Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

REVENUE FROM CONTRACTS WITH CUSTOMERSOur revenue streams are reported under three segments: oil and natural gas, contract drilling, and mid-stream. This is our disaggregation of revenue and how our segment revenue is reported (as reflected in Note 16 – Industry Segment Information). Revenue from the oil and natural gas segment is from sales of our oil and natural gas production. Revenue from the contract drilling segment is derived by contracting with upstream companies to drill an agreed-on number of wells or provide drilling rigs and services over an agreed-on time period. Revenue from the mid-stream segment is derived from gathering, transporting, and processing natural gas production and selling those commodities. We sell the hydrocarbons (from the oil and natural gas and mid-stream segments) to mid-stream and downstream oil and gas companies.

Oil and Natural Gas Revenues

Certain costs—as either a deduction from revenue or as an expense—is determined based on when control of the commodity is transferred to our customer, which would affect our total revenue recognized, but will not affect gross profit. For example, gathering, processing and transportation costs included as part of the contract price with the customer on transfer of control of the commodity are included in the transaction price, while costs incurred while we are in control of the commodity represent operating costs.

Contract Drilling Revenues

We evaluated the mobilization and de-mobilization charges due on our outstanding drilling contracts. The impact of those charges to the financial statements was immaterial. As of March 31, 2019, we had 32 contract drilling contracts with terms ranging from two months to almost three years.

Most of our drilling contracts have an original term of less than one year; however, the remaining performance obligations under the contracts that have a longer duration are not material.  

Mid-stream Contracts Revenues

Revenues are generated from the fees earned for gas gathering and processing services provided to a customer. The typical revenue contracts used by this segment are gas gathering and processing agreements. The following tables show the changes in our mid-stream contract asset and contract liability balances during the three months ended March 31, 2019:

Contract Assets	Amount
	(In thousands)
Balance at December 31, 2018 (1)	$	13,164
Amounts invoiced in excess of revenue recognized	(9)
Balance at March 31, 2019 (1)	$	13,155

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1.At December 31, 2018, the total contract assets are included in prepaid expenses and other and other assets of $0.3 million and $12.9 million, respectively, in our Condensed Consolidated Balance Sheet. At March 31, 2019, the total contract assets included prepaid expenses and other and other assets of $1.8 million and $11.4 million, respectively, in our Condensed Consolidated Balance Sheet.

Contract Liabilities	Amount
	(In thousands)
Balance at December 31, 2018	$	9,882
Revenue recognized included in beginning balance	(709)
Balance at March 31, 2019	$	9,173

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1.At December 31, 2018, the total contract liabilities are included in current portion of other long-term liabilities and other long-term liabilities of $2.9 million and $7.0 million, respectively, in our Condensed Consolidated Balance Sheet. At March 31, 2019, the total contract liabilities included current portion of other long-term liabilities and other long-term liabilities of $2.9 million and $6.3 million, respectively, in our Condensed Consolidated Balance Sheet.

Included below is the additional fixed revenue we will earn over the remaining term of the contracts and excludes all variable consideration to be earned with the associated contract.

Contract	Remaining Term of Contract	April - December 2019		2020		2021		2022		Total Remaining Impact to Revenue
		(In thousands)
Demand fee contracts	3-4 years	$	1,932	$	(3,781)	$	(3,507)	$	1,374	$	(3,982)