Delaware (State or other jurisdiction of incorporation or organization) | 81-3943703 (IRS Employer Identification Number) |
1401 Lawrence Street, Suite 1800 Denver, Colorado (Address of principal executive offices) | 80202 (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o | |||
Emerging growth company x |
• | our business strategy; |
• | our reserves; |
• | our drilling prospects, inventories, projects and programs; |
• | our intention to replace the reserves we produce through drilling and property acquisitions; |
• | our financial strategy, liquidity and capital required for our drilling program, including our assessment of the sufficiency of our liquidity to fund our capital program and the amount and allocation of our capital program in 2018; |
• | our expected timing of the exchange offer of our senior notes in May 2018; |
• | our expected noncash compensation expenses; |
• | our expected pricing and realized oil, natural gas and NGL prices; |
• | the timing and amount of our future production of oil, natural gas and NGLs; |
• | our future drilling plans, including the number of wells anticipated to be spud and brought online in 2018; |
• | government regulations and our ability to obtain permits and governmental approvals; |
• | our pending legal or environmental matters; |
• | our marketing of oil, natural gas and NGLs; |
• | our leasehold or business acquisitions; |
• | our costs of developing our properties; |
• | our hedging strategy and results; |
• | general economic conditions; |
• | uncertainty regarding our future operating results; and |
• | our plans, objectives, expectations and intentions contained in this quarterly report that are not historical. |
Item 1. | Financial Statements |
March 31, | December 31, | ||||||
2018 | 2017 | ||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 3,205 | $ | 9,523 | |||
Accounts receivable | 55,833 | 50,734 | |||||
Derivative instruments | 14,602 | — | |||||
Other current assets | 1,984 | 806 | |||||
Total current assets | 75,624 | 61,063 | |||||
PROPERTY AND EQUIPMENT | |||||||
Oil and natural gas properties, successful efforts method | 1,414,364 | 1,195,831 | |||||
Accumulated depletion | (214,002 | ) | (166,592 | ) | |||
Total oil and gas properties, net | 1,200,362 | 1,029,239 | |||||
Other property and equipment, net | 9,489 | 9,708 | |||||
Total property and equipment, net | 1,209,851 | 1,038,947 | |||||
OTHER NONCURRENT ASSETS | |||||||
Unamortized debt issuance costs | 4,196 | 3,273 | |||||
Derivative instruments | 2,138 | 26 | |||||
Other assets | 121 | 119 | |||||
Total noncurrent assets | 6,455 | 3,418 | |||||
TOTAL ASSETS | $ | 1,291,930 | $ | 1,103,428 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 22,639 | $ | 382 | |||
Accrued liabilities | 137,113 | 132,311 | |||||
Derivative instruments | 48,003 | 41,782 | |||||
Total current liabilities | 207,755 | 174,475 | |||||
LONG-TERM LIABILITIES | |||||||
Long-term debt | 265,000 | 155,000 | |||||
Derivative instruments | 10,435 | 11,095 | |||||
Asset retirement obligations | 1,052 | 811 | |||||
Deferred income taxes | 67,587 | 57,943 | |||||
Other long-term liabilities | 4,681 | 4,759 | |||||
Total long-term liabilities | 348,755 | 229,608 | |||||
Commitments and contingencies | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued | — | — | |||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 213,110,757 shares issued at March 31, 2018; 212,930,655 shares issued at December 31, 2017 | 2,131 | 2,129 | |||||
Additional paid-in capital | 849,150 | 773,674 | |||||
Accumulated deficit | (115,861 | ) | (76,458 | ) | |||
Total stockholders’ equity | 735,420 | 699,345 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,291,930 | $ | 1,103,428 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
REVENUES | |||||||
Oil sales | $ | 120,723 | $ | 36,765 | |||
Natural gas sales | 2,875 | 917 | |||||
NGL sales | 5,308 | 1,518 | |||||
Other operating revenues | 147 | 188 | |||||
Total revenues | 129,053 | 39,388 | |||||
OPERATING EXPENSES | |||||||
Lease operating expenses | 9,720 | 1,610 | |||||
Gathering and processing expenses | — | 392 | |||||
Production and ad valorem taxes | 7,674 | 2,640 | |||||
Exploration | — | 6 | |||||
Depletion, depreciation, amortization and accretion | 47,977 | 14,062 | |||||
Impairment of unproved oil and natural gas properties | 53 | 7 | |||||
General and administrative expenses (including equity-based compensation of $75,678 and $408,964 for the three months ended March 31, 2018 and 2017, respectively) | 86,317 | 413,551 | |||||
Other operating expenses | 22 | 135 | |||||
Total operating expenses | 151,763 | 432,403 | |||||
INCOME (LOSS) FROM OPERATIONS | (22,710 | ) | (393,015 | ) | |||
OTHER INCOME (EXPENSE) | |||||||
Gain (loss) on commodity derivatives | (4,326 | ) | 17,042 | ||||
Interest expense, net | (2,731 | ) | (711 | ) | |||
Other, net | 8 | 171 | |||||
Total other income (expense) | (7,049 | ) | 16,502 | ||||
INCOME (LOSS) BEFORE INCOME TAX | (29,759 | ) | (376,513 | ) | |||
Income tax expense (benefit) | 9,644 | 89,368 | |||||
NET INCOME (LOSS) | (39,403 | ) | (465,881 | ) | |||
Less: Net loss attributable to Jagged Peak Energy LLC (predecessor) | — | (375,476 | ) | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO JAGGED PEAK ENERGY INC. STOCKHOLDERS | $ | (39,403 | ) | $ | (90,405 | ) | |
Net income (loss) attributable to Jagged Peak Energy Inc. Stockholders per common share: | |||||||
Basic | $ | (0.18 | ) | $ | (0.42 | ) | |
Diluted | $ | (0.18 | ) | $ | (0.42 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic | 213,003 | 212,938 | |||||
Diluted | 213,003 | 212,938 |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||
Shares | Amount | |||||||||||||||||
BALANCE AT DECEMBER 31, 2017 | 212,931 | $ | 2,129 | $ | 773,674 | $ | (76,458 | ) | $ | 699,345 | ||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | 180 | 2 | (202 | ) | — | (200 | ) | |||||||||||
Equity-based compensation | — | — | 75,678 | — | 75,678 | |||||||||||||
Net income (loss) | — | — | — | (39,403 | ) | (39,403 | ) | |||||||||||
BALANCE AT MARCH 31, 2018 | 213,111 | $ | 2,131 | $ | 849,150 | $ | (115,861 | ) | $ | 735,420 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | (39,403 | ) | $ | (465,881 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depletion, depreciation, amortization and accretion expense | 47,977 | 14,062 | |||||
Impairment of unproved oil and natural gas properties | 53 | 7 | |||||
Amortization of debt issuance costs | 600 | 117 | |||||
Deferred income taxes | 9,644 | 89,368 | |||||
Equity-based compensation | 75,678 | 408,964 | |||||
(Gain) loss on commodity derivatives | 4,326 | (17,042 | ) | ||||
Net cash receipts (payments) on settled derivatives | (15,479 | ) | (1,071 | ) | |||
Other | (78 | ) | (39 | ) | |||
Change in operating assets and liabilities: | |||||||
Accounts receivable and other current assets | (5,351 | ) | (6,325 | ) | |||
Accounts payable and accrued liabilities | 2,275 | (459 | ) | ||||
Net cash provided by operating activities | 80,242 | 21,701 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Leasehold and acquisition costs | (7,585 | ) | (25,628 | ) | |||
Development of oil and natural gas properties | (185,982 | ) | (74,293 | ) | |||
Other capital expenditures | (1,270 | ) | (763 | ) | |||
Net cash used in investing activities | (194,837 | ) | (100,684 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from issuance of common stock in initial public offering, net of underwriting fees | — | 401,625 | |||||
Proceeds from credit facility | 110,000 | 10,000 | |||||
Repayment of credit facility | — | (142,000 | ) | ||||
Debt issuance costs | (1,523 | ) | (1,000 | ) | |||
Costs relating to initial public offering | — | (2,560 | ) | ||||
Employee tax withholding for settlement of equity compensation awards | (200 | ) | — | ||||
Net cash provided by financing activities | 108,277 | 266,065 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (6,318 | ) | 187,082 | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 9,523 | 11,727 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 3,205 | $ | 198,809 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||
Interest paid, net of capitalized interest | $ | 1,947 | $ | 697 | |||
Cash paid for income taxes | — | — | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES | |||||||
Accrued capital expenditures | $ | 130,171 | $ | 58,518 | |||
Asset retirement obligations | 230 | 40 | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES | |||||||
Accrued offering costs | $ | — | $ | 657 |
(in thousands) | March 31, 2018 | December 31, 2017 | |||||
Oil and gas sales | $ | 48,297 | $ | 42,869 | |||
Joint interest | 7,079 | 7,860 | |||||
Other | 457 | 5 | |||||
Total accounts receivable | $ | 55,833 | $ | 50,734 |
(in thousands) | March 31, 2018 | December 31, 2017 | |||||
Proved oil and natural gas properties | $ | 1,227,233 | $ | 1,012,321 | |||
Unproved oil and natural gas properties | 187,131 | 183,510 | |||||
Total oil and natural gas properties | 1,414,364 | 1,195,831 | |||||
Less: Accumulated depletion | (214,002 | ) | (166,592 | ) | |||
Total oil and natural gas properties, net | $ | 1,200,362 | $ | 1,029,239 |
(in thousands) | March 31, 2018 | December 31, 2017 | |||||
Accrued capital expenditures | $ | 107,366 | $ | 102,956 | |||
Accrued accounts payable | 8,608 | 8,488 | |||||
Royalties payable | 8,799 | 6,105 | |||||
Other current liabilities | 12,340 | 14,762 | |||||
Total accrued liabilities | $ | 137,113 | $ | 132,311 |
Three Months Ended March 31, 2018 | |||||||||||
(in thousands) | Amounts presented on statement of operations | ASC 606 Adjustments | Previous Revenue Recognition Method | ||||||||
Revenues | |||||||||||
Oil sales | $ | 120,723 | $ | — | $ | 120,723 | |||||
Natural gas sales | 2,875 | 899 | 3,774 | ||||||||
NGL sales | 5,308 | 1,615 | 6,923 | ||||||||
Other operating revenues | 147 | — | 147 | ||||||||
Total revenues | $ | 129,053 | $ | 2,514 | $ | 131,567 | |||||
Operating expenses | |||||||||||
Gathering and processing expenses | $ | — | $ | 2,514 | $ | 2,514 | |||||
Net income (loss) | $ | (39,403 | ) | $ | — | $ | (39,403 | ) |
Contract Period | Volumes (Bbls) | Wtd Avg Price ($/Bbl) | |||||
Oil Swaps: (1) | |||||||
Second quarter 2018 | 1,412,000 | $ | 52.69 | ||||
Third quarter 2018 | 1,481,200 | $ | 53.14 | ||||
Fourth quarter 2018 | 1,467,400 | $ | 53.45 | ||||
Total 2018 | 4,360,600 | $ | 53.10 | ||||
Year ending December 31, 2019 | 2,372,500 | $ | 51.89 | ||||
Oil Basis Swaps: (2) | |||||||
Second quarter 2018 | 1,410,500 | $ | (0.97 | ) | |||
Third quarter 2018 | 1,426,000 | $ | (0.97 | ) | |||
Fourth quarter 2018 | 1,426,000 | $ | (0.97 | ) | |||
Total 2018 | 4,262,500 | $ | (0.97 | ) | |||
Year ending December 31, 2019 | 2,920,000 | $ | (1.10 | ) |
(1) | The index prices for the oil swaps are based on the NYMEX–WTI monthly average futures price. |
(2) | The oil basis swap differential price is between Cushing–WTI and Midland–WTI. |
Contract Period | Volumes (Bbls) | Wtd Avg Price ($/Bbl) | |||||
Oil Swaps: (1) | |||||||
Third quarter 2018 | 138,000 | $ | 65.21 | ||||
Fourth quarter 2018 | 138,000 | $ | 65.21 | ||||
Total 2018 | 276,000 | $ | 65.21 | ||||
Year ending December 31, 2019 | 1,277,500 | $ | 60.25 |
(1) | The index prices for the oil swaps are based on the NYMEX–WTI monthly average futures price. |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Gain (loss) on derivative instruments, net | $ | (4,326 | ) | $ | 17,042 | ||
Net cash receipts (payments) on settled derivatives | $ | (15,479 | ) | $ | (1,071 | ) |
As of March 31, 2018: | Balance Sheet Location | Gross amounts presented on the balance sheet | Netting adjustments not offset on the balance sheet | Net amounts | ||||||||||
Assets | ||||||||||||||
Commodity contracts | Current assets - derivative instruments | $ | 14,602 | $ | (13,132 | ) | $ | 1,470 | ||||||
Commodity contracts | Noncurrent assets - derivative instruments | 2,138 | (2,138 | ) | — | |||||||||
Total assets | $ | 16,740 | $ | (15,270 | ) | $ | 1,470 | |||||||
Liabilities | ||||||||||||||
Commodity contracts | Current liabilities - derivative instruments | $ | 48,003 | $ | (13,132 | ) | $ | 34,871 | ||||||
Commodity contracts | Noncurrent liabilities - derivative instruments | 10,435 | (2,138 | ) | 8,297 | |||||||||
Total liabilities | $ | 58,438 | $ | (15,270 | ) | $ | 43,168 |
As of December 31, 2017: | Balance Sheet Location | Gross amounts presented on the balance sheet | Netting adjustments not offset on the balance sheet | Net amounts | ||||||||||
Assets | ||||||||||||||
Commodity contracts | Current assets - derivative instruments | $ | — | $ | — | $ | — | |||||||
Commodity contracts | Noncurrent assets - derivative instruments | 26 | (26 | ) | — | |||||||||
Total assets | $ | 26 | $ | (26 | ) | $ | — | |||||||
Liabilities | ||||||||||||||
Commodity contracts | Current liabilities - derivative instruments | $ | 41,782 | $ | — | $ | 41,782 | |||||||
Commodity contracts | Noncurrent liabilities - derivative instruments | 11,095 | (26 | ) | 11,069 | |||||||||
Total liabilities | $ | 52,877 | $ | (26 | ) | $ | 52,851 |
Level 2 | |||||||
(in thousands) | March 31, 2018 | December 31, 2017 | |||||
Assets from commodity derivative contracts | $ | 16,740 | $ | 26 | |||
Liabilities due to commodity derivative contracts | $ | 58,438 | $ | 52,877 |
Financial Covenant | Required Ratio | ||||
Ratio of current assets to liabilities, as defined in the credit agreement | Not less than | 1.0 | to | 1.0 | |
Ratio of debt to EBITDAX, as defined in the credit agreement | Not greater than | 4.0 | to | 1.0 |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Incentive unit awards | $ | 74,599 | $ | 408,964 | |||
Restricted stock unit awards | 1,319 | — | |||||
Performance stock unit awards | (395 | ) | — | ||||
Restricted stock unit awards issued to nonemployee directors | 155 | — | |||||
Total equity-based compensation expense | $ | 75,678 | $ | 408,964 |
Incentive Units (2) | Restricted Stock Units | Performance Stock Units | |||||||||
Unvested at December 31, 2017 | 7,755,745 | 582,973 | 398,566 | ||||||||
Awards Granted (1) | 293,118 | 427,060 | 534,758 | ||||||||
Vested | (2,789,511 | ) | (195,655 | ) | — | ||||||
Forfeited | (72,563 | ) | (91,970 | ) | (234,596 | ) | |||||
Unvested at March 31, 2018 | 5,186,789 | 722,408 | 698,728 | ||||||||
(1) Weighted average grant-date fair value | $ | 13.65 | $ | 12.52 | $ | 14.69 |
(2) | Included in the unvested incentive units at March 31, 2018 are 4,809,666 units for which equity-based compensation expense was accelerated and fully recognized in February 2018. See the discussion above for additional information. |
Incentive Units | Restricted Stock Units | Performance Stock Units | |||||||||
Compensation costs remaining at March 31, 2018 (in millions) | $ | 4.9 | $ | 8.0 | $ | 9.4 | |||||
Weighted average remaining period at March 31, 2018 (in years) | 2.8 | 2.6 | 2.6 |
Three Months Ended | From January 27, 2017, to | ||||||
(in thousands, except per share amounts) | March 31, 2018 | March 31, 2017 | |||||
Net income (loss) attributable to Jagged Peak Energy Inc. stockholders | $ | (39,403 | ) | $ | (90,405 | ) | |
Basic weighted average shares outstanding | 213,003 | 212,938 | |||||
Dilutive restricted stock units | — | — | |||||
Dilutive performance stock units | — | — | |||||
Diluted weighted average shares outstanding | 213,003 | 212,938 | |||||
Net income (loss) per common share: | |||||||
Basic | $ | (0.18 | ) | $ | (0.42 | ) | |
Diluted | $ | (0.18 | ) | $ | (0.42 | ) |
Three Months Ended | From January 27, 2017, to | ||||
(in thousands) | March 31, 2018 | March 31, 2017 | |||
Number of antidilutive units: (1) | |||||
Antidilutive restricted stock units | 624 | — | |||
Antidilutive performance stock units | 361 | — |
(1) | When the Company incurs a net loss, all outstanding equity awards are excluded from the calculation of diluted loss per common share because the inclusion of these awards would be anti-dilutive. |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Income tax expense | $ | 9,644 | $ | 89,368 | |||
Effective tax rate | (32.4 | )% | (23.7 | )% |
(in thousands) | |||
Asset retirement obligations at January 1, 2018 | $ | 929 | |
Liabilities incurred and assumed | 195 | ||
Liability settlements and disposals | — | ||
Revisions of estimated liabilities | 35 | ||
Accretion | 25 | ||
Asset retirement obligations at March 31, 2018 | 1,184 | ||
Less current portion of asset retirement obligations | (132 | ) | |
Long-term asset retirement obligations | $ | 1,052 |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Oryx via 3rd party shipper (1) | $ | 4,734 | $ | 1,419 | |||
Oryx (2) | $ | 215 | $ | 349 | |||
Phoenix (3) | $ | 109 | $ | 85 | |||
Trident (3) | $ | — | $ | 236 |
(1) | Fees paid by the Company’s third-party shipper to Oryx pursuant to the crude oil transportation and gathering agreement are netted against revenue as they are included in the net price paid by to the third-party shipper. |
(2) | Fees paid to Oryx for the purchase and installation of metering equipment are capitalized to proved properties on the consolidated and combined balance sheets. |
(3) | Fees paid to Phoenix and Trident are capitalized to proved properties on the consolidated and combined balance sheets. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Placed on production 19 gross (13.4 net) wells, of which we operated 11 gross (10.0 net), all within the southern Delaware Basin; |
• | Increased average daily production by 182% to 27,596 Boe/d, comprised of 79% oil; |
• | Grew oil production 164% to 21,850 barrels per day, natural gas production by 350% to 18.5 MMcf/d and NGL production rose 225% to 2,660 barrels per day; |
• | Production revenues rose 229% to $128.9 million; |
• | Improved cash flow from operating activities to $80.2 million from $21.7 million for the same period of 2017; |
• | Recorded a $4.3 million loss on commodity derivative instruments compared to a $17.0 million gain from the same period in 2017; |
• | Incurred equity-based compensation expense of $75.7 million compared to $409.0 million from the same period in 2017; and |
• | Increased our borrowing base from $425.0 million to $540.0 million. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Crude Oil (per Bbl): | |||||||
Average NYMEX price | $ | 62.91 | $ | 51.62 | |||
Realized price, before the effects of derivative settlements | $ | 61.39 | $ | 49.33 | |||
Realized price, after the effects of derivative settlements | $ | 53.52 | $ | 47.89 | |||
Natural Gas (per Mcf): | |||||||
Average NYMEX price | $ | 3.08 | $ | 3.02 | |||
Realized price (1) | $ | 1.73 | $ | 2.48 | |||
NGLs (per Bbl): | |||||||
Realized price (1) | $ | 22.17 | $ | 20.61 |
(1) | On January 1, 2018, we adopted ASC 606. As a result of adoption, natural gas and NGL realized prices for the three months ended March 31, 2018 include gathering and processing costs which reduced our realized natural gas and NGL prices by $0.54 per Mcf and $6.74 per barrel, respectively. For additional information regarding the new revenue recognition standard, see Note 2, Significant Accounting Policies and Related Matters, in “Part I. Financial Information - Item 1. Financial Statements.” |
Three Months Ended March 31, | ||||||||||||||
(in thousands or as indicated) | 2018 | 2017 | Change | % Change | ||||||||||
Production revenues: | ||||||||||||||
Oil sales | $ | 120,723 | $ | 36,765 | $ | 83,958 | 228 | % | ||||||
Natural gas sales | 2,875 | 917 | 1,958 | 214 | % | |||||||||
NGL sales | 5,308 | 1,518 | 3,790 | 250 | % | |||||||||
Total production revenues | $ | 128,906 | $ | 39,200 | $ | 89,706 | 229 | % | ||||||
Average sales price: (1) (2) | ||||||||||||||
Oil (per Bbl) | $ | 61.39 | $ | 49.33 | $ | 12.06 | 24 | % | ||||||
Natural gas (per Mcf) | $ | 1.73 | $ | 2.48 | $ | (0.75 | ) | (30 | )% | |||||
NGLs (per Bbl) | $ | 22.17 | $ | 20.61 | $ | 1.56 | 8 | % | ||||||
Total (per Boe) | $ | 51.90 | $ | 44.52 | $ | 7.38 | 17 | % | ||||||
Production volumes: | ||||||||||||||
Oil (MBbls) | 1,967 | 745 | 1,222 | 164 | % | |||||||||
Natural gas (MMcf) | 1,666 | 370 | 1,296 | 350 | % | |||||||||
NGLs (MBbls) | 239 | 74 | 165 | 223 | % | |||||||||
Total (MBoe) | 2,484 | 881 | 1,603 | 182 | % | |||||||||
Average daily production volume: | ||||||||||||||
Oil (Bbls/d) | 21,850 | 8,281 | 13,569 | 164 | % | |||||||||
Natural gas (Mcf/d) | 18,510 | 4,109 | 14,401 | 350 | % | |||||||||
NGLs (Bbls/d) | 2,660 | 819 | 1,841 | 225 | % | |||||||||
Total (Boe/d) | 27,596 | 9,785 | 17,811 | 182 | % |
(1) | On January 1, 2018, we adopted ASC 606. As a result of adoption, we changed the presentation of our natural gas and NGL sales revenues, with a corresponding change to our gathering and processing expense. For additional information regarding the new revenue recognition standard, see Note 2, Significant Accounting Policies and Related Matters, in |
Three Months Ended March 31, 2018 | |||||||||||
(in thousands) | Amounts presented on statement of operations | ASC 606 Adjustments | Previous Revenue Recognition Method | ||||||||
Production revenues: | |||||||||||
Oil sales | $ | 120,723 | $ | — | $ | 120,723 | |||||
Natural gas sales | 2,875 | 899 | 3,774 | ||||||||
NGL sales | 5,308 | 1,615 | 6,923 | ||||||||
Total production revenues | $ | 128,906 | $ | 2,514 | $ | 131,420 | |||||
Operating expenses | |||||||||||
Gathering and processing expenses | $ | — | $ | 2,514 | $ | 2,514 |
(2) | Average prices shown in the table do not include settlements of commodity derivative transactions. |
Three Months Ended March 31, | Per Boe | |||||||||||||||||||||
(in thousands, except per Boe) | 2018 | 2017 | Change | % Change | 2018 | 2017 | ||||||||||||||||
Lease operating expenses | $ | 9,720 | $ | 1,610 | $ | 8,110 | 504 | % | $ | 3.91 | $ | 1.83 | ||||||||||
Gathering and processing expenses (1) | — | 392 | (392 | ) | (100 | )% | $ | — | $ | 0.45 | ||||||||||||
Production and ad valorem taxes | 7,674 | 2,640 | 5,034 | 191 | % | $ | 3.09 | $ | 3.00 | |||||||||||||
Exploration | — | 6 | (6 | ) | (100 | )% | $ | — | $ | 0.01 | ||||||||||||
Depletion, depreciation, amortization and accretion | 47,977 | 14,062 | 33,915 | 241 | % | $ | 19.31 | $ | 15.97 | |||||||||||||
Impairment of unproved oil and natural gas properties | 53 | 7 | 46 | 657 | % | NM | NM | |||||||||||||||
Other operating expenses | 22 | 135 | (113 | ) | (84 | )% | $ | 0.01 | $ | 0.15 | ||||||||||||
General and administrative (before equity-based compensation) | 10,639 | 4,587 | 6,052 | 132 | % | $ | 4.28 | $ | 5.21 | |||||||||||||
Total operating expenses (before equity-based compensation) | 76,085 | 23,439 | 52,646 | 225 | % | $ | 30.63 | $ | 26.62 | |||||||||||||
Equity-based compensation | 75,678 | 408,964 | (333,286 | ) | ||||||||||||||||||
Total operating expenses | $ | 151,763 | $ | 432,403 | $ | (280,640 | ) |
(1) | On January 1, 2018, we adopted ASC 606 which changed the presentation of our natural gas and NGL sales revenues, with a corresponding change to our gathering and processing expense. See Note 2, Significant Accounting Policies and Related Matters, in “Part I. Financial Information - Item 1. Financial Statements” for more information, and the table in footnote 1 to the oil and natural gas revenues table, above, for a breakout of the impact on gathering and processing expense. |
Three Months Ended March 31, | |||||||||||
(in thousands) | 2018 | 2017 | Change | ||||||||
Incentive unit awards | $ | 74,599 | $ | 408,964 | $ | (334,365 | ) | ||||
Restricted stock unit awards | 1,474 | — | 1,474 | ||||||||
Performance stock unit awards | (395 | ) | — | (395 | ) | ||||||
Total equity-based compensation expense | $ | 75,678 | $ | 408,964 | $ | (333,286 | ) |
Three Months Ended March 31, | |||||||||||
(in thousands) | 2018 | 2017 | Change | ||||||||
Gain (loss) on commodity derivatives | $ | (4,326 | ) | $ | 17,042 | $ | (21,368 | ) | |||
Interest expense, net | (2,731 | ) | (711 | ) | (2,020 | ) | |||||
Other, net | 8 | 171 | (163 | ) | |||||||
Total other income (expense) | $ | (7,049 | ) | $ | 16,502 | $ | (23,551 | ) |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Gain (loss) on derivative instruments, net | $ | (4,326 | ) | $ | 17,042 | ||
Net cash receipts (payments) on settled derivatives | $ | (15,479 | ) | $ | (1,071 | ) |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Acquisitions | |||||||
Proved properties | $ | — | $ | — | |||
Unproved properties (1) | 7,518 | 22,810 | |||||
Development costs | 207,615 | 91,281 | |||||
Infrastructure costs | 3,742 | 8,371 | |||||
Exploration costs | — | 6 | |||||
Total oil and gas capital expenditures | $ | 218,875 | $ | 122,468 |
(1) | Relates to oil and natural gas mineral interest leasing activity. |
Three Months Ended March 31, | |||||
2018 | 2017 | ||||
Gross wells | |||||
Operated | 11 | 7 | |||
Non-operated | 8 | — | |||
19 | 7 | ||||
Net wells | |||||
Operated | 10.0 | 6.9 | |||
Non-operated | 3.4 | — | |||
13.4 | 6.9 |
(in millions) | |||||||
Drilling and completion (1) | $ | 540.0 | — | $ | 590.0 | ||
Water infrastructure | 20.0 | — | 25.0 | ||||
Total | $ | 560.0 | — | $ | 615.0 |
(1) | The 2018 drilling and completion budget includes $5 - $10 million budgeted for 3D seismic and other data initiatives. |
Three Months Ended March 31, | |||||||
(in thousands) | 2018 | 2017 | |||||
Net cash provided by operating activities | $ | 80,242 | $ | 21,701 | |||
Net cash used in investing activities | $ | (194,837 | ) | $ | (100,684 | ) | |
Net cash provided by financing activities | $ | 108,277 | $ | 266,065 |
• | incur additional indebtedness; |
• | incur liens; |
• | make investments; |
• | make loans to others; |
• | merge or consolidate with another entity; |
• | sell assets; |
• | make certain payments; |
• | enter into transactions with affiliates; |
• | hedge interest rates; and |
• | engage in certain other transactions without the prior consent of the lenders. |
Financial Covenant | Required Ratio | ||||
Ratio of current assets to liabilities, as defined in the credit agreement | Not less than | 1.0 | to | 1.0 | |
Ratio of debt to EBITDAX, as defined in the credit agreement | Not greater than | 4.0 | to | 1.0 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Sensitivity Analysis | ||||||||||||
(in thousands) | Revenue | % of Total | Change in Realized Prices | Impact on Revenue | ||||||||
Oil | $ | 120,723 | 94% | + / - $1.00 per barrel | + / - | $ | 1,967 | |||||
Natural gas | 2,875 | 2% | + / - $0.10 per Mcf | + / - | $ | 167 | ||||||
NGL | 5,308 | 4% | + / - $1.00 per barrel | + / - | $ | 239 | ||||||
Total (1) | $ | 128,906 | 100% |
(1) | Our oil, natural gas and NGL revenues do not include the effects of derivatives instruments. |
Change to Prices | ||||||||
(in thousands) | 10% Increase | 10% Decrease | ||||||
Increase (decrease) to net oil derivative liability as of March 31, 2018 | $ | 38,399 | $ | (38,399 | ) |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | |||||||||
January 1, 2018 - January 31, 2018 | — | $ | — | — | — | ||||||||
February 1, 2018 - February 28, 2018 | 15,553 | $ | 12.85 | — | — | ||||||||
March 1, 2018 - March 31, 2018 | — | $ | — | — | — | ||||||||
Total | 15,553 | $ | 12.85 | — | — |
(1) | Shares purchased represent shares of our common stock transferred to us to satisfy tax withholding obligations incurred upon the vesting of equity awards held by our employees. |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description of Exhibit | |
4.1 | ||
4.2 | ||
10.1† | ||
*10.2 | ||
10.3† | ||
*10.4 | ||
*31.1 | ||
*31.2 | ||
**32.1 | ||
**32.2 | ||
*101.INS | XBRL Instance Document | |
*101.SCH | XBRL Schema Document | |
*101.CAL | XBRL Calculation Linkbase Document | |
*101.LAB | XBRL Label Linkbase Document | |
*101.PRE | XBRL Presentation Linkbase Document | |
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
† | Compensatory plan or arrangement. | |
* | Filed herewith. | |
** | Furnished herewith. |
JAGGED PEAK ENERGY INC. | ||||
Date: | May 10, 2018 | By: | /s/ JAMES J. KLECKNER | |
Name: | James J. Kleckner | |||
Title: | Chief Executive Officer and President | |||
Date: | May 10, 2018 | By: | /s/ ROBERT W. HOWARD | |
Name: | Robert W. Howard | |||
Title: | Executive Vice President, Chief Financial Officer | |||
Date: | May 10, 2018 | By: | /s/ SHONN D. STAHLECKER | |
Name: | Shonn D. Stahlecker | |||
Title: | Controller |
BORROWER: | |||
JAGGED PEAK ENERGY LLC | |||
By: | /s/ CHRISTOPHER HUMBER | ||
Name: | Christopher Humber | ||
Title: | Executive Vice President, General Counsel and Secretary | ||
GUARANTOR: | |||
JAGGED PEAK ENERGY INC. | |||
By: | /s/ CHRISTOPHER HUMBER | ||
Name: | Christopher Humber | ||
Title: | Executive Vice President, General Counsel and Secretary |
ADMINSTRATIVE AGENT/ISSUING | |||
LENDER/LENDER: | |||
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender, an Existing Lender and an Assignor | |||
By: | /s/ SUZANNE RIDENHOUR | ||
Name: | Suzanne Ridenhour | ||
Title: | Director |
LENDERS: | |||
FIFTH THIRD BANK, as an Existing Lender and an Assignor | |||
By: | /s/ JONATHAN H. LEE | ||
Name: | Jonathan H. Lee | ||
Title: | Director |
ABN AMRO CAPTIAL USA LLC, as an Existing Lender and an Assignor | |||
By: | /s/ DARRELL HOLLEY | ||
Name: | Darrell Holley | ||
Title: | Managing Director | ||
By: | /s/ MICHAELA BRAUN | ||
Name: | Michaela Braun | ||
Title: | Director |
KEYBANK NATIONAL ASSOCIATION, as an Existing Lender and an Assignor | |||
By: | /s/ DAVID M. BORNSTEIN | ||
Name: | David M. Bornstein | ||
Title: | Senior Vice President |
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as an Existing Lender and an Assignor | |||
By: | /s/ JOHN LANE | ||
Name: | John Lane | ||
Title: | Executive Vice President |
CITIBANK, N.A., as an Existing Lender and an Assignor | |||
By: | /s/ PHIL BALLARD | ||
Name: | Phil Ballard | ||
Title: | Vice President |
JPMORGAN CHASE BANK, N.A., as an Existing Lender and an Assignor | |||
By: | /s/ DAVID MORRIS | ||
Name: | David Morris | ||
Title: | Authorized Officer |
GOLDMAN SACHS BANK USA, as an Existing Lender and an Assignor | |||
By: | /s/ JOSH ROSENTHAL | ||
Name: | Josh Rosenthal | ||
Title: | Authorized Signatory |
UBS AG, STAMFORD BRANCH, as an Existing Lender and an Assignor | |||
By: | /s/ HOUSSEM DALY | ||
Name: | Houssem Daly | ||
Title: | Associate Director | ||
By: | /s/ DARLENE ARIAS | ||
Name: | Darlene Arias | ||
Title: | Director |
BMO HARRIS BANK N.A., as a New Lender and an Assignee | |||
By: | /s/ JAMES V. DUCOTE | ||
Name: | James V. Ducote | ||
Title: | Managing Director |
ROYAL BANK OF CANADA, as a New Lender and an Assignee | |||
By: | /s/ KRISTAN SPIVEY | ||
Name: | Kristen Spivey | ||
Title: | Authorized Signatory |
COMERICA BANK, as a New Lender and an Assignee | |||
By: | /s/ V. MARK FUQUA | ||
Name: | V. Mark Fuqua | ||
Title: | Executive Vice President |
DEUTSCHE BANK AG NEW YORK BRANCH, as a New Lender and an Assignee | |||
By: | /s/ ALICIA SCHUG | ||
Name: | Alicia Schug | ||
Title: | Vice President | ||
By: | /s/ MARIA GUINCHARD | ||
Name: | Maria Guinchard | ||
Title: | Vice President |
U.S. BANK NATIONAL ASSOCIATION, as a New Lender and an Assignee | |||
By: | /s/ JOHN C. LOZANO | ||
Name: | John C. Lozano | ||
Title: | Senior Vice President |
BOKF, NA, as a New Lender and as an Assignee | |||
By: | /s/ BEN W. SUH | ||
Name: | Ben W. Suh | ||
Title: | Senior Vice President |
BORROWER: | |||
JAGGED PEAK ENERGY LLC | |||
By: | /s/ CHRISTOPHER HUMBER | ||
Name: | Christopher Humber | ||
Title: | Executive Vice President, General Counsel and Secretary | ||
GUARANTOR: | |||
JAGGED PEAK ENERGY INC. | |||
By: | /s/ CHRISTOPHER HUMBER | ||
Name: | Christopher Humber | ||
Title: | Executive Vice President, General Counsel and Secretary |
ADMINSTRATIVE AGENT/ISSUING | |||
LENDER/LENDER: | |||
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender, and a Lender | |||
By: | /s/ ZACHARY KRAMER | ||
Name: | Zachary Kramer | ||
Title: | Vice President |
LENDERS: | |||
FIFTH THIRD BANK, as a Lender | |||
By: | /s/ JONATHAN H. LEE | ||
Name: | Jonathan H. Lee | ||
Title: | Director |
ABN AMRO CAPTIAL USA LLC, as a Lender | |||
By: | /s/ DARRELL HOLLEY | ||
Name: | Darrell Holley | ||
Title: | Managing Director | ||
By: | /s/ MICHAELA BRAUN | ||
Name: | Michaela Braun | ||
Title: | Director |
KEYBANK NATIONAL ASSOCIATION, as a Lender | |||
By: | /s/ DAVID M. BORNSTEIN | ||
Name: | David M. Bornstein | ||
Title: | Senior Vice President |
CITIBANK, N.A., as a Lender | |||
By: | /s/ EAMON BAQUI | ||
Name: | Eamon Baqui | ||
Title: | Vice President |
JPMORGAN CHASE BANK, N.A., as a Lender | |||
By: | /s/ ROBERT KEEPERS | ||
Name: | Robert Keepers | ||
Title: | Authorized Signatory |
GOLDMAN SACHS BANK USA, as a Lender | |||
By: | /s/ MEGHAN SULLIVAN | ||
Name: | Meghan Sullivan | ||
Title: | Authorized Signatory |
UBS AG, STAMFORD BRANCH, as a Lender | |||
By: | /s/ HOUSSEM DALY | ||
Name: | Houssem Daly | ||
Title: | Associate Director | ||
By: | /s/ DARLENE ARIAS | ||
Name: | Darlene Arias | ||
Title: | Director |
BMO HARRIS BANK N.A., as a Lender | |||
By: | /s/ MELISSA GUZMANN | ||
Name: | Melissa Guzmann | ||
Title: | Director |
ROYAL BANK OF CANADA, as a Lender | |||
By: | /s/ KRISTAN SPIVEY | ||
Name: | Kristen Spivey | ||
Title: | Authorized Signatory |
COMERICA BANK, as a Lender | |||
By: | /s/ CASSANDRA M. LUCAS | ||
Name: | Cassandra M. Lucas | ||
Title: | Portfolio Manager |
DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender | |||
By: | /s/ MARGUERITE SUTTON | ||
Name: | Marguerite Sutton | ||
Title: | Vice President | ||
By: | /s/ ALICIA SCHUG | ||
Name: | Alicia Schug | ||
Title: | Vice President |
U.S. BANK NATIONAL ASSOCIATION, as a Lender | |||
By: | /s/ JOHN C. LOZANO | ||
Name: | John C. Lozano | ||
Title: | Senior Vice President |
BOKF, NA, as a Lender | |||
By: | /s/ SONJA BORODKO | ||
Name: | Sonja Borodko | ||
Title: | Senior Vice President |
ADMINISTRATIVE AGENT / ISSUING LENDER | ||
Wells Fargo Bank, National Association | Address: | 1700 Lincoln St., 6th Floor |
Denver, CO 80203 | ||
Attn: | Oleg Kogan | |
Telephone: | 303-863-5367 | |
Facsimile: | 303-863-5196 | |
Email: | Oleg.Kogan@wellsfargo.com | |
CREDIT PARTIES | ||
Borrow/Guarantors | Address: | 1401 Lawrence Street |
Suite 1800 | ||
Denver, CO 80202 | ||
Attn: | Bob Howard | |
Telephone: | 720-215-3660 | |
Facsimile: | 720-215-3690 | |
Email: | bhoward@jaggedpeakenergy.com |
Lender | Commitment | Elected Commitment | Pro Rata Share |
Wells Fargo Bank, National Association | $173,611,111.11 | $54,976,851.85 | 11.57407407% |
Fifth Third Bank | $145,833,333.33 | $46,180,555.56 | 9.72222222% |
ABN AMRO Capital USA LLC | $145,833,333.33 | $46,180,555.56 | 9.72222222% |
Citibank, N.A. | $145,833,333.33 | $46,180,555.56 | 9.72222222% |
JPMorgan Chase Bank, N.A. | $145,833,333.33 | $46,180,555.56 | 9.72222222% |
KeyBank National Association | $145,833,333.33 | $46,180,555.56 | 9.72222222% |
Goldman Sachs Bank USA | $97,222,222.22 | $30,787,037.03 | 6.48148148% |
UBS AG, Stamford Branch | $97,222,222.22 | $30,787,037.03 | 6.48148148% |
First Tennessee Bank National Association | $83,333,333.33 | $26,388,888.89 | 5.55555556% |
BMO Harris Bank N.A. | $55,555,555.56 | $17,592,592.59 | 3.70370370% |
Royal Bank of Canada | $55,555,555.56 | $17,592,592.59 | 3.70370370% |
Deutsche Bank AG New York Branch | $55,555,555.56 | $17,592,592.59 | 3.70370370% |
Comerica Bank | $55,555,555.56 | $17,592,592.59 | 3.70370370% |
U.S. Bank National Association | $55,555,555.56 | $17,592,592.59 | 3.70370370% |
BOKF, NA | $41,666,666.67 | $13,194,444.45 | 2.77777778% |
Total: | $1,500,000,000.00 | $475,000,000.00 | 100% |
1) | I have reviewed this quarterly report on Form 10-Q of Jagged Peak 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; and |
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 10, 2018 | /s/ JAMES J. KLECKNER | |
Name: | James J. Kleckner | ||
Title: | Chief Executive Officer and President |
1) | I have reviewed this quarterly report on Form 10-Q of Jagged Peak 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; and |
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 10, 2018 | /s/ ROBERT W. HOWARD | |
Name: | Robert W. Howard | ||
Title: | Executive Vice President and Chief Financial Officer |
1. | 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); and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 10, 2018 | /s/ JAMES J. KLECKNER | |
Name: | James J. Kleckner | ||
Title: | Chief Executive Officer and President |
1. | 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); and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 10, 2018 | /s/ ROBERT W. HOWARD | |
Name: | Robert W. Howard | ||
Title: | Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 04, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Fiscal Year Focus | 2018 | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Jagged Peak Energy Inc. | |
Entity Central Index Key | 0001685715 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 213,110,757 |
CONSOLIDATED AND COMBINED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock shares issued (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock shares issued (in shares) | 213,110,757 | 212,930,655 |
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Financial Position [Abstract] | ||
Equity-based compensation | $ 75,678 | $ 408,964 |
CONSOLIDATED AND COMBINED STATEMENT OF CHANGES IN EQUITY - 3 months ended Mar. 31, 2018 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
---|---|---|---|---|
Beginning Balance at Dec. 31, 2017 | $ 699,345 | $ 2,129 | $ 773,674 | $ (76,458) |
Beginning Balance (in shares) at Dec. 31, 2017 | 212,931 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | (200) | $ 2 | (202) | 0 |
Issuance of common stock in corporate reorganization (in shares) | 180 | |||
Equity-based compensation | 75,678 | 75,678 | ||
Net income (loss) | (39,403) | (39,403) | ||
Ending Balance at Mar. 31, 2018 | $ 735,420 | $ 2,131 | $ 849,150 | $ (115,861) |
Ending Balance (in shares) at Mar. 31, 2018 | 213,111 |
Organization, Operations and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Operations and Basis of Presentation | Organization, Operations and Basis of Presentation Organization and Operations Jagged Peak Energy Inc. (either individually or together with its subsidiaries, as the context requires, “Jagged Peak” or the “Company”) is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the southern Delaware Basin; the Delaware Basin is a sub-basin of the Permian Basin of West Texas. The Company’s acreage is located on large, contiguous blocks in the adjacent counties of Winkler, Ward, Reeves and Pecos, with significant oil-in-place within multiple stacked hydrocarbon-bearing formations. Corporate Reorganization and Initial Public Offering Jagged Peak is a Delaware corporation formed in September 2016, as a wholly owned subsidiary of Jagged Peak Energy LLC (“JPE LLC”), a Delaware limited liability company formed in April 2013. JPE LLC was formed by an affiliate of Quantum Energy Partners (“Quantum”) and former members of Jagged Peak’s management team. Jagged Peak was formed to become the holding company of JPE LLC in connection with Jagged Peak’s initial public offering (the “IPO”). Immediately prior to the IPO, a corporate reorganization (the “corporate reorganization”) took place whereby JPE LLC became a wholly owned subsidiary of Jagged Peak. As all power and authority to control the core functions of Jagged Peak and JPE LLC were, and continue to be, controlled by Quantum, the corporate reorganization was treated as a reorganization of entities under common control and the results of JPE LLC have been consolidated and combined for all periods. On January 27, 2017, the Company initiated its IPO of 31,599,334 shares of common stock to the public, which included 3,266,000 shares sold by the selling stockholders. The stock was priced at $15.00 per share and the Company received net proceeds of approximately $397.0 million after deducting offering expenses and underwriting discounts and commissions. The Company did not receive any proceeds from the sale of the shares by the selling stockholders. Additional background on the Company and its IPO, along with details of the ownership of the Company are available in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”). Basis of Presentation The accompanying unaudited consolidated and combined financial statements include the accounts of Jagged Peak and JPE LLC, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and should be read in conjunction with the financial statements, summary of significant accounting policies and footnotes included in the 2017 Form 10-K. Accordingly, certain disclosures required by GAAP and normally included in Annual Reports on Form 10-K have been condensed or omitted from this report; however, except as disclosed herein, there has been no material change in the information disclosed in the notes to consolidated and combined financial statements included in the Company’s 2017 Form 10-K. All significant intercompany and intra-company balances and transactions have been eliminated. It is the opinion of management that all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. The Company has no items of other comprehensive income or loss; therefore, its net income or loss is identical to its comprehensive income or loss. Operating results for the periods presented are not necessarily indicative of expected results for the full year because of the impact of fluctuations in prices received for oil, natural gas and NGLs, expected production increases due to development activities, natural production declines, the uncertainty of exploration and development drilling results, the fair value of derivative instruments and other factors. The unaudited consolidated and combined financial statements for periods prior to January 27, 2017 reflect the historical results of JPE LLC, other than the equity-based compensation expense and deferred tax expense, as further described in Note 6, Equity-based Compensation, and Note 8, Income Taxes, respectively. Certain reclassifications have been made to prior period amounts to conform to the current presentation. |
Significant Accounting Policies and Related Matters |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies and Related Matters | Significant Accounting Policies and Related Matters Significant Accounting Policies The significant accounting policies followed by the Company are set forth in Note 2, Significant Accounting Policies and Related Matters, to the Company’s consolidated and combined financial statements in its 2017 Form 10-K, and are supplemented by the notes to the consolidated and combined financial statements in this Quarterly Report on Form 10-Q. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in these notes to the consolidated and combined financial statements. Use of Estimates In the course of preparing the consolidated and combined financial statements, management makes various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events. Although management believes these estimates are reasonable, actual results could differ from these estimates. Estimates made in preparing these consolidated and combined financial statements include, among other things, (1) estimates of oil and natural gas reserve quantities, which impact depreciation, depletion and amortization and impairment of oil and natural gas properties, (2) operating and capital costs accrued, (3) estimates of timing and costs used in calculating asset retirement obligations, (4) estimates of the fair value of equity-based compensation, (5) estimates used in developing fair value assumptions and estimates, (6) estimates of deferred income taxes and (7) estimates and assumptions used in the disclosure of commitments and contingencies. Changes in estimates, assumptions or actual results could have a significant impact on results in future periods. Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, (“ASC 606”) using the modified retrospective approach, which only applied to contracts that were in effect as of the date of adoption. The adoption did not require an adjustment to opening retained earnings for the cumulative effect adjustment and did not impact the Company’s previously reported results of operations, nor its ongoing consolidated and combined balance sheets, statements of cash flow or statement of changes in equity. Under ASC 606, oil, natural gas and NGL sales revenues are recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied, and collectability is reasonably assured. All of the Company’s oil, natural gas and NGL sales are made under contracts with customers. The performance obligations for the Company’s contracts with customers are satisfied at a point in time through the delivery of oil and natural gas to its customers. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. The Company typically receives payment for oil, natural gas and NGL sales within 30 days of the month of delivery. The Company’s contracts for oil, natural gas and NGL sales are standard industry contracts that include variable consideration based on the monthly index price and adjustments that may include counterparty-specific provisions related to volumes, price differentials, discounts and other adjustments and deductions. Under the Company’s current gas processing contracts, it delivers natural gas to a purchaser at or near the wellhead. For these contracts, the Company has concluded the purchaser is the customer, and as such, the Company recognizes natural gas and NGLs revenues based on the net amount of proceeds it receives from the purchaser. The Company’s product types are as follows: Oil Sales. Under the Company’s oil sales contracts, the Company generally sells oil to the purchaser at or near the wellhead, and collects a contractually agreed upon index price, net of pricing and gathering and transportation differentials. The Company transfers control of the product to the purchaser at or near the wellhead and recognizes revenue based on the net price received. Natural Gas and NGL Sales. Under the Company’s natural gas sales contracts, the Company delivers and transfers control of natural gas to the purchaser at delivery points at or near the wellhead. The purchaser gathers and processes the natural gas and sells the resulting residue gas and NGLs to purchasers. The Company receives its contractual portion of the proceeds for the sale of the residue gas and NGLs at an agreed upon index price, net of pricing differentials and applicable selling expenses including gathering, processing and fractionation costs. The Company recognizes revenue at the expected net price when control transfers to the purchaser. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the variable consideration is allocated entirely to a wholly unsatisfied performance obligation, as allowed under ASC 606. Under the Company’s oil, natural gas and NGL sales contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. Disaggregation of Revenue The Company’s oil, natural gas and NGL sales revenues represent substantially all of its revenues, and are derived from the sale of oil, natural gas and NGL production within the Permian Basin. The Company believes the disaggregation of revenues into the three product types of oil sales, natural gas sales and NGL sales, as seen on the consolidated and combined statements of operations, is an appropriate level of detail for its primary activity. Accounts Receivable At March 31, 2018 and December 31, 2017, accounts receivable was comprised of the following:
At March 31, 2018 and December 31, 2017, the Company did not have any reserves for doubtful accounts and did not incur any bad debt expense in any period presented. Oil and Natural Gas Properties A summary of the Company’s oil and natural gas properties, net is as follows:
Capitalized leasehold costs attributable to proved properties are depleted using the units-of-production method based on proved reserves on a field basis. Capitalized well costs, including asset retirement costs, are depleted based on proved developed reserves on a field basis. For the three months ended March 31, 2018 and 2017, the Company recorded depletion for oil and natural gas properties of $47.4 million and $13.7 million, respectively. Depletion expense is included in depletion, depreciation, amortization and accretion expense on the accompanying consolidated and combined statements of operations. Accrued Liabilities The components of accrued liabilities are shown below:
Recent Accounting Pronouncements Recently Adopted Accounting Standards Revenue from Contracts with Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which outlined a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. The Company adopted the new standard on January 1, 2018, as described above. The Company implemented the necessary changes to its business processes, systems and controls to support recognition and disclosure of this new standard. The Company’s financial statement presentation related to revenue received from certain gas sales contracts changed as a result of the new standard. Under previous guidance, proceeds from certain gas sales contracts were reported gross, with related costs for gathering and processing being presented separately as gathering and processing expense. Upon adoption of the new standard, the Company presents revenue from these contracts net of gathering and processing costs, as these costs are incurred after control of the product is transferred to the customer. The impact of the new revenue recognition standard on the Company’s current period results is as follows:
Adoption of the new standard did not impact the Company’s previously reported results of operations or consolidated and combined cash flows statements. Stock Compensation - Scope of Modification Accounting. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. The ASU clarified which changes to the terms or conditions of an equity-based payment award require an entity to apply modification accounting in Topic 718. The standard became effective for the Company on January 1, 2018. The adoption of this new standard did not impact the Company’s consolidated and combined statements of operations, balance sheets or cash flows. Accounting Standards Not Yet Adopted Leases. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires all leases with a term greater than one year to be recognized on the balance sheet as right-of-use assets and lease liabilities. ASU 2016-02 retains a distinction between finance and operating leases concerning the recognition and presentation of the expense and payments related to leases in the statements of operations and cash flows. The Company will adopt the new standard on January 1, 2019. The Company is in process of evaluating the impact of this new standard, which includes an analysis of existing contracts, including drilling rig and frac fleet contracts, office leases and certain field equipment. The Company is also evaluating the effect of ASU 2016-02 on its current accounting policies, disclosures and controls. The Company believes that adopting the standard will result in increases to the assets and liabilities on its consolidated and combined balance sheets, and changes to the timing and presentation of certain operating expenses on its consolidated and combined statements of operations. The update does not apply to leases of mineral rights to explore for or use oil and natural gas. In January 2018, the FASB issued ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expire before the Company's adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. The Company intends to elect this transition provision. The Company continues to monitor relevant industry guidance regarding the implementation of ASU 2016-02 and will adjust its implementation strategies as necessary. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments The Company hedges a portion of its crude oil sales through derivative instruments to mitigate volatility in commodity prices. The use of these instruments exposes the Company to market basis differential risk if the WTI price does not move in parity with the Company’s underlying sales of crude oil produced in the southern Delaware Basin. The Company also hedges a portion of its market basis differential risk through basis swap contracts. The Company’s derivative instruments are carried at fair value on the consolidated and combined balance sheets. The Company estimates the fair value using risk adjusted discounted cash flow calculations. Cash flows are based on published future commodity price curves for the underlying commodity as of the date of the estimate. Due to the volatility of commodity prices, the estimated fair values of the Company’s derivative instruments are subject to fluctuation from period to period, which could result in significant differences between the current estimated fair value and the ultimate settlement price. For more information, refer to Note 4, Fair Value Measurements. In an effort to reduce the variability of the Company’s cash flows, the Company hedged the commodity prices associated with a portion of its expected future oil volumes by entering into swap and basis swap derivative financial instruments. With swaps, the Company typically receives an agreed upon fixed price for a specified notional quantity of oil or natural gas, and the Company pays the hedge counterparty a floating price for that same quantity based upon published index prices. Basis swap contracts establish the differential between Cushing WTI prices and Midland WTI prices for the notional volumes contracted. The Company’s commodity derivatives may expose it to the risk of financial loss in certain circumstances. The Company’s derivative arrangements provide protection on the hedged volumes if market prices decline below the prices at which these derivatives are set. If market prices rise above the prices at which the Company has hedged, the Company will be required to make settlement payments to its derivative counterparties. The following table summarizes the Company’s derivative contracts as of March 31, 2018:
The Company has elected to not apply hedge accounting, and as a result, its earnings are affected by the use of the mark-to-market method of accounting for derivative financial instruments. The changes in fair value of these instruments are recognized through earnings as other income or expense rather than deferred until the anticipated transaction affects earnings. The use of mark-to-market accounting for financial instruments can cause noncash earnings volatility due to changes in the underlying commodity price indices. The ultimate gain or loss upon settlement of these transactions is recognized in earnings as other income or expense. Cash settlements of the Company’s derivative contracts are included in cash flows from operating activities in the Company’s statements of cash flows. Subsequent to March 31, 2018, the Company entered into the following additional derivative contracts:
The Company recognized the following gains (losses) and net cash receipts (payments) in earnings for the periods indicated:
The Company’s derivative contracts are carried at their fair value on the Company’s consolidated and combined balance sheets using Level 2 inputs, and are subject to industry standard master netting arrangements, which allow the Company to offset recognized asset and liability fair value amounts on contracts with the same counterparty. The Company’s policy is to not offset these positions in its consolidated and combined balance sheets. The following tables present the amounts and classifications of the Company’s commodity contract derivative assets and liabilities as of March 31, 2018 and December 31, 2017 (in thousands):
Derivative Counterparty Risk Where the Company is exposed to credit risk in its financial instrument transactions, management analyzes the counterparty’s financial condition prior to entering into an agreement, and monitors the appropriateness of these counterparties on an ongoing basis. Generally, the Company does not require collateral and does not anticipate nonperformance by its counterparties. The Company’s counterparty credit exposure related to commodity derivative instruments is represented by contracts with a net positive fair value at the reporting date. These outstanding instruments, if any, expose the Company to credit risk in the event of nonperformance by the counterparties to the agreements. Should the creditworthiness of the Company’s counterparties decline, its ability to mitigate nonperformance risk is limited to a counterparty agreeing to either a voluntary termination and subsequent cash settlement or a novation of the derivative contract to a third-party. In the event of a counterparty default, the Company may sustain a loss and its cash receipts could be negatively impacted. At March 31, 2018, the Company had commodity derivative contracts with five counterparties, all of which were lenders under the Company’s Amended and Restated Credit Facility (as defined in Note 5, Debt) and all of which had investment grade credit ratings. These counterparties accounted for all the Company’s counterparty credit exposure related to commodity derivative assets. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Financial assets and liabilities are measured at fair value on a recurring basis. Nonfinancial assets and liabilities, such as the initial measurement of asset retirement obligations and oil and natural gas properties upon acquisition or impairment, are recognized at fair value on a nonrecurring basis. The Company categorizes the inputs to the fair value of its financial assets and liabilities using a three-tier fair value hierarchy, established by the FASB, that prioritizes the significant inputs used in measuring fair value: Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed securities and U.S. government treasury securities. Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in the category include nonexchange-traded derivatives such as over-the-counter forwards, swaps and options. Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value, and the company does not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities measured on a recurring basis Certain assets and liabilities are reported at fair value on a recurring basis, including the Company’s derivative instruments. To determine the fair value at the end of each reporting period, the Company computes discounted cash flows for the duration of each commodity derivative instrument using the terms of the related contract. Inputs consist of published forward commodity price curves as of the date of the estimate. The Company compares these prices to the price parameters contained in its hedge contracts to determine estimated future cash inflows or outflows, which are then discounted. The fair values of the Company’s commodity derivative assets and liabilities include a measure of credit risk. These valuations are Level 2 inputs. The following table is a listing of the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017:
Assets and liabilities measured on a nonrecurring basis The Company applies the provisions of the fair value measurement standard on a nonrecurring basis to its nonfinancial assets and liabilities, such as the acquisition or impairment of proved and unproved oil and gas properties and the inception value of asset retirement obligation liabilities. These assets and liabilities are subject to fair value adjustments only in certain circumstances and are not subject to recurring revaluations. The Company reviews its proved oil and natural gas properties for impairment whenever facts and circumstances indicate their carrying value may not be recoverable. In such circumstances, the income approach is used to determine the fair value of proved oil and natural gas reserves. Under this approach, the Company estimates the expected future cash flows of oil and natural gas properties and compares these undiscounted cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will write down the carrying amount of the oil and natural gas properties to estimated fair value. The factors used to determine fair value may include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, estimated future capital expenditures and a commensurate discount rate. These assumptions and estimates represent Level 3 inputs. No impairments were recorded on proved properties during the three months ended March 31, 2018 and 2017. Unproved oil and natural gas property costs are evaluated for impairment and reduced to fair value when there is an indication that the carrying costs may not be recoverable. To measure the fair value of the unproved properties, the Company uses a market approach, and takes into account future development plans, remaining lease term, drilling results, and reservoir performance. The Company recorded impairment expense on unproved oil and gas properties of $53 thousand and $7 thousand for the three months ended March 31, 2018 and 2017, respectively. These impairments resulted from expirations of certain undeveloped leases. The inception value of the Company’s asset retirement obligations is also measured at fair value on a nonrecurring basis. The inputs used to determine such fair value are based primarily on the present value of estimated future cash outflows. Given the unobservable nature of these inputs, they represent Level 3 inputs. The fair value measurements of assets acquired and liabilities assumed in a business acquisition are measured on a nonrecurring basis on the acquisition date using an income or market valuation approach based on inputs that are unobservable in the market and therefore represent Level 3 inputs. Significant inputs to the valuation of acquired oil and gas properties include estimates of future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk-adjusted discount rates. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation. Fair Value of Other Financial Instruments The Company has other financial instruments consisting primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities that approximate fair value due to the nature of the instrument and the short-term maturities of these instruments. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Debt | Debt Senior Secured Revolving Credit Facility The Company’s amended and restated credit facility, as amended (the “Amended and Restated Credit Facility”), had a borrowing base of $425.0 million, with $155.0 million outstanding, at December 31, 2017. In March 2018, the Company entered into Amendment No. 2 to the Amended and Restated Credit Facility which extended the maturity date of the Amended and Restated Credit Facility to March 21, 2023, increased the aggregate commitment to $1.5 billion and increased the borrowing base to $540.0 million. Borrowings under the Amended and Restated Credit Facility under Amendment No. 2 bear interest at a rate elected by the Company that is equal to an alternative base rate (which is equal to the greatest of the prime rate, the federal funds effective rate plus 0.50%, and the thirty-day adjusted LIBOR plus 1.0%) or LIBOR, in each case, plus the applicable margin. The applicable margin ranges from 0.50% to 1.50% in the case of the alternative base rate, and from 1.50% to 2.50% in the case of LIBOR, in each case depending on the amount of the loan outstanding in relation to the borrowing base. The commitment fee paid by the Company is between 0.375% to 0.50% per year on the unused portion of the borrowing base, depending on the relative amount of the loan outstanding in relation to the borrowing base. The Amended and Restated Credit Facility contains certain nonfinancial covenants, including among others, restrictions on indebtedness, restrictions on liens, restrictions on investments, restrictions on mergers, restrictions on sales of assets, restrictions on dividends and payments to the Company’s capital interest holders and restrictions on the Company’s hedging activity. The Amended and Restated Credit Facility also contains financial covenants, which are measured on a quarterly basis. The covenants, as defined in the Amended and Restated Credit Facility, include requirements to comply with the following financial ratios:
As of March 31, 2018, the Company was in compliance with its financial covenants. As of March 31, 2018, there was $265.0 million outstanding under the Amended and Restated Credit Facility. The weighted-average interest rate as of March 31, 2018 was 3.51%. In April 2018, and in connection with the issuance of the Senior Notes (as described and defined below), the lenders of the Amended and Restated Credit Facility agreed to waive a provision that would require a borrowing base reduction as a result of the Senior Notes. As a result, the borrowing base of the Amended and Restated Credit Facility continues to be $540.0 million. The Company also voluntarily elected to reduce the elected commitment to $475.0 million, effective as of the closing of the Senior Notes offering. Additionally, a portion of the proceeds from the Senior Notes were used to repay the entire outstanding balance under the Amended and Restated Credit Facility of $320.0 million as of the date the Senior Notes proceeds were received. As of the date of this filing, the Company has no borrowings outstanding, and $475.0 million available under the Amended and Restated Credit Facility. 5.875% Senior Unsecured Notes due 2026 On May 8, 2018, JPE LLC issued $500.0 million aggregate principal amount of 5.875% senior unsecured notes that mature on May 1, 2026 (the “Senior Notes”) in a 144A private placement that was exempt from registration under the Securities Act. The Senior Notes resulted in net proceeds to the Company, after deducting the initial purchasers’ discount and offering expenses, of approximately $489.3 million. A portion of such proceeds were used to repay the entire outstanding balance under the Amended and Restated Credit Facility of $320.0 million as of the date the Senior Notes proceeds were received. The remainder of the net proceeds are expected to be used to fund a portion of the Company’s 2018 capital program and for other general corporate purposes. Interest is payable on the Senior Notes semi-annually in arrears on each May 1 and November 1, commencing November 1, 2018. The Senior Notes are unconditionally guaranteed on a senior unsecured basis by Jagged Peak, and may be guaranteed by certain future subsidiaries of Jagged Peak. In connection with the issuance of the Senior Notes, the Company entered into a registration rights agreement with the initial purchasers, dated May 8, 2018, to allow holders of the unregistered Senior Notes to exchange the unregistered Senior Notes for registered notes that have substantially identical terms. The Company agreed to use reasonable efforts to cause the exchange to be completed within 360 days after the issuance of the Senior Notes. The Company is required to pay additional interest if it fails to comply with its obligations to complete the exchange offer of the Senior Notes within the specified time period, whereby the interest rate would be increased by up to 1.0% per annum during the period in which a registration default is in effect. The Company expects to comply with the terms of the registration rights agreement and complete the exchange of the Senior Notes within the 360-day period. If the Company experiences certain defined changes of control, each holder of the Senior Notes may require the Company to repurchase all or a portion of its Senior Notes for cash at a price equal to 101% of the aggregate principal amount of such Senior Notes, plus any accrued but unpaid interest as of the date of repurchase. The indenture governing the Senior Notes contains covenants that, among other things and subject to certain exceptions and qualifications, limit the Company’s ability and the ability of the Company’s restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from their subsidiaries to them; (vii) consolidate, merge or transfer all or substantially all of their assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. |
Equity-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based Compensation | Equity-based Compensation Equity-based compensation expense, which is recorded in general and administrative expense in the accompanying consolidated and combined statements of operations, for each type of equity-based compensation award was as follows for the periods indicated:
Equity-based compensation expense will fluctuate based on the grant-date fair value of awards, the number of awards, the requisite service period of the awards, modification of awards, employee forfeitures, and the timing of the awards. For the three months ended March 31, 2018, equity-based compensation expense includes (1) $71.3 million related to a modification of the service requirements in February 2018 for the incentive unit awards allocated at the IPO (as described further below) and (2) the reversal of equity-based compensation expense associated with awards that were forfeited during the three months ended March 31, 2018, notably performance stock unit (“PSU”) awards forfeited by former executive officers. As the Company’s policy is to recognize forfeitures as they occur, previously recognized expense on unvested awards is reversed at the date of forfeiture. For the three months ended March 31, 2017, equity-based compensation expense for incentive unit awards of $409.0 million included (1) $379.0 million related to the vested shares of common stock at the IPO date, all of which was noncash except for $14.7 million related to a management incentive advance payment made in April 2016, and (2) $22.2 million related to a modification in conjunction with a March 2017 separation agreement of a former executive officer. Through March 31, 2017, the Company did not issue any awards under its long-term incentive plan; as such, there is no equity-based compensation through that date other than the incentive unit awards. In February 2018, certain employees notified the Company of their desire to terminate their employment. Under the terms of the JPE Management Holdings LLC limited liability company agreement (“Management Holdco LLC Agreement”), upon voluntary termination of employment by an incentive unit award holder, the Board of Directors has the discretion to allow outstanding unvested incentive unit awards to immediately vest, to continue to vest post-termination, and/or to be automatically forfeited, or any combination thereof. Any forfeited incentive units would be reallocated to the remaining incentive unit holders employed by the Company. In February 2018, the Board of Directors modified these employees’ unvested incentive units to either immediately accelerate vesting, in the case of retiring employees, or continue to vest post-termination under the original vesting period. The Company determined that these changes are accounted for as modifications under ASC 718 in the first quarter of 2018. As a result of these modifications to the service requirements, the Company determined that, for accounting purposes under ASC 718, the incentive unit awards allocated at IPO no longer met the substantive service condition, and that any previously unrecognized equity-based compensation expense should be recognized immediately. The acceleration of all previously unrecognized equity-based compensation expense for incentive unit awards allocated at the time of the IPO resulted in the recognition of $71.3 million of noncash equity-based compensation expense in the first quarter of 2018. This accounting does not alter the legal service obligations under the Management Holdco LLC Agreement for remaining employees whose awards were not modified. Equity-based compensation expense recognition related to incentive unit awards that were unallocated at the time of the IPO is unaffected. The following table summarizes the Company’s incentive unit award, restricted stock unit (“RSU”) award and PSU award activity for the three months ended March 31, 2018:
The following table reflects the future equity-based compensation expense to be recorded for each type of award that was outstanding at March 31, 2018:
At March 31, 2018, there were 210,766 unallocated incentive unit awards that are available to be granted. When these units are granted, they will be valued using the closing stock price on the date of grant, and the Company will recognize the related expense over the requisite service period. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is similarly computed, except that the denominator includes the effect, using the treasury stock method, of unvested RSUs and PSUs if including such potential shares of common stock units is dilutive. The PSUs included in the calculation of diluted weighted average shares outstanding are based on the number of shares of common stock that would be issuable if the end of the reporting period was the end of the performance period required for the vesting of such PSU awards. During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all awards is anti-dilutive. For the three months ended March 31, 2017, the Company’s EPS calculation includes only the net loss for the period subsequent to the corporate reorganization and IPO, and omits income or loss prior to these events. In addition, the basic weighted average shares outstanding calculation is based on the actual days in which the shares were outstanding for the period from January 27, 2017 to March 31, 2017. Through March 31, 2017, the Company did not issue any shares under its long-term incentive plan; as such, there are no potentially dilutive shares as of that date. A reconciliation of the components of basic and diluted earnings per common share is presented in the table below:
The following table presents the weighted average number of outstanding equity awards that have been excluded from the computation of diluted earnings per common share as their inclusion would be anti-dilutive:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income tax expense was as follows for the periods indicated:
JPE LLC was organized as a limited liability company and treated as a pass-through entity for federal income tax purposes. As such, taxable income and any related tax credits were passed through to its members and included in their tax returns. Accordingly, provision for federal and state corporate income taxes has been made only for the operations of the Company from January 27, 2017 in the accompanying consolidated and combined financial statements. Included in the deferred federal income tax provision above for the three months ended March 31, 2017, is a $79.1 million related to the Company’s change in tax status as a result of the corporate reorganization. The Company computes its quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to its year-to-date income, except for discrete items. Income taxes for discrete items are computed and recorded in the period that the specific transaction occurs. For the three months ended March 31, 2018, the Company’s overall effective tax rate was different than the federal statutory rate of 21% primarily due to nondeductible equity-based compensation related to incentive unit awards allocated at the time of the IPO, and permanent differences on vested equity-based compensation awards. For the three months ended March 31, 2017, the Company’s overall effective tax rate was different than the federal statutory rate of 35% primarily due to the impact of the change in tax status and nondeductible equity-based compensation. On December 22, 2017, the President signed into law Public Law No. 115-97, a comprehensive tax reform bill commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). Due to the complexities involved in accounting for the enactment of the new law, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) 118 that allowed for a measurement period of up to one year after the enactment date of the Tax Act to finalize the impact of the Tax Act on a company's financial statements. The Company substantially completed its analysis of the Tax Act and recorded its estimated impact in the year ended December 31, 2017. As of March 31, 2018, the Company has not made any material adjustments to its provisional estimate at December 31, 2017. Any changes to the calculation that do arise will be recorded as they are identified during the measurement period provided for by SAB 118. |
Asset Retirement Obligations |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligations | Asset Retirement Obligations The following table summarizes the changes in the carrying amount of the asset retirement obligations for the three months ended March 31, 2018. The current portion of the asset retirement obligation liability is included in accrued liabilities on the consolidated and combined balance sheets.
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Commitments and Contingencies |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments There were no material changes in commitments during the first three months of 2018. Please refer to Note 10, Commitments and Contingencies, in the 2017 Form 10-K for additional discussion. Contingencies Legal Matters In the ordinary course of business, the Company may at times be subject to claims and legal actions. Management believes it is remote that the impact of such matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Environmental Matters The Company accounts for environmental contingencies in accordance with the accounting guidance related to accounting for contingencies. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or clean-ups are probable and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments is fixed and readily determinable. At both March 31, 2018 and December 31, 2017, the Company had no environmental matters requiring specific disclosure or requiring the recognition of a liability. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions As a result of Quantum’s significant ownership interest in the Company, the Company identified Oryx Midstream Services, LLC (together with Oryx Southern Delaware Holdings, LLC, “Oryx”), Phoenix Lease Services, LLC (“Phoenix”) and Trident Water Services, LLC (“Trident”), a wholly owned subsidiary of Phoenix, as related parties. These entities are considered related parties as Quantum owns an interest, either directly or indirectly, in each entity. The following table summarizes fees paid to Oryx, Phoenix and Trident for the periods indicated:
At March 31, 2018 and December 31, 2017, the Company had outstanding payables to these related parties of $1.8 million and $1.8 million, respectively. See Note 11, Related Party Transactions, in the 2017 Form 10-K for more information. |
Significant Accounting Policies and Related Matters (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated and combined financial statements include the accounts of Jagged Peak and JPE LLC, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and should be read in conjunction with the financial statements, summary of significant accounting policies and footnotes included in the 2017 Form 10-K. Accordingly, certain disclosures required by GAAP and normally included in Annual Reports on Form 10-K have been condensed or omitted from this report; however, except as disclosed herein, there has been no material change in the information disclosed in the notes to consolidated and combined financial statements included in the Company’s 2017 Form 10-K. All significant intercompany and intra-company balances and transactions have been eliminated. It is the opinion of management that all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. The Company has no items of other comprehensive income or loss; therefore, its net income or loss is identical to its comprehensive income or loss. Operating results for the periods presented are not necessarily indicative of expected results for the full year because of the impact of fluctuations in prices received for oil, natural gas and NGLs, expected production increases due to development activities, natural production declines, the uncertainty of exploration and development drilling results, the fair value of derivative instruments and other factors. The unaudited consolidated and combined financial statements for periods prior to January 27, 2017 reflect the historical results of JPE LLC, other than the equity-based compensation expense and deferred tax expense, as further described in Note 6, Equity-based Compensation, and Note 8, Income Taxes, respectively. |
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Reclassifications | Certain reclassifications have been made to prior period amounts to conform to the current presentation. |
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Use of Estimates | Use of Estimates In the course of preparing the consolidated and combined financial statements, management makes various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events. Although management believes these estimates are reasonable, actual results could differ from these estimates. Estimates made in preparing these consolidated and combined financial statements include, among other things, (1) estimates of oil and natural gas reserve quantities, which impact depreciation, depletion and amortization and impairment of oil and natural gas properties, (2) operating and capital costs accrued, (3) estimates of timing and costs used in calculating asset retirement obligations, (4) estimates of the fair value of equity-based compensation, (5) estimates used in developing fair value assumptions and estimates, (6) estimates of deferred income taxes and (7) estimates and assumptions used in the disclosure of commitments and contingencies. Changes in estimates, assumptions or actual results could have a significant impact on results in future periods. |
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Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, (“ASC 606”) using the modified retrospective approach, which only applied to contracts that were in effect as of the date of adoption. The adoption did not require an adjustment to opening retained earnings for the cumulative effect adjustment and did not impact the Company’s previously reported results of operations, nor its ongoing consolidated and combined balance sheets, statements of cash flow or statement of changes in equity. Under ASC 606, oil, natural gas and NGL sales revenues are recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied, and collectability is reasonably assured. All of the Company’s oil, natural gas and NGL sales are made under contracts with customers. The performance obligations for the Company’s contracts with customers are satisfied at a point in time through the delivery of oil and natural gas to its customers. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. The Company typically receives payment for oil, natural gas and NGL sales within 30 days of the month of delivery. The Company’s contracts for oil, natural gas and NGL sales are standard industry contracts that include variable consideration based on the monthly index price and adjustments that may include counterparty-specific provisions related to volumes, price differentials, discounts and other adjustments and deductions. Under the Company’s current gas processing contracts, it delivers natural gas to a purchaser at or near the wellhead. For these contracts, the Company has concluded the purchaser is the customer, and as such, the Company recognizes natural gas and NGLs revenues based on the net amount of proceeds it receives from the purchaser. The Company’s product types are as follows: Oil Sales. Under the Company’s oil sales contracts, the Company generally sells oil to the purchaser at or near the wellhead, and collects a contractually agreed upon index price, net of pricing and gathering and transportation differentials. The Company transfers control of the product to the purchaser at or near the wellhead and recognizes revenue based on the net price received. Natural Gas and NGL Sales. Under the Company’s natural gas sales contracts, the Company delivers and transfers control of natural gas to the purchaser at delivery points at or near the wellhead. The purchaser gathers and processes the natural gas and sells the resulting residue gas and NGLs to purchasers. The Company receives its contractual portion of the proceeds for the sale of the residue gas and NGLs at an agreed upon index price, net of pricing differentials and applicable selling expenses including gathering, processing and fractionation costs. The Company recognizes revenue at the expected net price when control transfers to the purchaser. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the variable consideration is allocated entirely to a wholly unsatisfied performance obligation, as allowed under ASC 606. Under the Company’s oil, natural gas and NGL sales contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. Disaggregation of Revenue The Company’s oil, natural gas and NGL sales revenues represent substantially all of its revenues, and are derived from the sale of oil, natural gas and NGL production within the Permian Basin. The Company believes the disaggregation of revenues into the three product types of oil sales, natural gas sales and NGL sales, as seen on the consolidated and combined statements of operations, is an appropriate level of detail for its primary activity. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards Revenue from Contracts with Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which outlined a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. The Company adopted the new standard on January 1, 2018, as described above. The Company implemented the necessary changes to its business processes, systems and controls to support recognition and disclosure of this new standard. The Company’s financial statement presentation related to revenue received from certain gas sales contracts changed as a result of the new standard. Under previous guidance, proceeds from certain gas sales contracts were reported gross, with related costs for gathering and processing being presented separately as gathering and processing expense. Upon adoption of the new standard, the Company presents revenue from these contracts net of gathering and processing costs, as these costs are incurred after control of the product is transferred to the customer. The impact of the new revenue recognition standard on the Company’s current period results is as follows:
Adoption of the new standard did not impact the Company’s previously reported results of operations or consolidated and combined cash flows statements. Stock Compensation - Scope of Modification Accounting. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. The ASU clarified which changes to the terms or conditions of an equity-based payment award require an entity to apply modification accounting in Topic 718. The standard became effective for the Company on January 1, 2018. The adoption of this new standard did not impact the Company’s consolidated and combined statements of operations, balance sheets or cash flows. Accounting Standards Not Yet Adopted Leases. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires all leases with a term greater than one year to be recognized on the balance sheet as right-of-use assets and lease liabilities. ASU 2016-02 retains a distinction between finance and operating leases concerning the recognition and presentation of the expense and payments related to leases in the statements of operations and cash flows. The Company will adopt the new standard on January 1, 2019. The Company is in process of evaluating the impact of this new standard, which includes an analysis of existing contracts, including drilling rig and frac fleet contracts, office leases and certain field equipment. The Company is also evaluating the effect of ASU 2016-02 on its current accounting policies, disclosures and controls. The Company believes that adopting the standard will result in increases to the assets and liabilities on its consolidated and combined balance sheets, and changes to the timing and presentation of certain operating expenses on its consolidated and combined statements of operations. The update does not apply to leases of mineral rights to explore for or use oil and natural gas. In January 2018, the FASB issued ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expire before the Company's adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. The Company intends to elect this transition provision. The Company continues to monitor relevant industry guidance regarding the implementation of ASU 2016-02 and will adjust its implementation strategies as necessary. |
Significant Accounting Policies and Related Matters (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | At March 31, 2018 and December 31, 2017, accounts receivable was comprised of the following:
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Property, Plant and Equipment | A summary of the Company’s oil and natural gas properties, net is as follows:
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Schedule of Accrued Liabilities | The components of accrued liabilities are shown below:
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact of the new revenue recognition standard on the Company’s current period results is as follows:
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Derivative Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The following table summarizes the Company’s derivative contracts as of March 31, 2018:
Subsequent to March 31, 2018, the Company entered into the following additional derivative contracts:
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Derivative Instruments, Gain (Loss) | The Company recognized the following gains (losses) and net cash receipts (payments) in earnings for the periods indicated:
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Schedule of Derivative Instruments by Balance Sheet Location | The following tables present the amounts and classifications of the Company’s commodity contract derivative assets and liabilities as of March 31, 2018 and December 31, 2017 (in thousands):
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table is a listing of the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017:
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Summary of Covenant Compliance | The covenants, as defined in the Amended and Restated Credit Facility, include requirements to comply with the following financial ratios:
|
Equity-based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | Equity-based compensation expense, which is recorded in general and administrative expense in the accompanying consolidated and combined statements of operations, for each type of equity-based compensation award was as follows for the periods indicated:
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Schedule of Share-based Compensation, Incentive Units, Activity | The following table summarizes the Company’s incentive unit award, restricted stock unit (“RSU”) award and PSU award activity for the three months ended March 31, 2018:
The following table reflects the future equity-based compensation expense to be recorded for each type of award that was outstanding at March 31, 2018:
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Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | A reconciliation of the components of basic and diluted earnings per common share is presented in the table below:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents the weighted average number of outstanding equity awards that have been excluded from the computation of diluted earnings per common share as their inclusion would be anti-dilutive:
|
Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense was as follows for the periods indicated:
|
Asset Retirement Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Asset Retirement Obligation | The following table summarizes the changes in the carrying amount of the asset retirement obligations for the three months ended March 31, 2018. The current portion of the asset retirement obligation liability is included in accrued liabilities on the consolidated and combined balance sheets.
|
Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The following table summarizes fees paid to Oryx, Phoenix and Trident for the periods indicated:
|
Organization, Operations and Basis of Presentation (Details) $ / shares in Units, $ in Millions |
Jan. 27, 2017
USD ($)
$ / shares
shares
|
---|---|
IPO | |
Debt Instrument [Line Items] | |
Stock issued (in shares) | 31,599,334 |
Share price (in dollars per share) | $ / shares | $ 15.00 |
IPO Sold by Stockholders | |
Debt Instrument [Line Items] | |
Stock issued (in shares) | 3,266,000 |
IPO Sold By Company | |
Debt Instrument [Line Items] | |
Net proceeds | $ | $ 397.0 |
Significant Accounting Policies and Related Matters - Schedule of Accounts Receivable (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 55,833,000 | $ 50,734,000 |
Reserve for doubtful accounts | 0 | 0 |
Oil and gas sales | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 48,297,000 | 42,869,000 |
Joint interest | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 7,079,000 | 7,860,000 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 457,000 | $ 5,000 |
Significant Accounting Policies and Related Matters - Oil and Natural Gas Properties (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | |||
Proved oil and natural gas properties | $ 1,227,233 | $ 1,012,321 | |
Unproved oil and natural gas properties | 187,131 | 183,510 | |
Total oil and natural gas properties | 1,414,364 | 1,195,831 | |
Less: Accumulated depletion | (214,002) | (166,592) | |
Total oil and gas properties, net | 1,200,362 | $ 1,029,239 | |
Depletion for oil and natural gas properties | $ 47,400 | $ 13,700 |
Significant Accounting Policies and Related Matters - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounting Policies [Abstract] | ||
Accrued capital expenditures | $ 107,366 | $ 102,956 |
Accrued accounts payable | 8,608 | 8,488 |
Royalties payable | 8,799 | 6,105 |
Other current liabilities | 12,340 | 14,762 |
Total accrued liabilities | $ 137,113 | $ 132,311 |
Derivative Instruments - Gains (Losses) in Earnings (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gain (loss) on derivative instruments, net | $ (4,326) | $ 17,042 |
Net cash receipts (payments) on settled derivatives | $ 15,479 | $ 1,071 |
Derivative Instruments - Narrative (Details) |
Mar. 31, 2018
counterparty
|
---|---|
Commodity contracts | |
Derivative [Line Items] | |
Number of counterparties | 5 |
Fair Value Measurements (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets from commodity derivative contracts | $ 16,740,000 | $ 26,000 | |
Liabilities due to commodity derivative contracts | 58,438,000 | 52,877,000 | |
Proved property impairment | 0 | $ 0 | |
Impairment of unproved oil and gas properties | 53,000 | $ 7,000 | |
Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets from commodity derivative contracts | 16,740,000 | 26,000 | |
Liabilities due to commodity derivative contracts | $ 58,438,000 | $ 52,877,000 |
Debt - Summary Of Covenant Compliance (Details) - Amended and Restated Credit Facility - Revolving Credit Facility |
1 Months Ended |
---|---|
Mar. 31, 2018 | |
Line of Credit Facility [Line Items] | |
Ratio of current assets to liabilities, as defined in the credit agreement (not less than) | 1.0 |
Ratio of debt to EBITDAX, as defined in the credit agreement (not greater than) | 4.0 |
Equity-based Compensation - Additional Information (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Feb. 28, 2018 |
Mar. 31, 2017 |
Jan. 26, 2017 |
Apr. 30, 2016 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | $ 75,678 | $ 408,964 | ||||
Profit Interest Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | $ 14,700 | $ 74,599 | $ 408,964 | |||
Management Holdco | Profit Interest Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity-based compensation expense | $ 71,300 | $ 379,000 | ||||
Unallocated shares held (in shares) | 210,766 | |||||
Management Holdco | Incentive unit awards, former executive officer | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation modification | $ 22,200 |
Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
2 Months Ended | 3 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Earnings Per Share [Line Items] | |||
Net income (loss) attributable to Jagged Peak Energy Inc. stockholders | $ (90,405) | $ (39,403) | $ (465,881) |
Basic weighted average shares outstanding (in shares) | 212,938 | 213,003 | 212,938 |
Diluted weighted average shares outstanding (in shares) | 212,938 | 213,003 | 212,938 |
Net income (loss) per common share: | |||
Basic (in dollars per share) | $ (0.42) | $ (0.18) | $ (0.42) |
Diluted (in dollars per share) | $ (0.42) | $ (0.18) | $ (0.42) |
Restricted stock unit awards | |||
Earnings Per Share [Line Items] | |||
Dilutive units (in shares) | 0 | 0 | |
Performance stock unit awards | |||
Earnings Per Share [Line Items] | |||
Dilutive units (in shares) | 0 | 0 |
Earnings Per Share - Antidilutive Securities (Details) - shares shares in Thousands |
2 Months Ended | 3 Months Ended |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2018 |
|
Restricted stock unit awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted average number of outstanding equity awards excluded from diluted earnings per share calculation (in shares) | 0 | 624 |
Performance stock unit awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted average number of outstanding equity awards excluded from diluted earnings per share calculation (in shares) | 0 | 361 |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Deferred income taxes | $ 79.1 | |
Federal statutory rate | 21.00% | 35.00% |
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 9,644 | $ 89,368 |
Effective tax rate | (32.40%) | (23.70%) |
Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Asset retirement obligation, beginning balance | $ 929 | |
Liabilities incurred and assumed | 195 | |
Liability settlements and disposals | 0 | |
Revisions of estimated liabilities | 35 | |
Accretion | 25 | |
Asset retirement obligation, ending balance | 1,184 | |
Less current portion of asset retirement obligations | (132) | |
Long-term asset retirement obligations | $ 1,052 | $ 811 |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Related Party Transaction [Line Items] | |||
Outstanding payables | $ 1,800 | $ 1,800 | |
Phoenix Lease Services, LLC | |||
Related Party Transaction [Line Items] | |||
Fees paid to related party | 109 | $ 85 | |
Trident Water Services, LLC | |||
Related Party Transaction [Line Items] | |||
Fees paid to related party | 0 | 236 | |
Oil Gathering Agreement | Oryx Midstream Services, LLC | |||
Related Party Transaction [Line Items] | |||
Fees paid to related party | 4,734 | 1,419 | |
Leasing Of Equipment | Oryx Midstream Services, LLC | |||
Related Party Transaction [Line Items] | |||
Fees paid to related party | $ 215 | $ 349 |
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