Properties and Equipment

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment Disclosure

NOTE 6 - PROPERTIES AND EQUIPMENT, NET

The following table presents the components of properties and equipment, net of accumulated depreciation, depletion and amortization (“DD&A”) as of the dates indicated:

	September 30, 2021		December 31, 2020
	(in thousands)
Properties and equipment, net:
Crude oil and natural gas properties
Proved	$	8,135,626	$	7,523,639
Unproved	338,668		350,677
Total crude oil and natural gas properties	8,474,294		7,874,316
Equipment and other	64,343		65,027
Land and buildings	19,978		24,299
Construction in progress	368,808		523,550
Properties and equipment, at cost	8,927,423		8,487,192
Accumulated DD&A	(4,101,086)		(3,627,993)
Properties and equipment, net	$	4,826,337	$	4,859,199

Impairment of Oil and Gas Properties. There were no significant impairment charges recognized related to our proved and unproved properties during the three and nine months ended September 30, 2021. In the first quarter of 2020, the significant decline in crude oil prices in addition to the ongoing effects of the COVID-19 pandemic were considered a triggering event that required us to assess our crude oil and natural gas properties for possible impairment. As a result of our assessment, we recorded impairment expense of $881.1 million to our proved and unproved properties.

Proved Properties. Of the total impairment expense recognized in the first quarter of 2020, approximately $753.0 million was related to our Delaware Basin proved properties. These impairment charges represented the amount by which the carrying value of the crude oil and natural gas properties exceeded the estimated fair value. We estimated the fair value of proved crude oil and natural gas properties using valuation techniques that convert future cash flows to a single discounted amount, a level 3 input. Significant inputs and assumptions to the valuation of proved crude oil and natural gas properties include estimates of reserves volumes, future operating and development costs, future commodity prices, and a discount rate of 17 percent, which was based on a weighted-average cost of capital for the area where the assets are located.

Unproved Properties. We recognized approximately $127.3 million of impairment charges for our unproved properties in the Delaware Basin during the three months ended March 31, 2020. These impairment charges were recognized based on the fair value of the properties, a Level 3 input. The fair value is estimated based on a review of our current drilling plans, estimated future cash flows for probable well locations and expected future lease expirations, primarily in areas where we have no development plans.

Suspended Well Costs. The following table presents the capitalized exploratory well cost pending determination of proved reserves and included in properties and equipment for the periods presented:

	Nine Months Ended September 30, 2021		Year Ended December 31, 2020
	(in thousands, except for number of wells)
Beginning balance	$	7,459	$	16,078
Additions to capitalized exploratory well costs pending the determination of proved reserves	6,090		11,770
Reclassifications to proved properties	(13,549)		(20,389)
Ending balance	$	—	$	7,459
Number of wells pending determination at period-end	—		2

As of December 31, 2020, our net capitalized exploratory well costs that have been capitalized for a period greater than one year were $7.5 million. During the three months ended September 30, 2021, both exploratory wells were determined to be successful producing wells and were reclassified into proved properties. We have no remaining exploratory wells pending determination as of September 30, 2021.