
2.	Basis of Presentation

These Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and other commitments in the normal course of business. Our primary sources of liquidity have historically included cash from operating activities, borrowings under our revolving credit agreement (the “Revolver”), proceeds from the sales of assets and, from time to time, proceeds from capital market transactions, including the offering of debt and equity securities. Our cash flows from operating activities are subject to significant volatility due to changes in commodity prices for our crude oil, NGL and natural gas products, as well as variations in our production. Due primarily to the substantial decline in commodity prices over the last twelve months, our liquidity has been adversely impacted. We have incurred net losses in each of the three years ending December 31, 2015, and reported a net loss attributable to common shareholders of $(1.6) billion for the year ended December 31, 2015.

Further, based on our current operating forecast and capital structure, we do not believe we will be able to comply with all of the financial covenants under the Revolver during the next twelve months. We are also dependent on restructuring our debt or obtaining additional debt and/or equity financing to continue our planned principal business operations. These factors raise substantial doubt about our ability to continue as a “going concern.”

Under the Revolver, we are required to deliver audited, consolidated financial statements without a “going concern” or like qualification or exception. The audit report prepared by our auditors with respect to the financial statements in this Annual Report on Form 10-K includes an explanatory paragraph expressing substantial doubt as to our ability to continue as a “going concern.” Therefore, we are in default under the Revolver. Pursuant to an amendment to the Revolver (see Note 9), we have received an agreement from our lenders that such default, together with certain other defaults, will not become events of default until April 12, 2016 (which can be further extended until May 10, 2016 if certain conditions have been satisfied).

As of December 31, 2015, the total outstanding principal amount of our debt obligations was $1.2 billion. We are continuing to actively explore and evaluate various strategic alternatives to reduce the level of our long-term debt and lower our future cash interest obligations. In January 2016, we retained Kirkland & Ellis LLP (“K&E”) and Jefferies LLC (“Jefferies”) to provide strategic advice generally and to act as our advisors in that regard. The timing and outcome of these efforts is highly uncertain. One or more of these alternatives could potentially be consummated without the consent of any one or more of our current security holders and, if consummated, could be dilutive to the holders of our outstanding equity securities and adversely affect the trading prices and values of our current debt and equity securities or if we were to seek protection under the bankruptcy laws, could cause the shares of our common stock to be canceled, with limited recovery, if any. We are actively working to address these matters; however, there can be no assurance that our efforts will be successful on acceptable terms or at all. The Consolidated Financial Statements do not include any adjustments that may result from the outcome of this uncertainty.