REVENUE RECOGNITION

On January 1, 2018, the Company adopted Accounting Standard Codification (ASC) 606, Revenue from Contracts with Customers, using the modified retrospective method. The adoption of ASC 606 superseded the revenue recognition requirements in ASC 605, Revenue Recognition, and had the following impact on the Company’s results of operations for the three months and nine months ended September 30, 2018:



	Three months ended September 30, 2018
(in thousands)	As reported under ASC 606			As computed under ASC 605			Increase (Decrease)
Revenues
Oil, natural gas liquids and natural gas sales	$	380,884		$	382,611		$	(1,727	)
Operating Costs and Expenses
Oil, natural gas liquids and natural gas production	$	55,078		$	56,805		$	(1,727	)
Net Loss	$	(26,572	)	$	(26,572	)	$	—



	Nine months ended September 30, 2018
(in thousands)	As reported under ASC 606		As computed under ASC 605		Increase (Decrease)
Revenues
Oil, natural gas liquids and natural gas sales	$	1,110,317	$	1,114,892	$	(4,575	)
Operating Costs and Expenses
Oil, natural gas liquids and natural gas production	$	165,671	$	170,246	$	(4,575	)
Net Income	$	160,617	$	160,617	$	—

The changes in revenues and operating costs and expenses are due to certain marketing and transportation costs determined to have occurred after transfer of control to the purchaser. Accordingly, under ASC 606 these marketing and transportation costs are reported as a deduction to revenues.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers, as it applies the practical exemption in accordance with ASC 606. The exemption applies to variable consideration that is recognized as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to our remaining performance obligations is not required.

Performance obligations for the sale of oil, natural gas liquids and natural gas are satisfied at a point in time because the customer obtains control and title of the asset when the oil, natural gas liquids and natural gas is delivered to the designated sales point. Because the Company's performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company has recognized amounts due from contracts with customers of $150.1 million and $131.9 million at September 30, 2018 and December 31, 2017, respectively, as accounts receivable within the consolidated balance sheets.

Revenues are predominantly derived from the sale of oil, natural gas liquids and natural gas. Revenues are recognized when obligations under the terms of a contract with our customers are satisfied; generally, this occurs with the transfer of control of the promised goods or services in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenue on these contracts is recognized in accordance with the five-step revenue recognition model prescribed under ASC 606. Payment is generally made on these oil, natural gas liquids and natural gas sales contracts within 30 days of the end of the calendar month in which product is delivered. The sale of oil, natural gas liquids and natural gas as presented on the consolidated statements of operations represents the Company's share of revenues net of royalties and excludes revenue interests owned by others. When selling oil, natural gas liquids and natural gas on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis. Taxes are not included in the transaction costs.

In accordance with ASC 606, the Company disaggregates revenues from contracts with customers by product type. The following table summarizes our revenue by major product:



	Three months ended		Nine months ended
(in thousands)	September 30, 2018		September 30, 2018
Oil	$	316,059	$	936,136
Natural gas liquids	49,407		125,591
Natural gas	15,418		48,590
Total	$	380,884	$	1,110,317