			Net value		Assets		Liabilities			Net value
Natural gas derivative contracts	$	634	$	(363	)	$	271	$	184	$	(3,658	)	$	(3,474	)
Crude oil derivative contracts		19,274		—			19,274		—		(9,895	)		(9,895	)
Total derivative instruments		19,908		(363	)		19,545		184		(13,553	)		(13,369	)
Less:
Netting adjustments (1)		363		(363	)		—		184		(184	)		—
Derivative instruments - current		10,001		—			10,001		—		(7,525	)		(7,525	)
Derivative instruments - long-term	$	9,544	$	—		$	9,544	$	—	$	(5,844	)	$	(5,844	)

(1) Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted only to the extent that they relate to the same current versus noncurrent classification on the balance sheet.

Effect of derivative instruments on the consolidated statements of operations

We do not apply hedge accounting to any of our derivative instruments. As a result, all gains and losses associated with our derivative contracts are recognized immediately as “Derivative (losses) gains” in the consolidated statements of operations.

“Derivative (losses) gains” in the consolidated statements of operations are comprised of the following:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017		Three months
	through			through		ended
	March 31, 2017			March 21, 2017		March 31, 2016
Change in fair value of commodity price derivatives	$	(13,807	)	$	46,721	$	(35,554	)
Settlement gains on commodity price derivatives		1,692			1,285		47,486
Total derivative (losses) gains	$	(12,115	)	$	48,006	$	11,932

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Fair value measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair value measurements

Note 7: Fair value measurements

Fair value is defined by the FASB 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. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Fair value measurements are categorized according to the fair value hierarchy defined by the FASB. The hierarchical levels are based upon the level of judgment associated with the inputs used to measure the fair value of the assets and liabilities as follows:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 inputs include quoted prices for identical or similar instruments in markets that are not active and inputs other than quoted prices that are observable for the asset or liability.

• Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

Recurring fair value measurements

As of March 31, 2017, and December 31, 2016, our financial instruments recorded at fair value on a recurring basis consisted of commodity derivative contracts (see “Note 6—Derivative instruments”). We had no Level 1 assets or liabilities. Our derivative contracts classified as Level 2 consisted of commodity price swaps which are valued using an income approach. Future cash flows from the commodity price swaps are estimated based on the difference between the fixed contract price and the underlying published forward market price. Our derivative contracts classified as Level 3 consisted of collars. The fair value of these contracts is developed by a third-party pricing service using a proprietary valuation model, which we believe incorporates the assumptions that market participants would have made at the end of each period. Observable inputs include contractual terms, published forward pricing curves, and yield curves. Significant unobservable inputs are implied volatilities. Significant increases (decreases) in implied volatilities in isolation would result in a significantly higher (lower) fair value measurement. We review these valuations and the changes in the fair value measurements for reasonableness. All derivative instruments are recorded at fair value and include a measure of our own nonperformance risk for derivative liabilities or that of our counterparties for derivative assets.

The fair value hierarchy for our financial assets and liabilities is shown by the following table:

	Successor								Predecessor
	March 31, 2017								December 31, 2016
	Derivative assets			Derivative liabilities			Net assets (liabilities)		Derivative assets			Derivative liabilities			Net assets (liabilities)
Significant other observable inputs (Level 2)	$	19,432		$	(363	)	$	19,069	$	184		$	(13,455	)	$	(13,271	)
Significant unobservable inputs (Level 3)		476			—			476		—			(98	)		(98	)
Netting adjustments (1)		(363	)		363			—		(184	)		184			—
	$	19,545		$	—		$	19,545	$	—		$	(13,369	)	$	(13,369	)

(1) Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification.

Changes in the fair value of our derivative instruments, classified as Level 3 in the fair value hierarchy, were as follows for the periods presented:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
Net derivative assets (liabilities)	March 31, 2017			March 21, 2017			March 31, 2016
Beginning balance	$	715		$	(98	)	$	123,068
Realized and unrealized (losses) gains included in derivative gains		(239	)		813			6,978
Settlements received		—			—			(39,093	)
Ending balance	$	476		$	715		$	90,953
(Losses) gains relating to instruments still held at the reporting date included in derivative (losses) gains for the period	$	(239	)	$	813		$	2,027

Nonrecurring fair value measurements

Asset retirement obligations. Additions to the asset and liability associated with our asset retirement obligations are measured at fair value on a nonrecurring basis. Our asset retirement obligations consist of the estimated present value of future costs to plug and abandon or otherwise dispose of our oil and natural gas properties and related facilities. Significant inputs used in determining such obligations include estimates of plugging and abandonment costs, inflation rates, discount rates, and well life, all of which are Level 3 inputs according to the fair value hierarchy. The estimated future costs to dispose of properties added during the first three months of 2017 and 2016 were escalated using an annual inflation rate of 2.30% and 2.42%, respectively. The estimated future costs to dispose of properties added during the first three months of 2017 were discounted, depending on the range of maturity of the property, with a credit-adjusted risk-free rate ranging from 5.20% to 7.40%. The discount rate used for the first three months of 2016 was our weighted average credit-adjusted risk-free interest rate of 20.00%. These estimates may change based upon future inflation rates and changes in statutory remediation rules. See “Note 8—Asset retirement obligations” for additional information regarding our asset retirement obligations.

Fair value of other financial instruments

Our significant financial instruments, other than derivatives, consist primarily of cash and cash equivalents, accounts receivable, accounts payable, and debt. We believe the carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair values due to the short-term maturities of these instruments.

The carrying value and estimated fair value of our debt at March 31, 2017, and December 31, 2016, were as follows:

	Successor				Predecessor
	March 31, 2017				December 31, 2016
Level 2	Carrying value (1)		Estimated fair value		Carrying value (1)		Estimated fair value
New Revolver	$	120,000	$	120,000	$	—	$	—
New Term Loan		150,000		150,000		—		—
Other secured debt		9,665		9,665		10,029		10,029
9.875% Senior Notes due 2020		—		—		298,000		268,200
8.25% Senior Notes due 2021		—		—		384,045		344,680
7.625% Senior Notes due 2022		—		—		525,910		470,689

(1) The carrying value excludes deductions for debt issuance costs and discounts.

The carrying value of our New Revolver, New Term Loan and other secured long-term debt approximates fair value because the rates are comparable to those at which we could currently borrow under similar terms, are variable and incorporate a measure of our credit risk. The fair value of our Senior Notes was estimated based on quoted market prices. We have not disclosed the fair value of outstanding amounts under our Prior Credit Facility as of December 31, 2016, as it was not practicable to obtain a reasonable estimate of such value while the Predecessor was in bankruptcy.

Counterparty credit risk

Our derivative contracts are executed with institutions, or affiliates of institutions, that are parties to our credit facilities at the time of execution, and we believe the credit risks associated with all of these institutions are acceptable. We do not require collateral or other security from counterparties to support derivative instruments. Master agreements are in place with each of our derivative counterparties which provide for net settlement in the event of default or termination of the contracts under each respective agreement. As a result of the netting provisions, our maximum amount of loss under derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the derivatives. Our loss is further limited as any amounts due from a defaulting counterparty that is a Lender, or an affiliate of a Lender, under our credit facilities can be offset against amounts owed to such counterparty Lender. As of March 31, 2017, the counterparties to our open derivative contracts consisted of four financial institutions, of which all were subject to our rights of offset under our New Credit Facility.

The following table summarizes our derivative assets and liabilities which are offset in the consolidated balance sheets under our master netting agreements. It also reflects the amounts outstanding under our credit facilities that are available to offset our net derivative assets due from counterparties that are lenders under our credit facilities.

	Offset in the consolidated balance sheets									Gross amounts not offset in the consolidated balance sheets
	Gross assets (liabilities)			Offsetting assets (liabilities)			Net assets (liabilities)			Derivatives (1)		Amounts outstanding under credit facilities			Net amount
Successor - March 31, 2017
Derivative assets	$	19,908		$	(363	)	$	19,545		$	—	$	(19,545	)	$	—
Derivative liabilities		(363	)		363			—			—		—			—
	$	19,545		$	—		$	19,545		$	—	$	(19,545	)	$	—
Predecessor - December 31, 2016
Derivative assets	$	184		$	(184	)	$	—		$	—	$	—		$	—
Derivative liabilities		(13,553	)		184			(13,369	)		—		—			(13,369	)
	$	(13,369	)	$	—		$	(13,369	)	$	—	$	—		$	(13,369	)

_____________________________________________________

(1) Since positive and negative positions with a counterparty are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification, these represent remaining amounts that could have been offset under our master netting agreements.

We did not post additional collateral under any of these contracts as all of our counterparties are secured by the collateral under our credit facilities. Payment on our derivative contracts could be accelerated in the event of a default on our New Credit Facility. The aggregate fair value of our derivative liabilities subject to acceleration in the event of default was $363 at March 31, 2017.

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Asset retirement obligations

3 Months Ended

Mar. 31, 2017

Asset Retirement Obligation Disclosure [Abstract]

Asset retirement obligations

Note 8: Asset retirement obligations

The following table provides a summary of our asset retirement obligation activity:  

Liability for asset retirement obligations as of December 31, 2016 (Predecessor)	$	72,137
Liabilities incurred in current period		535
Liabilities settled and disposed in current period		(869	)
Revisions in estimated cash flows		181
Accretion expense		1,249
Liability for asset retirement obligations as of March 21, 2017 (Predecessor)	$	73,233
Fair value fresh-start adjustment	$	(2,757	)
Liability for asset retirement obligations as of March 21, 2017 (Successor)	$	70,476
Liabilities incurred in current period		—
Liabilities settled and disposed in current period		—
Revisions in estimated cash flows		—
Accretion expense		121
Liability for asset retirement obligations as of March 31, 2017 (Successor)	$	70,597
Less current portion included in accounts payable and    accrued liabilities		6,066
Asset retirement obligations, long-term	$	64,531

See “Note 7—Fair value measurements” for additional information regarding fair value assumptions associated with our asset retirement obligations.

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Deferred compensation

3 Months Ended

Mar. 31, 2017

Share Based Compensation [Abstract]

Deferred Compensation

Note 9: Deferred compensation

Restricted Stock Unit Plan

Prior to our emergence from bankruptcy, we had a Non-Officer Restricted Stock Unit Plan (the “RSU Plan”) in effect as an incentive plan for nonexecutive employees. The provisions under our RSU Plan are discussed in Note 11 — Deferred compensation in Item 8. Financial Statements and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016. As of January 1, 2017, there were 98,596 unvested and outstanding Restricted Stock Units with a weighted average grant date fair value of $7.18 per unit.

Due to the severe decline in commodity pricing, which has resulted in a steep decline in our estimated proved reserves, the estimated fair value per RSU as of January 1, 2017, was $0.00. All remaining unvested awards were cancelled upon our emergence from bankruptcy on the Effective Date.

2015 Cash Incentive Plan

We adopted the Long-Term Cash Incentive Plan (the “2015 Cash LTIP”) on August 7, 2015. The 2015 Cash LTIP provides additional cash compensation to certain employees of the Company in the form of awards that generally vest in equal annual increments over a four -year period. Since the awards do not vary according to the value of the Company’s equity, the awards are not considered “stock-based compensation” under accounting guidance. We accrue for the cost of each annual increment over the period service is required to vest. A summary of compensation expense for the 2015 Cash LTIP is presented below:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
2015 Cash LTIP expense (net of amounts capitalized)	$	13	$	5	$	159
2015 Cash LTIP payments		—		17		42

On April 3, 2017, the Company awarded an additional $3,321 under the 2015 Cash LTIP.

2010 Equity Incentive Plan

We adopted the Chaparral Energy, Inc. 2010 Equity Incentive Plan (the “2010 Plan”) on April 12, 2010. The 2010 Plan reserved a total of 86,301 shares of our class A common stock for awards issued under the 2010 Plan. All of our or our affiliates’ employees, officers, directors, and consultants, as defined in the 2010 Plan, were eligible to participate in the 2010 Plan.

The awards granted under the 2010 Plan consisted of shares that were subject to service vesting conditions (the “Time Vested” awards) and shares that are subject to market and performance vested conditions (the “Performance Vested” awards). The material provisions under the 2010 Plan are discussed in “Note 11—Deferred compensation” in Item 8. Financial Statement and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2016.

As of result of our bankruptcy, the estimated fair value of our Time Vested restricted awards was $0.00 per share since the Petition Date. Furthermore, during the third quarter of 2016, we recorded a cumulative catch up adjustment of to reverse the aggregate compensation cost associated with our Performance Vested awards in order to reflect a decrease in the probability that requisite service would be achieved for these awards. Pursuant to our Reorganization Plan, all outstanding restricted shares were cancelled. As this cancellation was not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration, it was accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost was recognized at the cancellation date.

A summary of our restricted stock activity for the Predecessor period in 2017 is presented below:

	Time Vested							Performance Vested
	Weighted average grant date fair value		Restricted shares			Vest date fair value		Weighted average grant date fair value		Restricted shares
	($ per share)							($ per share)
Unvested and outstanding at January 1, 2017 - Predecessor	$	790.91		6,667				$	277.33		21,475
Granted	$	—		—				$	—		—
Vested	$	812.91		(2,602	)	$	—	$	—		—
Forfeited	$	785.70		(468	)			$	195.75		(986	)
Cancelled	$	775.66		(3,597	)			$	281.26		(20,489	)
Unvested and outstanding at March 21, 2017 - Predecessor	$	—		—				$	—		—

Stock-based compensation cost

Compensation cost is calculated net of forfeitures, which are estimated based on our historical and expected turnover rates. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation cost could be different from what we have recorded in the current period.

A portion of stock-based compensation cost associated with employees involved in our acquisition, exploration, and development activities has been capitalized as part of our oil and natural gas properties. The remaining cost is reflected in lease operating and general and administrative expenses in the consolidated statements of operations. We recognized stock-based compensation expense as follows for the periods indicated:  

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017			Three months
	through		through			ended
	March 31, 2017		March 21, 2017			March 31, 2016
Stock-based compensation cost (credit)	$	—	$	194		$	(898	)
Less: stock-based compensation cost capitalized		—		(39	)		(124	)
Stock-based compensation expense (credit)	$	—	$	155		$	(1,022	)
Payments for stock-based compensation	$	—	$	—		$	49

The credit for stock-based compensation for the three months ended March 31, 2016, was primarily a result of forfeitures from our workforce reduction in January 2016. As of March 31, 2017, and December 31, 2016, accrued payroll and benefits payable included $0 and $0, respectively, for stock-based compensation costs expected to be settled within the next twelve months. We did not have any unrecognized compensation cost as of March 31, 2017, as all previously outstanding equity based awards were cancelled.

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Commitments and contingencies

3 Months Ended

Mar. 31, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and contingencies

Note 10: Commitments and contingencies

Standby letters of credit (“Letters”) available under our Credit Facility are used in lieu of surety bonds with various organizations for liabilities relating to the operation of oil and natural gas properties. We had Letters outstanding totaling $828 as of March 31, 2017, and December 31, 2016. When amounts under the Letters are paid by the lenders, interest accrues on the amount paid at the same interest rate applicable to borrowings under the Credit Facility. No amounts were paid by the lenders under the Letters; therefore, we paid no interest on the Letters during the three months ended March 31, 2017 or 2016.

Litigation and Claims

Chapter 11 Proceedings. Commencement of the Chapter 11 Cases automatically stayed many of the proceedings and actions against us noted below as well as other claims and actions that were or could have been brought prior to May 9, 2016, and the claims remain subject to bankruptcy court jurisdiction. In connection with the proofs of claim asserted during bankruptcy from the proceedings or actions below, we are unable to estimate the amounts that will be allowed through the Bankruptcy proceedings due to the complexity and number of legal and factual issues presented by the matters and uncertainties with respect to, amongst other things, the nature of the claims and defenses, the potential size of the classes, the scope and types of the properties and agreements involved, and the ultimate potential outcomes of the matters. As a result, no reserves were established within our liabilities in connection with the proceedings and actions described below. To the extent that any of these legal proceedings result in a claim being allowed against us, pursuant to the terms of the Reorganization Plan, such claims will be satisfied through the issuance of new stock in the Company.

Naylor Farms, Inc., individually and as class representative on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On June 7, 2011, an alleged class action was filed against us in the United States District Court for the Western District of Oklahoma (“Naylor Trial Court”) alleging that we improperly deducted post-production costs from royalties paid to plaintiffs and other royalty interest owners as categorized in the petition from crude oil and natural gas wells located in Oklahoma (“Naylor Farms Case”). The purported class includes non-governmental royalty interest owners in oil and natural gas wells we operate in Oklahoma. The plaintiffs have alleged a number of claims, including breach of contract, fraud, breach of fiduciary duty, unjust enrichment, and other claims and seek termination of leases, recovery of compensatory damages, interest, punitive damages and attorney fees on behalf of the alleged class. We have responded to the Naylor Farms petition, denied the allegations and raised arguments and defenses. Plaintiffs filed a motion for class certification in October 2015. In addition, the plaintiffs filed a motion for summary judgment asking the court to determine as a matter of law that natural gas is not marketable until it is in the condition and location to enter an interstate pipeline. Responsive briefs to both motions were filed in the fourth quarter of 2015. On May 20, 2016, we filed a Notice of Suggestion of Bankruptcy with the Naylor Trial Court, informing the court that we had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. In response, on May 23, 2016, the court issued an order administratively closing the case, subject to reopening depending on the disposition of the bankruptcy proceedings. On July 22, 2016, attorneys for the putative class filed a motion in the Bankruptcy Court asking the court to lift the automatic stay and allow the case to proceed in the Naylor Trial Court. We did not object to lifting the automatic stay with regard to this case for the limited purpose of allowing the Naylor Trial Court to rule on the pending motion for class certification. On January 17, 2017, the Naylor Trial Court certified a modified class of plaintiffs with oil and gas leases containing specific language. The modified class constitutes less than 60% of the leases the Plaintiffs originally sought to certify. On January 30, 2017, the Company filed a motion for reconsideration with the Naylor Trial Court, asking the court to rule the class cannot be immediately certified because Plaintiffs did not define dates for class membership. Plaintiffs responded the class should include claims reaching back to December 1, 1999, to which we responded the statute of limitations should limit the beginning of the class period to June 1, 2006. The Naylor Trial Court issued an order conditionally denying reconsideration, contingent on Plaintiffs selection of June 1, 2006 as the commencement of the class period. Plaintiffs amended the class to include only claims relating back to June 1, 2006. On April 18, 2017, the Naylor Trial Court denied our motion for reconsideration and also issued an order administratively closing the case pending disposition of the bankruptcy proceedings. On May 1, 2017, we filed a Petition for Permission to Appeal Class Certification Order with the Tenth Circuit Court of Appeals (“Appellate Petition”). The Tenth Circuit has not ruled on our Appellate Petition.

The plaintiffs have indicated, if the class is certified, they seek damages in excess of $5,000 which may increase with the passage of time, a majority of which damages would be comprised of interest. In addition to filing claims on behalf of the named plaintiffs and associated parties, plaintiffs’ attorneys filed a proof of claim on behalf of the putative class claiming in excess of $150,000 in our Chapter 11 Cases. The Company has objected treatment of the claim on a class basis, asserting the claim should be addressed on an individual basis. The Bankruptcy Court heard testimony and arguments regarding class-wide treatment of the claim on February 28, 2017, but has not ruled on the matter. Under the Reorganization Plan, the Plaintiffs are identified as a separate class of creditors, Class 8. Under the Reorganization Plan, Class 8 claims are entitled to receive their pro rata share of new stock issued to the holders of general unsecured claims (including claims of the Noteholders). Although the members of Class 8 voted to reject the Plan, the Bankruptcy Court confirmed the Plan on March 10, 2017, without objection by the Plaintiffs. If the Bankruptcy Court permits the Plaintiffs’ proof of claim to proceed on behalf of the class and the plaintiffs ultimately prevail on the merits of their claims, any liability arising under judgment or settlement of the unsecured claims would be satisfied through the issuance of new stock in the Company. We continue to dispute the plaintiffs’ allegations, dispute the case meets the requirements for class certification, and are objecting to the claims both individually and on a class-wide basis.

Amanda Dodson, individually and as class representative on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On May 10, 2013, Amanda Dodson, filed a complaint against us in the District Court of Mayes County, Oklahoma, (“Dodson Case”) with an allegation similar to those asserted in the Naylor Farms case related to post-production deductions, and include claims for breach of contract, fraud, breach of fiduciary duty, unjust enrichment, and other claims and seek termination of leases, recovery of compensatory damages, interest, punitive damages and attorney fees on behalf of the alleged class. The alleged class includes non-governmental royalty interest owners in oil and natural gas wells we operate in Oklahoma. We have responded to the Dodson petition, denied the allegations and raised a number of affirmative defenses. At the time we filed our Bankruptcy Petitions, a class had not been certified and discovery had not yet commenced. As the plaintiffs in the Dodson case did not file proofs of claim either for the putative class or the putative class representative, we anticipate any liability related to this claim will be addressed only based on proofs of claim filed by individual royalty owners.

Martha Donelson and John Friend, on behalf of themselves and on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On August 11, 2014, an alleged class action was filed against us, as well as several other operators in Osage County, in the United States District Court for the Northern District of Oklahoma, alleging claims on behalf of the named plaintiffs and all similarly situated Osage County land owners and surface lessees. The plaintiffs challenged leases and drilling permits approved by the Bureau of Indian Affairs without the environmental studies allegedly required under the National Environmental Protection (NEPA). The plaintiffs assert claims seeking recovery for trespass, nuisance, negligence and unjust enrichment. Relief sought includes declaring oil and natural gas leases and drilling permits obtained in Osage County without a prior NEPA study void ab initio, removing us from all properties owned by the class members, disgorgement of profits, and compensatory and punitive damages. On March 31, 2016, the Court dismissed the case against the federal agencies named as defendants, and therefore against all defendants, as an improper challenge under NEPA and the Administrative Procedures Act. On April 29, 2016, the plaintiffs filed a motion to alter or amend the court’s opinion and vacate the judgment, arguing the court does have jurisdiction to hear the claims and dismissal of the federal defendants does not require dismissal of the oil company defendants. The plaintiffs also filed a motion to file an amended complaint to cure the deficiencies which the court found in the dismissed complaint. Several defendants have filed briefs objecting to plaintiffs’ motions. On May 20, 2016, the Company filed a Notice of Suggestion of Bankruptcy, informing the court that we had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, and has not responded to the plaintiffs’ motions. After a motion for reconsideration was denied, Plaintiffs filed a Notice of Appeal on December 6, 2016. On December 30, 2016, the Court of Appeals entered an Order Abating Appeal due to pending bankruptcy proceedings of multiple defendants. On January 13, 2017, Plaintiffs responded to the Order Abating Appeal, asking the Court to proceed with the appeal. The Court has not ruled on the appeal as of the date of this report. The Court lifted the Stay as to Chaparral on April 13, 2017, and we joined the answer filed by other non-federal defendants which had been filed on March 24, 2017.

As the plaintiffs in the Donelson case did not file proofs of claim either for the putative class or the putative class representatives, we anticipate any monetary liability related to this claim will be discharged. We dispute plaintiffs’ allegations and dispute that the case meets the requirements for a class action.

Lisa West and Stormy Hopson, individually and as class representatives on behalf of all similarly situated persons v. Chaparral Energy, L.L.C. On February 18, 2016, an alleged class action was filed against us, as well as several other operators in the District Court of Pottawatomie County, State of Oklahoma (“West Case”), alleging claims on behalf of named plaintiffs and all similarly situated persons having an insurable real property interest in eight counties in central Oklahoma (the “Class Area”). The plaintiffs allege the oil and gas operations conducted by us and the other defendants have induced or triggered earthquakes in the Class Area. The plaintiffs are asking the court to require the defendants to reimburse plaintiffs and class members for earthquake insurance premiums from 2011 through a future date defined as the time at which the court determines there is no longer a risk that our activities induce or trigger earthquakes, as well as attorney fees and costs and other relief. The plaintiffs did not ask for damages related to actual property damage which may have occurred. We responded to the petition, denied the allegations and raised a number of affirmative defenses. At this time, a class has not been certified and discovery has not yet commenced. On March 18, 2016, the case was removed to the United States District Court for the Western District of Oklahoma under the Class Action Fairness Act (“CAFA”). On May 20, 2016, we filed a Notice of Suggestion of Bankruptcy, informing the court that we had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. On October 14, 2016, the plaintiffs filed an Amended Complaint adding additional defendants and increasing the Class Area to 25 Central Oklahoma counties. Although we are named as a defendant, the Amended Complaint expressly limits its claims against us to those asserted in the original petition unless and until the automatic stay is lifted. Plaintiffs’ attorneys filed a proof of claim on behalf of the putative class claiming in excess of $75,000 in our Chapter 11 Cases. Other defendants have filed motions to dismiss the action based on various theories, as well as motions to strike various allegations and requested relief as unsupported by Oklahoma law. A hearing on the various motions to dismiss and motions to strike was held on May 12, 2017. The judge made various rulings from the bench, including dismissing the complaint for failure to adequately allege causation, but permitting the plaintiffs to amend the complaint to cure the deficiency. We dispute the plaintiffs’ claims, dispute that the case meets the requirements for a class action, dispute the remedies requested are available under Oklahoma law, and are vigorously defending the case.

We are involved in various other legal proceedings including, but not limited to, commercial disputes, claims from royalty and surface owners, property damage claims, personal injury claims, employment claims, and other matters which arise in the ordinary course of business. In addition, other proofs of claim have been filed in our bankruptcy case which we anticipate repudiating. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect any of them individually to have a material effect on our financial condition, results of operations or cash flows.

We have numerous contractual commitments in the ordinary course of business including debt service requirements, operating leases, capital leases and purchase obligations. Our operating leases primarily relate to CO₂ recycle compressors at our EOR facilities and office equipment while our capital leases are related to the sale and subsequent leaseback of compressors. Our purchase obligations primarily relate to a contract for the purchase of CO₂ and drilling rig services. Other than changes to our credit facility (see “Note 5—Debt”) and the discharge of our Senior Notes and certain general unsecured claims pursuant our Reorganization Plan (see “Note 3—Chapter 11 reorganization”), the only other material change to our contractual commitments since December 31, 2016, relates to our contracts for drilling rig services. As of March 31, 2017, our obligations under our drilling rig contracts were $2,581.

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Nature of operations and summary of significant accounting policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Nature of operations

Nature of operations

Chaparral Energy, Inc. and its subsidiaries, (collectively, “we”, “our”, “us”, or the “Company”) are involved in the acquisition, exploration, development, production and operation of oil and natural gas properties. Our properties are located primarily in Oklahoma and Texas. To facilitate our financial statement presentations, we refer to the post-emergence reorganized company in these consolidated financial statements and footnotes as the “Successor” for periods subsequent to March 21, 2017, and to the pre-emergence company as “Predecessor” for periods prior to March 21, 2017. As discussed in “Note 2—Chapter 11 Reorganization,” we filed voluntary petitions for bankruptcy relief and subsequently operated as debtor in possession, in accordance with the applicable provisions of the Bankruptcy Code, until our emergence from bankruptcy on March 21, 2017. The cancellation of all existing shares outstanding followed by the issuance of new shares in the reorganized Company upon our emergence from bankruptcy caused a related change of control under US GAAP. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Reorganization Plan, the Company’s consolidated financial statements on or after March 21, 2017, are not comparable with the consolidated financial statements prior to that date.

Interim financial statements

Interim financial statements

The accompanying unaudited consolidated interim financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC and do not include all of the financial information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) 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, 2016.

The financial information as of March 31, 2017, and for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), and the three months ended March 31, 2016, is unaudited. The financial information as of December 31, 2016, has been derived from the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. In management’s opinion, such information contains all adjustments considered necessary for a fair presentation of the results of the interim periods. The results of operations for the periods of March 22, 2017, through March 31, 2017 (Successor), and January 1, 2017, through March 21, 2017 (Predecessor), are not necessarily indicative of the results of operations that will be realized for the year ended December 31, 2017.

Cash and cash equivalents

Cash and cash equivalents

We maintain cash and cash equivalents in bank deposit accounts and money market funds which may not be federally insured. As of March 31, 2017, cash with a recorded balance totaling approximately $27,600 was held at JP Morgan Chase Bank, N.A. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk on such accounts.

As of March 31, 2017 we had restricted cash of $14,200 which is included in “Cash and cash equivalents” in our consolidated balance sheets. The restricted funds were maintained primarily to pay debtor related professional fees associated with our reorganization as well as certain convenience class unsecured claims upon our emergence from bankruptcy. As of December 31, 2016, we had restricted cash of $1,400 which was required to be maintained during the pendency of our bankruptcy.

Accounts receivable

Accounts receivable

We have receivables from joint interest owners and oil and natural gas purchasers which are generally uncollateralized. Accounts receivable consisted of the following at March 31, 2017, and December 31, 2016:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
Joint interests	$	13,304		$	13,818
Accrued commodity sales		32,460			31,304
Derivative settlements		3,231			—
Other		2,016			1,657
Allowance for doubtful accounts		(593	)		(553	)
	$	50,418		$	46,226

Inventories

Inventories

Inventories consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Equipment inventory	$	5,326	$	8,165
Commodities		1,521		1,418
Inventory valuation allowance		—		(2,232	)
	$	6,847	$	7,351

Oil and natural gas properties

Oil and natural gas properties

Costs associated with unevaluated oil and natural gas properties are excluded from the amortizable base until a determination has been made as to the existence of proved reserves. Unevaluated leasehold costs are transferred to the amortization base with the costs of drilling the related well upon proving up reserves of a successful well or upon determination of a dry or uneconomic well, under a process that is conducted each quarter. Furthermore, unevaluated oil and natural gas properties are reviewed for impairment if events and circumstances exist that indicate a possible decline in the recoverability of the carrying amount of such property. The impairment assessment is conducted at least once annually and whenever there are indicators that an impairment has occurred. In assessing whether an impairment has occurred, we consider factors such as intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. Upon determination of an impairment, all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. The processes above are applied to unevaluated oil and natural gas properties on an individual basis or as a group if properties are individually insignificant.

In the past, the costs associated with unevaluated properties typically relate to acquisition costs of unproved acreage. However, as a result of fresh start accounting, substantially all of the carrying value of our unevaluated properties are the result of a fair value increase to reflect the value of our acreage in our STACK play (see “Note 3—Fresh start accounting”).

The costs of unevaluated oil and natural gas properties consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Leasehold acquisitions	$	579,151	$	15,455
Capitalized interest		54		1,894
Wells and facilities in progress of completion		7,467		3,004
Total unevaluated oil and natural gas properties excluded from amortization	$	586,672	$	20,353

Ceiling Test. In accordance with the full cost method of accounting, the net capitalized costs of oil and natural gas properties are not to exceed their related PV-10 value, net of tax considerations, plus the cost of unproved properties not being amortized.

Our estimates of oil and natural gas reserves as of March 31, 2017, were prepared using an average price for oil and natural gas on the first day of each month for the prior twelve months as required by the SEC. As discussed in “Note 3—Fresh start accounting,” our application of fresh start accounting to our balance sheet on March 21, 2017,  resulted in the carrying value of our oil and natural gas properties being restated based on their fair value. The estimated fresh start fair value along with adjustments for activity between March 21, 2017, and the end of the first quarter of 2017 as well as the increase in SEC average prices resulted in a carrying value that was below the full cost ceiling at quarter-end and thus a ceiling test write-down was not required.

Income taxes

Income taxes

We recorded income tax expense during the Successor and Predecessor periods in 2017 to reflect our obligation for current Texas margin tax on gross revenues less certain deductions. We did not record any net deferred tax benefit in the Successor or Predecessor periods in 2017 as any deferred tax asset arising from the benefit is reduced by a valuation allowance.

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, as well as the jurisdiction in which such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

As of the bankruptcy emergence date of March 21, 2017, we are in a net deferred tax asset position and based on our anticipated operating results in subsequent quarters, we project being in a net deferred tax asset position at December 31, 2017. We believe it is more likely than not that these deferred tax assets will not be realized, and accordingly, recorded a full valuation allowance against our net deferred tax assets as of March 21, 2017, and as of March 31, 2017.

We will continue to evaluate whether the valuation allowance is needed in future reporting periods. The valuation allowance will remain until we can determine that the net deferred tax assets are more likely than not to be realized. Future events or new evidence which may lead us to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings,  improvements in oil prices, and taxable events that could result from one or more transactions. The valuation allowance does not prevent future utilization of the tax attributes if we recognize taxable income. As long as we conclude that the valuation allowance against its net deferred tax assets is necessary, we likely will not have any additional deferred income tax expense or benefit.

The benefit of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the consolidated financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Interest and penalties, if any, related to uncertain tax positions would be recorded in interest expense and other expense, respectively. There were no uncertain tax positions at March 31, 2017, and December 31, 2016.

As described in “Note 2—Chapter 11 Reorganization,” elements of the Reorganization Plan provided that our indebtedness related to Senior Notes and certain general unsecured claims were exchanged Successor common stock in settlement of those claims. Absent an exception, a debtor recognizes cancellation of indebtedness income (“CODI”) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code of 1986, as amended (“IRC”), provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from Chapter 11 bankruptcy proceedings, the estimated amount of CODI is approximately $61,000, which will reduce the value of the Company’s net operating losses. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of emergence, or January 1, 2018. The reduction of net operating losses is expected to be fully offset by a corresponding decrease in valuation allowance.

The IRC provides an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future taxable income in the event of a change in ownership. Emergence from Chapter 11 bankruptcy proceedings resulted in a change in ownership for purposes of the IRC Section 382. We analyzed alternatives available within the IRC to taxpayers in Chapter 11 bankruptcy proceedings in order to minimize the impact of the ownership change and cancellation of indebtedness income on its tax attributes. Upon filing its 2017 U.S. Federal income tax return, we plan to elect an available alternative which would likely result in the Company experiencing a limitation that subjects existing tax attributes at emergence to an IRC Section 382 limitation that could result in some or all of the remaining net operating loss carryforwards expiring unused. However, we will continue to evaluate the remaining available alternatives which would not subject existing tax attributes to an IRC Section 382 limitation.

Liability management

Liability management

Liability management expense includes third party legal and professional service fees incurred from our activities to restructure our debt and in preparation for our bankruptcy petition. As a result of our Chapter 11 petition, such expenses, to the extent that they are incremental and directly related to our bankruptcy reorganization, are reflected in “Reorganization items” in our consolidated statements of operations.

Cost reduction initiatives

Cost reduction initiatives

Cost reduction initiatives include expenses related to our efforts to reduce our capital, operating and administrative costs in response to the depressed commodity pricing environment. The expense consists of costs for one-time severance and termination benefits in connection with our reductions in force and third party legal and professional services we have engaged to assist in our cost savings initiatives as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
One-time severance and termination benefits	$	1	$	608	$	3,036
Professional fees		5		21		89
Total cost reduction initiatives expense	$	6	$	629	$	3,125

Recently issued and adopted accounting pronouncements

Recently adopted accounting pronouncements

In March 2016, the FASB issued authoritative guidance with the objective to simplify several aspects of the accounting for share-based payments, including accounting for income taxes when awards vest or are settled, statutory withholdings and accounting for forfeitures. Classification of these aspects on the statement of cash flows is also addressed. We have adopted this guidance, which was effective for fiscal periods beginning after December 15, 2016, and interim periods thereafter, in the current quarter, with no material impact to our financial statements of results of operation. We did not have any previously unrecognized excess tax benefits that required an adjustment to the opening balance of retained earnings under the modified retrospective transition method required by the guidance.

In March 2016, the FASB issued authoritative guidance that clarifies that the assessment of whether an embedded contingent put or call option in a financial instrument is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence described in ASC 815. We adopted this guidance, which was effective for fiscal periods beginning after December 15, 2016, and interim periods thereafter, in the current quarter, with no material impact to our financial statements or results of operations.

In August 2014, the FASB issued authoritative guidance that required entities to evaluate whether there is substantial doubt about their ability to continue as a going concern and required additional disclosures if certain criteria were met. The guidance was adopted on December 31, 2016, and other than discussions regarding our emergence from bankruptcy and the related exit financing in “Note 2 — Chapter 11 reorganization” and “Note 6—Debt”, there were no additional required disclosures as contemplated by this guidance.

Recently issued accounting pronouncements

In January 2017, the FASB issued authoritative guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities constitutes a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described under updated revenue recognition guidance. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We expect that adoption of the new guidance may reduce the likelihood that a future transaction would be accounted for as a business combination although such a determination may require a greater degree of judgment.

In May 2014, the FASB issued authoritative guidance that supersedes previous revenue recognition requirements and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The new standard allows for either full retrospective adoption, meaning the standard is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning the standard is applied only to the most current period presented. During 2015 and 2016, the FASB released further updates that, among others, provided supplemental guidance and clarification to this topic including clarification on principal vs. agent considerations and identifying performance obligations and licensing. We are currently evaluating the effect the new standard and its subsequent updates will have on our financial statements and results of operations. In 2017, we established an implementation team and engaged external advisers to develop a multi-phase plan to assess our business and contracts, as well as any changes to processes to adopt the requirements of the new standard and its related updates.

In January 2016, the FASB issued authoritative guidance that amends existing requirements on the classification and measurement of financial instruments. The standard principally affects accounting for equity investments and financial liabilities where the fair value option has been elected. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods thereafter. Early adoption of certain provisions is permitted. We do not expect this guidance to materially impact our financial statements or results of operations.

In February 2016, the FASB issued authoritative guidance significantly amending the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. Furthermore, all leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, a sale will only be recognized if the criteria in the new revenue recognition standard are met. For public business entities, this guidance is effective for fiscal periods beginning after December 15, 2018 and interim periods thereafter, and should be applied using a modified retrospective approach. Early adoption is permitted. Based on an assessment of our current operating leases, which are predominantly comprised of leases for CO₂ compressors, we do not expect this guidance to materially impact our balance sheet or results of operations. However, we also enter into contractual arrangements relating to rights of ways or surface use that are typical of upstream oil and gas operations. We are currently assessing whether such arrangements are included in the new guidance and the potential impact, if any, on our financial statements or results of operations from these arrangements.

In June 2016, the FASB issued authoritative guidance which modifies the measurement of expected credit losses of certain financial instruments. The guidance is effective for fiscal years beginning after December 15, 2020, however early adoption is permitted for fiscal years beginning after December 15, 2018. The updated guidance impacts our financial statements primarily due to its effect on our accounts receivables. Our history of accounts receivable credit losses almost entirely relates to receivables from joint interest owners in our operated oil and natural gas wells. Based on this history and on mitigating actions we are permitted to take    such as netting past due amounts against revenue and assuming title to the working interest, we do not expect this guidance to materially impact our financial statements or results of operations.

In August 2016, the FASB issued authoritative guidance which provides clarification on how certain cash receipts and cash payments are presented and classified on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and is required to be adopted using a retrospective approach if practicable. Early adoption is permitted. We do not expect this guidance to have a material impact on our consolidated statement of cash flows.

Liabilities Subject to Compromise

Liabilities Subject to Compromise. In accordance with ASC 852 “Reorganizations,” our financial statements include amounts classified as liabilities subject to compromise which represent estimates of pre-petition obligations that were allowed as claims in our bankruptcy case. These liabilities are reported at the amounts allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. The amounts disclosed below as of March 21, 2017, reflect the liabilities immediately prior to our Reorganization Plan becoming effective:

	Predecessor
	March 21, 2017		December 31, 2016
Accounts payable and accrued liabilities	$	6,687	$	9,212
Accrued payroll and benefits payable		3,949		4,048
Revenue distribution payable		3,050		3,474
Senior Notes and associated accrued interest		1,267,410		1,267,410
Liabilities subject to compromise	$	1,281,096	$	1,284,144

Reorganization Items

Reorganization Items

We use this category to reflect, where applicable, post-petition revenues, expenses, gains and losses that are direct and incremental as a result of the reorganization of the business. Reorganization items are as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017
	through		through
	March 31, 2017		March 21, 2017
Gains on the settlement of liabilities subject to compromise	$	—	$	(372,093	)
Fresh start accounting adjustments		—		(641,684	)
Professional fees		620		18,790
Rejection of employment contracts		—		4,573
Write off unamortized issuance costs on Prior Credit Facility		—		1,687
Total reorganization items	$	620	$	(988,727	)

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Nature of operations and summary of significant accounting policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Components of accounts receivable

Accounts receivable consisted of the following at March 31, 2017, and December 31, 2016:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
Joint interests	$	13,304		$	13,818
Accrued commodity sales		32,460			31,304
Derivative settlements		3,231			—
Other		2,016			1,657
Allowance for doubtful accounts		(593	)		(553	)
	$	50,418		$	46,226

Components of inventory

Inventories consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Equipment inventory	$	5,326	$	8,165
Commodities		1,521		1,418
Inventory valuation allowance		—		(2,232	)
	$	6,847	$	7,351

Components of unevaluated oil and natural gas properties

The costs of unevaluated oil and natural gas properties consisted of the following at March 31, 2017, and December 31, 2016:

	Successor		Predecessor
	March 31,		December 31,
	2017		2016
Leasehold acquisitions	$	579,151	$	15,455
Capitalized interest		54		1,894
Wells and facilities in progress of completion		7,467		3,004
Total unevaluated oil and natural gas properties excluded from amortization	$	586,672	$	20,353

Components of cost reduction initiatives expense

The expense consists of costs for one-time severance and termination benefits in connection with our reductions in force and third party legal and professional services we have engaged to assist in our cost savings initiatives as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
One-time severance and termination benefits	$	1	$	608	$	3,036
Professional fees		5		21		89
Total cost reduction initiatives expense	$	6	$	629	$	3,125

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Chapter 11 Reorganization (Tables)

3 Months Ended

Mar. 31, 2017

Reorganizations [Abstract]

Summary of Components of Liabilities Subject to Compromise

The amounts disclosed below as of March 21, 2017, reflect the liabilities immediately prior to our Reorganization Plan becoming effective:

	Predecessor
	March 21, 2017		December 31, 2016
Accounts payable and accrued liabilities	$	6,687	$	9,212
Accrued payroll and benefits payable		3,949		4,048
Revenue distribution payable		3,050		3,474
Senior Notes and associated accrued interest		1,267,410		1,267,410
Liabilities subject to compromise	$	1,281,096	$	1,284,144

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Fresh start accounting (Tables)

3 Months Ended

Mar. 31, 2017

Fresh Start Accounting [Abstract]

Schedule of enterprise value to estimated fair value of the successor's common stock

The following table reconciles the enterprise value to the estimated fair value of the Successor’s common stock as of the Effective Date:

Enterprise value	$	1,200,000
Plus: cash and cash equivalents		45,123
Less: fair value of outstanding debt		(296,061	)
Less: fair value of warrants (consideration for previously accrued consulting fees)		(118	)
Fair value of Successor common stock on the Effective Date	$	948,944
Total shares issued under the Reorganization Plan		44,982,142
Per share value (1)	$	21.10

____________________________________________________________

(1) The per share value shown above is calculated based upon the financial information determined using US GAAP at the Effective Date.

Schedule of enterprise value to estimated reorganization value of the successor's assets

The following table reconciles the enterprise value to the estimated reorganization value of the Successor’s assets as of the Effective Date:

Enterprise value	$	1,200,000
Plus: cash and cash equivalents		45,123
Plus: current liabilities		82,254
Plus: noncurrent liabilities excluding long-term debt		64,735
Reorganization value of Successor assets	$	1,392,112

Schedule of reorganization balance sheet and fresh start accounting adjustments

The following consolidated balance sheet is as of March 21, 2017. This consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Reorganization Plan (reflected in the column "Reorganization Adjustments") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments") as of the Effective Date:

				Reorganization				Fresh Start
	Predecessor			Adjustments				Adjustments				Successor
Assets
Current assets:
Cash and cash equivalents	$	180,456		$	(135,333	)	(a)	$	—			$	45,123
Accounts receivable, net		46,837			—				—				46,837
Inventories, net		6,885			—				—				6,885
Prepaid expenses		4,933			(535	)	(b)		—				4,398
Derivative instruments		19,058			—				—				19,058
Total current assets		258,169			(135,868	)			—				122,301
Property and equipment		38,391			—				18,987		(i)		57,378
Oil and natural gas properties, using the full cost method:
Proved		4,355,576			—				(3,751,511	)	(i)		604,065
Unevaluated (excluded from the amortization base)		26,039			—				559,535		(i)		585,574
Accumulated depreciation, depletion, amortization and impairment		(3,811,326	)		—				3,811,326		(i)		—
Total oil and natural gas properties		570,289			—				619,350		(i)		1,189,639
Derivative instruments		14,295			—				—				14,295
Other assets		5,499			2,410		(c)		590		(i)		8,499
Total assets	$	886,643		$	(133,458	)		$	638,927			$	1,392,112
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and accrued liabilities	$	64,413		$	(2,737	)	(a)(d)	$	—			$	61,676
Accrued payroll and benefits payable		7,366			2,186		(d)		—				9,552
Accrued interest payable		2,095			(2,095	)	(a)		—				—
Revenue distribution payable		7,975			3,050		(d)		—				11,025
Long-term debt and capital leases, classified as current		468,814			(464,182	)	(e)		—				4,632
Total current liabilities		550,663			(463,778	)			—				86,885
Long-term debt and capital leases, less current maturities		—			291,429		(f)		—				291,429
Deferred compensation		—			519		(d)		—				519
Asset retirement obligations		66,973			—				(2,757	)	(i)		64,216
Liabilities subject to compromise		1,281,096			(1,281,096	)	(d)		—				—
Commitments and contingencies
Stockholders’ (deficit) equity:
Predecessor common stock		14			(14	)	(g)		—				—
Predecessor additional paid in capital		425,425			(425,425	)	(g)		—				—
Successor common stock		—			450		(g)		—				450
Successor additional paid in capital		—			948,613		(g)		—				948,613
(Accumulated deficit) retained earnings		(1,437,528	)		795,844		(h)		641,684		(j)		—
Total stockholders' (deficit) equity		(1,012,089	)		1,319,468				641,684				949,063
Total liabilities and stockholders' equity (deficit)	$	886,643		$	(133,458	)		$	638,927			$	1,392,112

Reorganization adjustments

(a) Adjustments reflect the following net cash payments recorded as of the Effective Date from implementation of the Plan:

Cash proceeds from rights offering	$	50,031
Cash proceeds from New Term Loan		150,000
Cash proceeds from New Revolver		120,000
Fees paid to lender for New Term Loan		(750	)
Fees paid to lender for New Revolver		(1,125	)
Payment in full to extinguish Prior Credit Facility		(444,440	)
Payment of accrued interest on Prior Credit Facility		(2,095	)
Payment of previously accrued creditor-related professional fees		(6,954	)
Net cash used	$	(135,333	)

(b) Reclassification of previously prepaid professional fees to debt issuance costs associated with the New Credit Facility.

(c) Reflects issuance costs related to the New Credit Facility:

Fees paid to lender for New Term Loan	$	750
Fees paid to lender for New Revolver		1,125
Professional fees related to debt issuance costs on the New Credit Facility		535
Total issuance costs on New Credit Facility	$	2,410

(d) As part of the Plan, the Bankruptcy Court approved the settlement of certain allowable claims, reported as liabilities subject to compromise in the Company’s historical consolidated balance sheet. As a result, a gain was recognized on the settlement of liabilities subject to compromise calculated as follows:

Senior Notes including interest	$	1,267,410
Accounts payable and accrued liabilities		6,687
Accrued payroll and benefits payable		3,949
Revenue distribution payable		3,050
Total liabilities subject to compromise		1,281,096
Amounts settled in cash, reinstated or otherwise reserved at emergence		(10,089	)
Fair value of equity issued in settlement of Senior Notes and certain general unsecured creditors		(898,914	)
Gain on settlement of liabilities subject to compromise	$	372,093

(e) Reflects extinguishment of Prior Credit Facility along with associated unamortized issuance costs, establishment of New Credit Facility and adjustments to reclassify existing debt back to their scheduled maturities:

Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default	$	(22,612	)
Establishment of New Term Loan - current portion		1,183
Payment in full to extinguish Prior Credit Facility		(444,440	)
Write-off unamortized issuance costs associated with Prior Credit Facility		1,687
	$	(464,182	)

(f) Reflects establishment of our New Credit Facility pursuant to our Reorganization Plan, net of issuance costs, as well as adjustments to reclassify existing debt back to their scheduled maturities:

Origination of the New Term Loan, net of current portion	$	148,817
Origination of the New Revolver		120,000
Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default		22,612
	$	291,429

(g) Adjustment represents (i) the cancellation of Predecessor equity on the Effective Date, (ii) the issuance of 44,982,142 shares of Successor common stock on the Effective Date and (iii) the issuance of 140,023 warrants on the Effective Date (see “Note 2—Chapter 11 reorganization”)

Cancellation of predecessor equity - par value	$	(14	)
Cancellation of predecessor equity - paid in capital		(425,425	)
Issuance of successor common stock in settlement of claims		898,914
Issuance of successor common stock under rights offering		50,031
Issuance of warrants		118
Net impact to common stock-par and additional paid in capital	$	523,624

(h) Reflects the cumulative impact of the following reorganization adjustments:

Gain on settlement of liabilities subject to compromise	$	372,093
Cancellation of predecessor equity		425,438
Write-off unamortized issuance costs associated with Prior Credit Facility		(1,687	)
Net impact to retained earnings	$	795,844

Fresh start adjustments

(i) Represents fresh start accounting adjustments primarily to (i) remove accumulated depreciation, depletion, amortization and impairment, (ii) increase the value of proved oil and gas properties, (iii) increase the value of unevaluated oil and gas properties primarily to capture the value of our acreage in the STACK, (iv) increase other property and equipment primarily due to increases to land, vehicles, machinery and equipment and (v) decrease asset retirement obligations. These fair value measurements giving rise to these adjustments are primarily based on Level 3 inputs under the fair value hierarchy (See “Note 7—Fair value measurements”).

(j) Reflects the cumulative impact of the fresh start adjustments discussed herein.

Schedule of reorganization items

Reorganization items are as follows:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017
	through		through
	March 31, 2017		March 21, 2017
Gains on the settlement of liabilities subject to compromise	$	—	$	(372,093	)
Fresh start accounting adjustments		—		(641,684	)
Professional fees		620		18,790
Rejection of employment contracts		—		4,573
Write off unamortized issuance costs on Prior Credit Facility		—		1,687
Total reorganization items	$	620	$	(988,727	)

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Supplemental disclosures to the consolidated statements of cash flows (Tables)

3 Months Ended

Mar. 31, 2017

Supplemental Cash Flow Elements [Abstract]

Supplemental disclosures to the consolidated statements of cash flows

Supplemental disclosures to the consolidated statements of cash flows are presented below:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
	March 31, 2017			March 21, 2017			March 31, 2016
Net cash provided by operating activities included:
Cash payments for interest	$	2,768		$	4,105		$	3,639
Interest capitalized		(54	)		(248	)		(1,076	)
Cash payments for interest, net of amounts capitalized	$	2,714		$	3,857		$	2,563
Cash payments for reorganization items	$	—		$	11,405		$	—
Non-cash investing activities included:
Asset retirement obligation additions and revisions	$	—		$	716		$	100
Change in accrued oil and gas capital expenditures	$	—		$	5,387		$	(11,045	)

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Debt (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Components of debt

As of the dates indicated, debt consisted of the following:

	Successor			Predecessor
	March 31,			December 31,
	2017			2016
New Revolver	$	120,000		$	—
New Term Loan, net of discount of $745 and $0, respectively		149,255			—
Prior Credit Facility		—			444,440
Real estate mortgage note		9,454			9,595
Installment notes payable		211			434
Capital lease obligations		16,308			16,946
Unamortized debt issuance costs (1)		(1,649	)		(2,303	)
Total debt, net		293,579			469,112
Less current portion		4,588			469,112
Total long-term debt, net	$	288,991		$	—

(1) Debt issuance costs are presented as a direct deduction from debt rather than an asset pursuant to recent accounting guidance. See table below.

	Successor		Predecessor
	March 31,		December 31,
Unamortized debt issuance costs	2017		2016
New Revolver	$	1,649	$	—
Prior Credit Facility		—		2,303
Total unamortized debt issuance costs	$	1,649	$	2,303

Schedule of mandatory principal payment according to schedule of remaining outstanding balance due upon maturity

We are required to make scheduled, mandatory principal payments in respect of the New Term Loan according to the schedule below, with the remaining outstanding balance due upon maturity:

Total payments for 2017	$	1,183
Total payments for 2018		1,500
Total payments for 2019		3,750
Total payments for 2020		6,750
Total mandatory prepayments	$	13,183

Premiums, discounts and debt issuance costs

As a result, we wrote off the remaining balance of unamortized issuance costs, premium and discount on March 31, 2016, as follows:

Non-cash expense for write-off of debt issuance costs on Senior Notes	$	17,756
Non-cash expense for write-off of debt discount costs on Senior Notes		4,014
Non-cash gain for write-off of debt premium on Senior Notes		(4,800	)
Total	$	16,970

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Derivative instruments (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of derivatives outstanding

The following table summarizes our crude oil derivatives outstanding as of March 31, 2017:

			Weighted average fixed price per Bbl
Period and type of contract	Volume MBbls		Swaps		Purchased puts		Sold calls
2017
Swaps		2,704	$	54.97	$	—	$	—
2018
Swaps		2,116	$	54.92	$	—	$	—
Collars		183	$	—	$	50.00	$	60.50
2019
Swaps		1,312	$	54.26	$	—	$	—

The following table summarizes our natural gas derivatives outstanding as of March 31, 2017:

Period and type of contract	Volume BBtu		Weighted average fixed price per MMBtu
2017
Swaps		7,091	$	3.34
2018
Swaps		5,861	$	3.03
2019
Swaps		3,322	$	2.86

Derivative instruments recorded on the balance sheet at fair value

The estimated fair values of derivative instruments are provided below. The carrying amounts of these instruments are equal to the estimated fair values.

	Successor							Predecessor
	March 31, 2017							December 31, 2016
	Assets		Liabilities			Net value		Assets		Liabilities			Net value
Natural gas derivative contracts	$	634	$	(363	)	$	271	$	184	$	(3,658	)	$	(3,474	)
Crude oil derivative contracts		19,274		—			19,274		—		(9,895	)		(9,895	)
Total derivative instruments		19,908		(363	)		19,545		184		(13,553	)		(13,369	)
Less:
Netting adjustments (1)		363		(363	)		—		184		(184	)		—
Derivative instruments - current		10,001		—			10,001		—		(7,525	)		(7,525	)
Derivative instruments - long-term	$	9,544	$	—		$	9,544	$	—	$	(5,844	)	$	(5,844	)

(1) Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted only to the extent that they relate to the same current versus noncurrent classification on the balance sheet.

Derivative (losses) gains in the consolidated statements of operations

“Derivative (losses) gains” in the consolidated statements of operations are comprised of the following:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017		Three months
	through			through		ended
	March 31, 2017			March 21, 2017		March 31, 2016
Change in fair value of commodity price derivatives	$	(13,807	)	$	46,721	$	(35,554	)
Settlement gains on commodity price derivatives		1,692			1,285		47,486
Total derivative (losses) gains	$	(12,115	)	$	48,006	$	11,932

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Fair value measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair value hierarchy for financial instruments measured at fair value on a recurring basis

The fair value hierarchy for our financial assets and liabilities is shown by the following table:

	Successor								Predecessor
	March 31, 2017								December 31, 2016
	Derivative assets			Derivative liabilities			Net assets (liabilities)		Derivative assets			Derivative liabilities			Net assets (liabilities)
Significant other observable inputs (Level 2)	$	19,432		$	(363	)	$	19,069	$	184		$	(13,455	)	$	(13,271	)
Significant unobservable inputs (Level 3)		476			—			476		—			(98	)		(98	)
Netting adjustments (1)		(363	)		363			—		(184	)		184			—
	$	19,545		$	—		$	19,545	$	—		$	(13,369	)	$	(13,369	)

(1) Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification.

Level 3 rollforward

Changes in the fair value of our derivative instruments, classified as Level 3 in the fair value hierarchy, were as follows for the periods presented:

	Successor			Predecessor
	Period from			Period from
	March 22, 2017			January 1, 2017			Three months
	through			through			ended
Net derivative assets (liabilities)	March 31, 2017			March 21, 2017			March 31, 2016
Beginning balance	$	715		$	(98	)	$	123,068
Realized and unrealized (losses) gains included in derivative gains		(239	)		813			6,978
Settlements received		—			—			(39,093	)
Ending balance	$	476		$	715		$	90,953
(Losses) gains relating to instruments still held at the reporting date included in derivative (losses) gains for the period	$	(239	)	$	813		$	2,027

Fair value of other financial instruments

The carrying value and estimated fair value of our debt at March 31, 2017, and December 31, 2016, were as follows:

	Successor				Predecessor
	March 31, 2017				December 31, 2016
Level 2	Carrying value (1)		Estimated fair value		Carrying value (1)		Estimated fair value
New Revolver	$	120,000	$	120,000	$	—	$	—
New Term Loan		150,000		150,000		—		—
Other secured debt		9,665		9,665		10,029		10,029
9.875% Senior Notes due 2020		—		—		298,000		268,200
8.25% Senior Notes due 2021		—		—		384,045		344,680
7.625% Senior Notes due 2022		—		—		525,910		470,689

(1) The carrying value excludes deductions for debt issuance costs and discounts.

Offsetting Assets and Liabilities

The following table summarizes our derivative assets and liabilities which are offset in the consolidated balance sheets under our master netting agreements. It also reflects the amounts outstanding under our credit facilities that are available to offset our net derivative assets due from counterparties that are lenders under our credit facilities.

	Offset in the consolidated balance sheets									Gross amounts not offset in the consolidated balance sheets
	Gross assets (liabilities)			Offsetting assets (liabilities)			Net assets (liabilities)			Derivatives (1)		Amounts outstanding under credit facilities			Net amount
Successor - March 31, 2017
Derivative assets	$	19,908		$	(363	)	$	19,545		$	—	$	(19,545	)	$	—
Derivative liabilities		(363	)		363			—			—		—			—
	$	19,545		$	—		$	19,545		$	—	$	(19,545	)	$	—
Predecessor - December 31, 2016
Derivative assets	$	184		$	(184	)	$	—		$	—	$	—		$	—
Derivative liabilities		(13,553	)		184			(13,369	)		—		—			(13,369	)
	$	(13,369	)	$	—		$	(13,369	)	$	—	$	—		$	(13,369	)

_____________________________________________________

(1) Since positive and negative positions with a counterparty are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification, these represent remaining amounts that could have been offset under our master netting agreements.

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Asset retirement obligations (Tables)

3 Months Ended

Mar. 31, 2017

Asset Retirement Obligation Disclosure [Abstract]

Asset retirement obligations

The following table provides a summary of our asset retirement obligation activity:  

Liability for asset retirement obligations as of December 31, 2016 (Predecessor)	$	72,137
Liabilities incurred in current period		535
Liabilities settled and disposed in current period		(869	)
Revisions in estimated cash flows		181
Accretion expense		1,249
Liability for asset retirement obligations as of March 21, 2017 (Predecessor)	$	73,233
Fair value fresh-start adjustment	$	(2,757	)
Liability for asset retirement obligations as of March 21, 2017 (Successor)	$	70,476
Liabilities incurred in current period		—
Liabilities settled and disposed in current period		—
Revisions in estimated cash flows		—
Accretion expense		121
Liability for asset retirement obligations as of March 31, 2017 (Successor)	$	70,597
Less current portion included in accounts payable and    accrued liabilities		6,066
Asset retirement obligations, long-term	$	64,531

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Deferred compensation (Tables)

3 Months Ended

Mar. 31, 2017

Share Based Compensation [Abstract]

Summary of compensation expense

A summary of compensation expense for the 2015 Cash LTIP is presented below:

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017		Three months
	through		through		ended
	March 31, 2017		March 21, 2017		March 31, 2016
2015 Cash LTIP expense (net of amounts capitalized)	$	13	$	5	$	159
2015 Cash LTIP payments		—		17		42

Rollforward of unvested deferred compensation

A summary of our restricted stock activity for the Predecessor period in 2017 is presented below:

	Time Vested							Performance Vested
	Weighted average grant date fair value		Restricted shares			Vest date fair value		Weighted average grant date fair value		Restricted shares
	($ per share)							($ per share)
Unvested and outstanding at January 1, 2017 - Predecessor	$	790.91		6,667				$	277.33		21,475
Granted	$	—		—				$	—		—
Vested	$	812.91		(2,602	)	$	—	$	—		—
Forfeited	$	785.70		(468	)			$	195.75		(986	)
Cancelled	$	775.66		(3,597	)			$	281.26		(20,489	)
Unvested and outstanding at March 21, 2017 - Predecessor	$	—		—				$	—		—

Stock-based compensation cost

We recognized stock-based compensation expense as follows for the periods indicated:  

	Successor		Predecessor
	Period from		Period from
	March 22, 2017		January 1, 2017			Three months
	through		through			ended
	March 31, 2017		March 21, 2017			March 31, 2016
Stock-based compensation cost (credit)	$	—	$	194		$	(898	)
Less: stock-based compensation cost capitalized		—		(39	)		(124	)
Stock-based compensation expense (credit)	$	—	$	155		$	(1,022	)
Payments for stock-based compensation	$	—	$	—		$	49

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Nature of operations and summary of significant accounting policies (Cash and Accounts Receivable) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Cash and accounts receivable
Restricted cash	$ 14,200
Components of accounts receivable
Joint interests	13,304
Accrued commodity sales	32,460
Derivative settlements	3,231
Other	2,016
Allowance for doubtful accounts	(593)
Accounts receivable, net	50,418	$ 46,837
Predecessor
Cash and accounts receivable
Restricted cash			$ 1,400
Components of accounts receivable
Joint interests			13,818
Accrued commodity sales			31,304
Other			1,657
Allowance for doubtful accounts			(553)
Accounts receivable, net		$ 46,837	$ 46,226
JP Morgan Chase Bank, N.A.
Cash and accounts receivable
Cash held	$ 27,600

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Nature of operations and summary of significant accounting policies (Inventories) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Energy Related Inventory
Equipment inventory	$ 5,326
Commodities	1,521
Inventories, net	$ 6,847	$ 6,885
Predecessor
Energy Related Inventory
Equipment inventory			$ 8,165
Commodities			1,418
Inventory valuation allowance			(2,232)
Inventories, net		$ 6,885	$ 7,351

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Nature of operations and summary of significant accounting policies (Unevaluated Oil and Natural Gas Properties) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Capitalized costs of unproved properties excluded from amortization
Leasehold acquisitions	$ 579,151
Capitalized interest	54
Wells and facilities in progress of completion	7,467
Total unevaluated oil and natural gas properties excluded from amortization	$ 586,672	$ 585,574
Predecessor
Capitalized costs of unproved properties excluded from amortization
Leasehold acquisitions			$ 15,455
Capitalized interest			1,894
Wells and facilities in progress of completion			3,004
Total unevaluated oil and natural gas properties excluded from amortization		$ 26,039	$ 20,353

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Nature of operations and summary of significant accounting policies (Income Taxes) (Details) - USD ($)		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Income Tax Disclosure [Line Items]
Deferred tax benefit	$ 0
Uncertain tax positions	$ 0	$ 0
Estimated amount of cancellation of indebtedness income		$ 61,000,000
Predecessor
Income Tax Disclosure [Line Items]
Deferred tax benefit			$ 0
Uncertain tax positions				$ 0

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Nature of operations and summary of significant accounting policies (Cost Reduction Initiatives) (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016
Restructuring Cost and Reserve [Line Items]
Cost reduction initiatives expense	$ 6
Predecessor
Restructuring Cost and Reserve [Line Items]
Cost reduction initiatives expense		$ 629	$ 3,125
One-time Severance and Termination Benefits
Restructuring Cost and Reserve [Line Items]
Cost reduction initiatives expense	1
One-time Severance and Termination Benefits | Predecessor
Restructuring Cost and Reserve [Line Items]
Cost reduction initiatives expense		608	3,036
Professional Fees
Restructuring Cost and Reserve [Line Items]
Cost reduction initiatives expense	$ 5
Professional Fees | Predecessor
Restructuring Cost and Reserve [Line Items]
Cost reduction initiatives expense		$ 21	$ 89

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Chapter 11 Reorganization - Narrative (Details)		3 Months Ended
	Mar. 21, 2017 USD ($) Director Member $ / shares shares	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Chapter Eleven Reorganization [Line Item]
Liabilities subject to compromise		$ 0
Predecessor
Chapter Eleven Reorganization [Line Item]
Senior Notes and associated accrued interest	$ 1,267,410,000		$ 1,267,410,000
Accounts payable and accrued liabilities	6,687,000		9,212,000
Accrued payroll and benefits payable	3,949,000		4,048,000
Revenue distribution payable	3,050,000		3,474,000
Liabilities subject to compromise	1,281,096,000		$ 1,284,144,000
Plan of Reorganization
Chapter Eleven Reorganization [Line Item]
Senior Notes and associated accrued interest	1,267,410,000
General unsecured claims	2,439,000
Professional fees	6,954,000
Segregated account for professional fees attributable to our advisors	$ 11,000,000
Number of directors | Director	7
Number of non-employee members | Member	6
Plan of Reorganization | Minimum
Chapter Eleven Reorganization [Line Item]
Reorganization plan, enterprise value of the post emergence	$ 1,050,000,000
Plan of Reorganization | Maximum
Chapter Eleven Reorganization [Line Item]
Reorganization plan, enterprise value of the post emergence	1,350,000,000
Plan of Reorganization | Prior Credit Facility
Chapter Eleven Reorganization [Line Item]
Amount of repayments on prior credit facility	444,440,000
Plan of Reorganization | New Revolver
Chapter Eleven Reorganization [Line Item]
New credit facility, opening balance	120,000,000
Plan of Reorganization | New Term Loan
Chapter Eleven Reorganization [Line Item]
New credit facility, opening balance	150,000,000
Plan of Reorganization | Backstop Parties
Chapter Eleven Reorganization [Line Item]
Gross proceeds from rights offering	$ 50,031,000
Plan of Reorganization | Common Stock
Chapter Eleven Reorganization [Line Item]
Common stock shares issued | shares	44,982,142
Percentage of common stock outstanding on conversion of debt	90.00%
Plan of Reorganization | Common Stock | Mr. Mark Fischer, Founder and Former Chief Executive Officer
Chapter Eleven Reorganization [Line Item]
Warrants issued for purchase of common stock | shares	140,023
Exercise price of warrants per share | $ / shares	$ 36.78
Warrants expiry date	Jun. 30, 2018
Plan of Reorganization | Common Stock | Management Incentive Plan
Chapter Eleven Reorganization [Line Item]
Additional shares authorized for issuance	7.00%
Plan of Reorganization | Common Stock | Backstop Parties
Chapter Eleven Reorganization [Line Item]
Percentage of rights issued on common stock outstanding	9.00%
Percentage of outstanding stock received as fee	1.00%
Chaparral Energy Inc and Subsidiaries
Chapter Eleven Reorganization [Line Item]
Date of bankruptcy petition filed		May 09, 2016
Place of bankruptcy petition filed		United States Bankruptcy Court for the District of Delaware
Reorganization plan confirmation date		Mar. 10, 2017
Reorganization plan effective date		Mar. 21, 2017

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Fresh Start Accounting - Additional information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017
Fresh Start Adjustment [Line Items]
Enterprise value		$ 1,200,000,000
Fair value of proved reserves		604,065,000
Fair value of undeveloped leasehold acreage		585,574,000
Discounted Cash Flow
Fresh Start Adjustment [Line Items]
Discount rate	8.50%
Midpoint [Member] | Plan of Reorganization
Fresh Start Adjustment [Line Items]
Reorganization plan, enterprise value of the post emergence		$ 1,200,000,000
Maximum
Fresh Start Adjustment [Line Items]
Fresh start voting share percentage of existing shareholders in emerging entity		50.00%
Maximum | Plan of Reorganization
Fresh Start Adjustment [Line Items]
Reorganization plan, enterprise value of the post emergence		$ 1,350,000,000
Minimum | Plan of Reorganization
Fresh Start Adjustment [Line Items]
Reorganization plan, enterprise value of the post emergence		$ 1,050,000,000

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Fresh Start Accounting - Reconciliation of Enterprise Value to Estimated Fair Value of the Successor's Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands		Mar. 31, 2017	Mar. 21, 2017
Fresh Start Accounting [Abstract]
Enterprise value			$ 1,200,000
Cash and cash equivalents		$ 32,494	45,123
Less: fair value of outstanding debt			(296,061)
Less: fair value of warrants (consideration for previously accrued consulting fees)			(118)
Fair value of Successor common stock on the Effective Date			$ 948,944
Common stock, shares outstanding			44,982,142
Per share value	[1]		$ 21.10

[1] The per share value shown above is calculated based upon the financial information determined using US GAAP at the Effective Date.

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Fresh Start Accounting - Reconciliation of Enterprise Value to Estimated Reorganization Value of the Successor's Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 21, 2017
Fresh Start Accounting [Abstract]
Enterprise value		$ 1,200,000
Cash and cash equivalents	$ 32,494	45,123
Plus: current liabilities		82,254
Plus: noncurrent liabilities excluding long-term debt		64,735
Reorganization value of Successor assets		$ 1,392,112

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Fresh Start Accounting - Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 32,494	$ 45,123
Accounts receivable, net	50,418	46,837
Inventories, net	6,847	6,885
Prepaid expenses	4,319	4,398
Derivative instruments	10,001	19,058
Total current assets	104,079	122,301
Property and equipment, net	56,136	57,378
Oil and natural gas properties, using the full cost method:
Proved	608,789	604,065
Unevaluated (excluded from the amortization base)	586,672	585,574
Accumulated depreciation, depletion, amortization and impairment	3,034
Total oil and natural gas properties	1,192,427	1,189,639
Derivative instruments	9,544	14,295
Other assets	5,988	8,499
Total assets	1,368,174	1,392,112
Current liabilities:
Accounts payable and accrued liabilities	60,262	61,676
Accrued payroll and benefits payable	7,358	9,552
Accrued interest payable	0
Revenue distribution payable	12,535	11,025
Long-term debt and capital leases, classified as current	4,588	4,632
Total current liabilities	84,743	86,885
Long-term debt and capital leases, less current maturities	288,991	291,429
Deferred compensation	529	519
Asset retirement obligations	64,531	64,216
Liabilities subject to compromise	0
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Common stock		450
Additional paid in capital	948,613	948,613
Accumulated deficit	(19,683)
Total stockholders' equity (deficit)	929,380	949,063
Total liabilities and stockholders' equity (deficit)	$ 1,368,174	1,392,112
Reorganization Adjustments
Current assets:
Cash and cash equivalents		(135,333)
Prepaid expenses		(535)
Total current assets		(135,868)
Oil and natural gas properties, using the full cost method:
Other assets		2,410
Total assets		(133,458)
Current liabilities:
Accounts payable and accrued liabilities		(2,737)
Accrued payroll and benefits payable		2,186
Accrued interest payable		(2,095)
Revenue distribution payable		3,050
Long-term debt and capital leases, classified as current		(464,182)
Total current liabilities		(463,778)
Long-term debt and capital leases, less current maturities		291,429
Deferred compensation		519
Liabilities subject to compromise		1,281,096
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Common stock		450
Additional paid in capital		948,613
Accumulated deficit		795,844
Total stockholders' equity (deficit)		1,319,468
Total liabilities and stockholders' equity (deficit)		(133,458)
Fresh Start Adjustments
Current assets:
Property and equipment, net		18,987
Oil and natural gas properties, using the full cost method:
Proved		(3,751,511)
Unevaluated (excluded from the amortization base)		559,535
Accumulated depreciation, depletion, amortization and impairment		(3,811,326)
Total oil and natural gas properties		619,350
Other assets		590
Total assets		638,927
Current liabilities:
Asset retirement obligations		(2,757)
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Accumulated deficit		641,684
Total stockholders' equity (deficit)		641,684
Total liabilities and stockholders' equity (deficit)		638,927
Predecessor
Current assets:
Cash and cash equivalents		180,456
Cash and cash equivalents		45,123	$ 186,480	$ 187,473	$ 17,065
Accounts receivable, net		46,837	46,226
Inventories, net		6,885	7,351
Prepaid expenses		4,933	3,886
Derivative instruments		19,058	0
Total current assets		258,169	243,943
Property and equipment, net		38,391	41,347
Oil and natural gas properties, using the full cost method:
Proved		4,355,576	4,323,964
Unevaluated (excluded from the amortization base)		26,039	20,353
Accumulated depreciation, depletion, amortization and impairment		3,811,326	3,789,133
Total oil and natural gas properties		570,289	555,184
Derivative instruments		14,295	0
Other assets		5,499	5,513
Total assets		886,643	845,987
Current liabilities:
Accounts payable and accrued liabilities		64,413	42,442
Accrued payroll and benefits payable		7,366	3,459
Accrued interest payable		2,095	732
Revenue distribution payable		7,975	9,426
Long-term debt and capital leases, classified as current		468,814	469,112
Total current liabilities		550,663	532,696
Long-term debt and capital leases, less current maturities			0
Deferred compensation			0
Asset retirement obligations		66,973	65,456
Liabilities subject to compromise		1,281,096	1,284,144
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Common stock		14
Additional paid in capital		425,425	425,231
Accumulated deficit		(1,437,528)	(1,467,398)
Total stockholders' equity (deficit)		(1,012,089)	(1,042,153)
Total liabilities and stockholders' equity (deficit)		886,643	$ 845,987
Predecessor | Reorganization Adjustments
Stockholders’ equity (deficit):
Common stock		(14)
Additional paid in capital		$ (425,425)

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Fresh Start Accounting - Consolidated Balance Sheet (Parenthetical) (Details) - USD ($) $ in Thousands				3 Months Ended
		Mar. 31, 2017	Mar. 21, 2017	Mar. 21, 2017	Mar. 31, 2016	Dec. 31, 2016
Fresh Start Adjustment [Line Items]
Total issuance costs on New Credit Facility	[1]	$ 1,649
Liabilities subject to compromise		0
Fair value of equity issued in settlement of Senior Notes and certain general unsecured creditors			$ (948,944)	$ (948,944)
Long-term debt and capital leases, classified as current		4,588	4,632	4,632
Long-term debt and capital leases, less current maturities		288,991	291,429	291,429
Cancellation of predecessor equity - par value			450	450
Cancellation of predecessor equity - paid in capital		948,613	948,613	948,613
Professional fees		620
Total reorganization items		620
Predecessor
Fresh Start Adjustment [Line Items]
Total issuance costs on New Credit Facility	[1]					$ 2,303
Senior Notes and associated accrued interest			1,267,410	1,267,410		1,267,410
Accounts payable and accrued liabilities			6,687	6,687		9,212
Accrued payroll and benefits payable			3,949	3,949		4,048
Revenue distribution payable			3,050	3,050		3,474
Liabilities subject to compromise			1,281,096	1,281,096		1,284,144
Gain on settlement of liabilities subject to compromise				(372,093)
Write-off unamortized issuance costs associated with Prior Credit Facility				1,687
Long-term debt and capital leases, classified as current			468,814	468,814		469,112
Origination of the New Term Loan, net of current portion						444,440
Long-term debt and capital leases, less current maturities						0
Cancellation of predecessor equity - par value			14	14
Cancellation of predecessor equity - paid in capital			425,425	425,425		$ 425,231
Write-off unamortized issuance costs associated with Prior Credit Facility				(1,687)
Fresh start accounting adjustments				(641,684)
Professional fees				18,790
Rejection of employment contracts				4,573
Total reorganization items				(988,727)	$ 0
New Term Loan
Fresh Start Adjustment [Line Items]
New credit facility, opening balance		149,255
New Revolver
Fresh Start Adjustment [Line Items]
Total issuance costs on New Credit Facility		1,649
New credit facility, opening balance		$ 120,000
Reorganization Adjustments
Fresh Start Adjustment [Line Items]
Cash proceeds from rights offering			50,031
Payment in full to extinguish Prior Credit Facility			(444,440)
Payment of accrued interest on Prior Credit Facility			(2,095)
Payment of previously accrued creditor-related professional fees			(6,954)
Net cash used			(135,333)
Total issuance costs on New Credit Facility			2,410	2,410
Senior Notes and associated accrued interest			1,267,410	1,267,410
Accounts payable and accrued liabilities			6,687	6,687
Accrued payroll and benefits payable			3,949	3,949
Revenue distribution payable			3,050	3,050
Liabilities subject to compromise			1,281,096	1,281,096
Amounts settled in cash, reinstated or otherwise reserved at emergence			(10,089)	(10,089)
Fair value of equity issued in settlement of Senior Notes and certain general unsecured creditors			(898,914)	(898,914)
Gain on settlement of liabilities subject to compromise			372,093
Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default			(22,612)	(22,612)
Write-off unamortized issuance costs associated with Prior Credit Facility			1,687
Long-term debt and capital leases, classified as current			(464,182)	(464,182)
Reclassification from current to noncurrent, based on scheduled repayment, of debt no longer in default			22,612	22,612
Long-term debt and capital leases, less current maturities			291,429	291,429
Cancellation of predecessor equity - par value			450	450
Cancellation of predecessor equity - paid in capital			948,613	948,613
Issuance of successor common stock in settlement of claims			898,914	898,914
Issuance of successor common stock under rights offering			50,031	50,031
Issuance of warrants			118	118
Net impact to common stock-par and additional paid in capital			523,624	523,624
Cancellation of predecessor equity			425,438
Write-off unamortized issuance costs associated with Prior Credit Facility			(1,687)
Net impact to retained earnings			795,844	795,844
Reorganization Adjustments | Predecessor
Fresh Start Adjustment [Line Items]
Cancellation of predecessor equity - par value			(14)	(14)
Cancellation of predecessor equity - paid in capital			$ (425,425)	$ (425,425)
Reorganization Adjustments | Common Stock
Fresh Start Adjustment [Line Items]
Common stock shares issued			44,982,142
Warrants issued for purchase of common stock			140,023	140,023
Reorganization Adjustments | New Credit Facility
Fresh Start Adjustment [Line Items]
Total issuance costs on New Credit Facility			$ 535	$ 535
Reorganization Adjustments | New Term Loan
Fresh Start Adjustment [Line Items]
Cash proceeds			150,000
Fees paid to lender			(750)
Total issuance costs on New Credit Facility			750	750
Establishment of New Term Loan - current portion			1,183	1,183
Reorganization Adjustments | New Revolver
Fresh Start Adjustment [Line Items]
Cash proceeds			120,000
Fees paid to lender			(1,125)
Total issuance costs on New Credit Facility			1,125	1,125
Reorganization Adjustments | New Credit Facility | New Term Loan
Fresh Start Adjustment [Line Items]
Origination of the New Term Loan, net of current portion			148,817	148,817
Reorganization Adjustments | New Credit Facility | New Revolver
Fresh Start Adjustment [Line Items]
New credit facility, opening balance			$ 120,000	$ 120,000

[1] Debt issuance costs are presented as a direct deduction from debt rather than an asset pursuant to recent accounting guidance. See table below

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Supplemental disclosures to the consolidated statements of cash flows (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016
Net cash provided by operating activities included:
Cash payments for interest	$ 2,768
Interest capitalized	(54)
Cash payments for interest, net of amounts capitalized	$ 2,714
Predecessor
Net cash provided by operating activities included:
Cash payments for interest		$ 4,105	$ 3,639
Interest capitalized		(248)	(1,076)
Cash payments for interest, net of amounts capitalized		3,857	2,563
Cash payments for reorganization items		11,405
Non-cash investing activities included:
Asset retirement obligation additions and revisions		716	100
Change in accrued oil and gas capital expenditures		$ 5,387	$ (11,045)

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Debt (Components of Debt) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Real estate mortgage note		$ 9,454
Installment notes payable		211
Capital lease obligations		16,308
Unamortized debt issuance costs	[1]	1,649
Total debt, net		293,579
Less current portion		4,588	$ 4,632
Total long-term debt, net		288,991	291,429
Predecessor
Debt Instrument [Line Items]
Prior Credit Facility				$ 444,440
Real estate mortgage note				9,595
Installment notes payable				434
Capital lease obligations				16,946
Unamortized debt issuance costs	[1]			2,303
Total debt, net				469,112
Less current portion			$ 468,814	469,112
Total long-term debt, net				$ 0
New Revolver
Debt Instrument [Line Items]
New Credit Facility		120,000
Unamortized debt issuance costs		1,649
New Term Loan
Debt Instrument [Line Items]
New Credit Facility		$ 149,255

[1] Debt issuance costs are presented as a direct deduction from debt rather than an asset pursuant to recent accounting guidance. See table below

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Debt (Components of Debt) (Parenthetical) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
New Term Loan
Debt Instrument [Line Items]
Unamortized discount	$ 745	$ 0

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Debt (Unamortized Debt Issuance Costs) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Unamortized debt issuance costs
Total unamortized debt issuance costs	[1]	$ 1,649
Predecessor
Unamortized debt issuance costs
Total unamortized debt issuance costs	[1]		$ 2,303
New Revolver
Unamortized debt issuance costs
Total unamortized debt issuance costs		$ 1,649
Prior Credit Facility | Predecessor
Unamortized debt issuance costs
Total unamortized debt issuance costs			$ 2,303

[1] Debt issuance costs are presented as a direct deduction from debt rather than an asset pursuant to recent accounting guidance. See table below

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Debt - Additional Information (Details) - USD ($) $ in Thousands	Mar. 21, 2017	Mar. 31, 2017
New Revolver
Debt Instrument [Line Items]
New credit facility, opening balance		$ 120,000
New Term Loan
Debt Instrument [Line Items]
New credit facility, opening balance		$ 149,255
Plan of Reorganization | Prior Credit Facility
Debt Instrument [Line Items]
Amount of repayments on prior credit facility	$ 444,440
Plan of Reorganization | New Revolver
Debt Instrument [Line Items]
New credit facility, opening balance	120,000
Plan of Reorganization | New Term Loan
Debt Instrument [Line Items]
New credit facility, opening balance	$ 150,000

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Debt (New Term Loan) (Details) - New Term Loan	3 Months Ended
	Mar. 31, 2017	Apr. 03, 2017
Line Of Credit Facility [Line Items]
Debt instrument maturity date	Mar. 21, 2021
Alternate Base Rate
Line Of Credit Facility [Line Items]
Basis spread on variable rate	6.75%
Outstanding borrowings, accruing interest rate	10.75%
Adjusted LIBO Rate
Line Of Credit Facility [Line Items]
Basis spread on variable rate	7.75%
Debt instrument floor rate	1.00%
Subsequent Event | Adjusted LIBO Rate
Line Of Credit Facility [Line Items]
Outstanding borrowings, accruing interest rate		8.78%

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Debt (Schedule of Mandatory Principal Payment According to Schedule of Remaining Outstanding Balance Due upon Maturity) (Details) - Post Emergent - New Term Loan $ in Thousands	Mar. 31, 2017 USD ($)
Debt Instrument [Line Items]
Total payments for 2017	$ 1,183
Total payments for 2018	1,500
Total payments for 2019	3,750
Total payments for 2020	6,750
Total mandatory prepayments	$ 13,183

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Debt (New Revolver) (Details) - New Revolver - USD ($)	3 Months Ended
	Mar. 31, 2017	Apr. 03, 2017
Line Of Credit Facility [Line Items]
Borrowing base amount	$ 400,000,000
Debt instrument maturity date	Mar. 21, 2021
Initial borrowing base amount	$ 225,000,000
Debt instrument redetermination date	May 01, 2018
Availability under the facility	$ 104,172,000
Commitment fee on unused portion of the borrowing base	0.50%
Letter of Credit
Line Of Credit Facility [Line Items]
Basis spread on variable rate	0.125%
Alternate Base Rate
Line Of Credit Facility [Line Items]
Additional interest rate on outstanding amounts in event of default	2.00%
Outstanding borrowings, accruing interest rate	6.50%
Alternate Base Rate | Minimum
Line Of Credit Facility [Line Items]
Basis spread on variable rate	2.00%
Alternate Base Rate | Maximum
Line Of Credit Facility [Line Items]
Basis spread on variable rate	3.00%
Adjusted LIBO Rate
Line Of Credit Facility [Line Items]
One month interest period	1 month
Two month interest period	2 months
Three month interest period	3 months
Six month interest period	6 months
Adjusted LIBO Rate | Minimum
Line Of Credit Facility [Line Items]
Basis spread on variable rate	3.00%
Adjusted LIBO Rate | Maximum
Line Of Credit Facility [Line Items]
Basis spread on variable rate	4.00%
Subsequent Event | Adjusted LIBO Rate
Line Of Credit Facility [Line Items]
Outstanding borrowings, accruing interest rate		4.53%

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Debt (Covenants) (Details) - New Credit Facility	3 Months Ended
	Mar. 31, 2017 USD ($)
Line Of Credit Facility [Line Items]
Number of consecutive quarters	four
Minimum
Line Of Credit Facility [Line Items]
Current Ratio covenant	100.00%
Asset coverage ratio covenant	135.00%
Liquidity requirement	$ 25,000,000
Maximum
Line Of Credit Facility [Line Items]
Ratio of debt to EBITDAX	350.00%

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Debt (Write-off of Senior Note Issuance Costs Discount and Premium) (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Debt Disclosure [Abstract]
Write-off of Senior Note issuance costs, discount and premium	$ 0	$ 16,970

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Debt (Premiums, Discounts and Debt Issuance Costs) (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Debt Disclosure [Abstract]
Non-cash expense for write-off of debt issuance costs on Senior Notes		$ 17,756
Non-cash expense for write-off of debt discount costs on Senior Notes		4,014
Non-cash gain for write-off of debt premium on Senior Notes		(4,800)
Total	$ 0	$ 16,970

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Debt (Capital Leases) (Details) - U.S. Bank National Association - Capital Lease Obligations - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2013
Leases, Capital [Abstract]
Proceeds from sale and leaseback of assets		$ 24,500
Lease term	84 months
Purchase option period	72 months
Implicit interest rate	3.80%
Minimum lease payments	$ 3,181

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Derivative instruments - Summary of derivatives outstanding (Details) bbl in Thousands, MMBTU in Thousands	Mar. 31, 2017 bbl MMBTU $ / bbl $ / MMBTU
Swaps | Derivative Maturing in 2017 | Crude Oil Derivative Contracts
Derivative [Line Items]
Volume | bbl	2,704
Weighted average fixed price	54.97
Swaps | Derivative Maturing in 2017 | Natural Gas Derivative Contracts
Derivative [Line Items]
Volume | MMBTU	7,091
Weighted average fixed price | $ / MMBTU	3.34
Swaps | Derivative Maturing in 2018 | Crude Oil Derivative Contracts
Derivative [Line Items]
Volume | bbl	2,116
Weighted average fixed price	54.92
Swaps | Derivative Maturing in 2018 | Natural Gas Derivative Contracts
Derivative [Line Items]
Volume | MMBTU	5,861
Weighted average fixed price | $ / MMBTU	3.03
Swaps | Derivative Maturing in 2019 | Crude Oil Derivative Contracts
Derivative [Line Items]
Volume | bbl	1,312
Weighted average fixed price	54.26
Swaps | Derivative Maturing in 2019 | Natural Gas Derivative Contracts
Derivative [Line Items]
Volume | MMBTU	3,322
Weighted average fixed price | $ / MMBTU	2.86
Collars | Derivative Maturing in 2018 | Crude Oil Derivative Contracts
Derivative [Line Items]
Volume | bbl	183
Weighted average fixed price per Bbl, purchased puts	50.00
Weighted average fixed price per Bbl, sold calls	60.50

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Derivative Instruments (Derivative instruments recorded on the balance sheet at fair value) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Fair value of derivative instruments
Derivative assets, gross		$ 19,908
Derivative liabilities, gross		(363)
Derivative assets (liabilities), net		19,545
Netting adjustments	[1]	363
Derivative Liability, Netting adjustments	[1]	(363)
Current derivative assets, net		10,001	$ 19,058
Current derivative liabilities, net		0
Current derivative assets (liabilities), net		10,001
Long-term derivative assets, net		9,544	14,295
Long-term derivative liabilities, net		0
Long-term derivative assets (liabilities), net		9,544
Predecessor
Fair value of derivative instruments
Derivative assets, gross				$ 184
Derivative liabilities, gross				(13,553)
Derivative assets (liabilities), net				(13,369)
Netting adjustments	[1]			184
Derivative Liability, Netting adjustments	[1]			(184)
Current derivative assets, net			19,058	0
Current derivative liabilities, net				(7,525)
Current derivative assets (liabilities), net				(7,525)
Long-term derivative assets, net			$ 14,295	0
Long-term derivative liabilities, net				(5,844)
Long-term derivative assets (liabilities), net				(5,844)
Natural Gas Derivative Contracts
Fair value of derivative instruments
Derivative assets, gross		634
Derivative liabilities, gross		(363)
Derivative assets (liabilities), net		271
Natural Gas Derivative Contracts | Predecessor
Fair value of derivative instruments
Derivative assets, gross				184
Derivative liabilities, gross				(3,658)
Derivative assets (liabilities), net				(3,474)
Crude Oil Derivative Contracts
Fair value of derivative instruments
Derivative assets, gross		19,274
Derivative assets (liabilities), net		$ 19,274
Crude Oil Derivative Contracts | Predecessor
Fair value of derivative instruments
Derivative liabilities, gross				(9,895)
Derivative assets (liabilities), net				$ (9,895)

[1] Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted only to the extent that they relate to the same current versus noncurrent classification on the balance sheet.

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Derivative Instruments (Derivative (losses) gains in the consolidated statements of operations) (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016
Derivative Gains (Losses) [Line Items]
Change in fair value of commodity price derivatives	$ (13,807)
Settlement gains on commodity price derivatives	1,692
Total derivative (losses) gains	$ (12,115)
Predecessor
Derivative Gains (Losses) [Line Items]
Change in fair value of commodity price derivatives		$ 46,721	$ (35,554)
Settlement gains on commodity price derivatives		1,285	47,486
Total derivative (losses) gains		$ 48,006	$ 11,932

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Fair value measurements (Recurring Fair Value Measurements) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets, gross		$ 19,908
Derivative liabilities, gross		(363)
Derivative assets (liabilities), net		19,545
Derivative assets, amount offset		(363)
Derivative liabilities, amounts offset		363
Derivative assets, net		19,545
Predecessor
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets, gross			$ 184
Derivative liabilities, gross			(13,553)
Derivative assets (liabilities), net			(13,369)
Derivative assets, amount offset			(184)
Derivative liabilities, amounts offset			184
Derivative liabilities, net			(13,369)
Recurring Fair Value Measurements
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets (liabilities), net		19,545
Derivative assets, amount offset	[1]	(363)
Derivative liabilities, amounts offset	[1]	363
Derivative assets amount offset (liabilities), net	[1]	0
Derivative assets, net		19,545
Derivative liabilities, net		0
Recurring Fair Value Measurements | Predecessor
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets (liabilities), net			(13,369)
Derivative assets, amount offset	[1]		(184)
Derivative liabilities, amounts offset	[1]		184
Derivative assets amount offset (liabilities), net	[1]		0
Derivative assets, net			0
Derivative liabilities, net			(13,369)
Recurring Fair Value Measurements | Significant Other Observable Inputs (Level 2)
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets, gross		19,432
Derivative liabilities, gross		(363)
Derivative assets (liabilities), net		19,069
Recurring Fair Value Measurements | Significant Other Observable Inputs (Level 2) | Predecessor
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets, gross			184
Derivative liabilities, gross			(13,455)
Derivative assets (liabilities), net			(13,271)
Recurring Fair Value Measurements | Significant Unobservable Inputs (Level 3)
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets, gross		476
Derivative liabilities, gross		0
Derivative assets (liabilities), net		$ 476
Recurring Fair Value Measurements | Significant Unobservable Inputs (Level 3) | Predecessor
Fair Value Hierarchy for Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative assets, gross			0
Derivative liabilities, gross			(98)
Derivative assets (liabilities), net			$ (98)

[1] Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification.

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Fair value measurements (Level 3 Rollforward) (Details) - Recurring Fair Value Measurements - Significant Unobservable Inputs (Level 3) - Derivative - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016
Level 3 Rollforward
Beginning balance	$ 715
Realized and unrealized (losses) gains included in derivative gains	(239)
Settlements received	0
Ending balance	476	$ 715
(Losses) gains relating to instruments still held at the reporting date included in derivative (losses) gains for the period	(239)
Predecessor
Level 3 Rollforward
Beginning balance	$ 715	(98)	$ 123,068
Realized and unrealized (losses) gains included in derivative gains		813	6,978
Settlements received		0	(39,093)
Ending balance		715	90,953
(Losses) gains relating to instruments still held at the reporting date included in derivative (losses) gains for the period		$ 813	$ 2,027

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Fair value measurements (Nonrecurring Fair Value Measurements) (Details) - Significant Unobservable Inputs (Level 3) - Nonrecurring Fair Value Measurements	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Nonrecurring Fair Value Measurements
Annual inflation rate	2.30%	2.42%
Credit-adjusted risk-free interest rate		20.00%
Minimum
Nonrecurring Fair Value Measurements
Credit-adjusted risk-free interest rate	5.20%
Maximum
Nonrecurring Fair Value Measurements
Credit-adjusted risk-free interest rate	7.40%

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Fair value measurements (Fair Value of Other Financial Instruments) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
New Term Loan
Fair Value of Other Financial Instruments
New Credit Facility		$ 149,255
New Revolver
Fair Value of Other Financial Instruments
New Credit Facility		120,000
Significant Other Observable Inputs (Level 2) | Carrying Value | New Term Loan
Fair Value of Other Financial Instruments
New Credit Facility	[1]	150,000
Significant Other Observable Inputs (Level 2) | Carrying Value | New Revolver
Fair Value of Other Financial Instruments
New Credit Facility	[1]	120,000
Significant Other Observable Inputs (Level 2) | Estimated Fair Value | New Term Loan
Fair Value of Other Financial Instruments
New Credit Facility		150,000
Significant Other Observable Inputs (Level 2) | Estimated Fair Value | New Revolver
Fair Value of Other Financial Instruments
New Credit Facility		120,000
Significant Other Observable Inputs (Level 2) | 9.875% Senior Notes due 2020 | Carrying Value | Predecessor
Fair Value of Other Financial Instruments
Senior Notes	[1]		$ 298,000
Significant Other Observable Inputs (Level 2) | 9.875% Senior Notes due 2020 | Estimated Fair Value | Predecessor
Fair Value of Other Financial Instruments
Senior Notes			268,200
Significant Other Observable Inputs (Level 2) | 8.25% Senior Notes due 2021 | Carrying Value | Predecessor
Fair Value of Other Financial Instruments
Senior Notes	[1]		384,045
Significant Other Observable Inputs (Level 2) | 8.25% Senior Notes due 2021 | Estimated Fair Value | Predecessor
Fair Value of Other Financial Instruments
Senior Notes			344,680
Significant Other Observable Inputs (Level 2) | 7.625% Senior Notes due 2022 | Carrying Value | Predecessor
Fair Value of Other Financial Instruments
Senior Notes	[1]		525,910
Significant Other Observable Inputs (Level 2) | 7.625% Senior Notes due 2022 | Estimated Fair Value | Predecessor
Fair Value of Other Financial Instruments
Senior Notes			470,689
Significant Other Observable Inputs (Level 2) | Secured Debt | Carrying Value
Fair Value of Other Financial Instruments
Other secured debt	[1]	9,665
Significant Other Observable Inputs (Level 2) | Secured Debt | Carrying Value | Predecessor
Fair Value of Other Financial Instruments
Other secured debt	[1]		10,029
Significant Other Observable Inputs (Level 2) | Secured Debt | Estimated Fair Value
Fair Value of Other Financial Instruments
Other secured debt		$ 9,665
Significant Other Observable Inputs (Level 2) | Secured Debt | Estimated Fair Value | Predecessor
Fair Value of Other Financial Instruments
Other secured debt			$ 10,029

[1] The carrying value excludes deductions for debt issuance costs and discounts.

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Fair value measurements (Counterparty Credit Risk) (Details) $ in Thousands	Mar. 31, 2017 USD ($) financial_institutions
Counterparty Credit Risk
Derivative liabilities subject to acceleration | $	$ 363
Concentration of Counterparty Credit Risk
Counterparty Credit Risk
Derivative contracts, number of counterparties | financial_institutions	4

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Fair value measurements (Derivatives Offset in the Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Offsetting Assets [Line Items]
Derivative assets, gross		$ 19,908
Derivative assets, amount offset		(363)
Derivative assets		19,545
Derivative assets, not offset	[1]	0
Credit facility balance available to offset net derivative assets		(19,545)
Derivative asset, net		0
Derivative liabilities, gross		(363)
Derivative liabilities, amounts offset		363
Derivative liabilities, not offset	[1]	0
Credit facility balance available to offset net derivative liabilities		0
Derivative Asset (Liability), Fair Value, Gross Asset		19,545
Derivative Asset (Liability), Fair Value, Gross Liability		0
Derivative Asset (Liability), Net		19,545
Derivative liability asset not offset	[1]	$ 0
Predecessor
Offsetting Assets [Line Items]
Derivative assets, gross			$ 184
Derivative assets, amount offset			(184)
Derivative assets, not offset	[1]		0
Credit facility balance available to offset net derivative assets			0
Derivative asset, net			0
Derivative liabilities, gross			(13,553)
Derivative liabilities, amounts offset			184
Derivative liabilities			(13,369)
Derivative liabilities, not offset	[1]		0
Credit facility balance available to offset net derivative liabilities			0
Derivative liability, net			(13,369)
Derivative Asset (Liability), Fair Value, Gross Asset			(13,369)
Derivative Asset (Liability), Fair Value, Gross Liability			0
Derivative Asset (Liability), Net			(13,369)
Derivative liability asset not offset	[1]		0
Derivative asset (liability), net			$ (13,369)

[1] Since positive and negative positions with a counterparty are netted on the balance sheet only to the extent that they relate to the same current versus noncurrent classification, these represent remaining amounts that could have been offset under our master netting agreements.

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Asset retirement obligations (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 21, 2017	Dec. 31, 2016
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Liability for asset retirement obligations, Beginning balance	$ 70,476
Accretion expense	121
Liability for asset retirement obligations, Ending balance	70,597	$ 70,476
Fair value fresh-start adjustment		(2,757)
Less current portion included in accounts payable and accrued liabilities	6,066
Asset retirement obligations	64,531	64,216
Predecessor
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Liability for asset retirement obligations, Beginning balance	$ 73,233	72,137
Liabilities incurred in current period		535
Liabilities settled and disposed in current period		(869)
Revisions in estimated cash flows		181
Accretion expense		1,249
Liability for asset retirement obligations, Ending balance		73,233
Asset retirement obligations		$ 66,973	$ 65,456

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Deferred compensation (Restricted Stock Unit Plan) (Details) - Restricted Stock Unit Plan - Restricted Stock Units (RSU)	Jan. 01, 2017 $ / shares shares
Stock-Based Compensation [Line Items]
Unvested and outstanding restricted stock units | shares	98,596
Weighted average grant date fair value of per unit of unvested and outstanding restricted stock units	$ 7.18
Estimated fair value per share at end of period ($ per share)	$ 0.00

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Deferred compensation (Cash Incentive Plan) (Details) - The 2015 Cash LTIP - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2017	Mar. 21, 2017	Mar. 31, 2016	Apr. 03, 2017
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Deferred Compensation Arrangement with Individual, Requisite Service Period		4 years
2015 Cash LTIP expense (net of amounts capitalized)	$ 13
Subsequent Event
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Additional amount awarded					$ 3,321
Predecessor
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
2015 Cash LTIP expense (net of amounts capitalized)			$ 5	$ 159
2015 Cash LTIP payments			$ 17	$ 42

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Deferred compensation (2010 Equity Incentive Plan) (Details) - Restricted Stock - 2010 Equity Incentive Plan - Common Class A $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 21, 2017 USD ($) $ / shares shares
Stock-Based Compensation [Line Items]
Shares reserved for issuance under the 2010 Plan | shares	86,301
Service Vesting Conditions
Stock-Based Compensation [Line Items]
Estimated fair value per share at end of period ($ per share) | $ / shares	$ 0.00
Vest date fair value
Vest date fair value | $	$ 0
Service Vesting Conditions | Predecessor
Weighted average grant date fair value
Unvested and outstanding at beginning of period ($ per share) | $ / shares	$ 790.91
Granted ($ per share) | $ / shares	0
Vested ($ per share) | $ / shares	812.91
Forfeited ($ per share) | $ / shares	785.70
Cancelled ($ per share) | $ / shares	$ 775.66
Shares
Unvested and outstanding at beginning of period (in shares) | shares	6,667
Granted (in shares) | shares	0
Vested (in shares) | shares	(2,602)
Forfeited (in shares) | shares	(468)
Cancelled (in shares) | shares	(3,597)
Performance Vested | Predecessor
Weighted average grant date fair value
Unvested and outstanding at beginning of period ($ per share) | $ / shares	$ 277.33
Granted ($ per share) | $ / shares	0
Vested ($ per share) | $ / shares	0
Forfeited ($ per share) | $ / shares	195.75
Cancelled ($ per share) | $ / shares	$ 281.26
Shares
Unvested and outstanding at beginning of period (in shares) | shares	21,475
Granted (in shares) | shares	0
Vested (in shares) | shares	0
Forfeited (in shares) | shares	(986)
Cancelled (in shares) | shares	(20,489)

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Deferred compensation (Stock-based compensation cost) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 21, 2017	Mar. 31, 2016	Mar. 31, 2017	Dec. 31, 2016
Stock-Based Compensation [Line Items]
Stock-based compensation costs included in accrued payroll and benefits payable			$ 0	$ 0
Time Vested Awards
Stock-Based Compensation [Line Items]
Unrecognized compensation cost			$ 0
Predecessor
Stock-Based Compensation [Line Items]
Stock-based compensation cost (credit)	$ 194	$ (898)
Less: stock-based compensation cost capitalized	(39)	(124)
Stock-based compensation expense (credit)	$ 155	(1,022)
Payments for stock-based compensation		$ 49

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Commitments and Contingencies - Additional information (Details) - USD ($) $ in Thousands			3 Months Ended
	Mar. 31, 2017	Jan. 17, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Loss Contingency Information About Litigation Matters [Abstract]
Interest paid	$ 2,768
Obligations under drilling rig contracts	2,581		$ 2,581
Naylor Farms Case
Loss Contingency Information About Litigation Matters [Abstract]
Minimum percentage of plaintiff in modified class		60.00%
Naylor Farms Case | Pending Litigation | Minimum
Loss Contingency Information About Litigation Matters [Abstract]
Damages sought			5,000
Naylor Farms Case Putative Class Action | Pending Litigation | Minimum
Loss Contingency Information About Litigation Matters [Abstract]
Damages sought			150,000
West Case Putative Class Action | Pending Litigation | Minimum
Loss Contingency Information About Litigation Matters [Abstract]
Damages sought			75,000
Letter of Credit
Loss Contingency Information About Litigation Matters [Abstract]
Letters of credit outstanding	$ 828		828		$ 828
Interest paid			0	$ 0
Proceeds from Letters			$ 0	$ 0