Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

Our revenue streams are reported under three segments: oil and natural gas, contract drilling, and mid-stream. This is how we disaggregate our revenue and how we report our segment revenue (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 comes from contracting with upstream companies to drill an agreed-on number of wells or provide drilling rigs and services over an agreed-on period. Revenue from the mid-stream segment is derived from gathering, transporting, and processing natural gas and NGLs and selling those commodities. We sell the hydrocarbons (from our oil and natural gas and mid-stream segments) to other 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—are 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 have evaluated the mobilization and de-mobilization charges due under our outstanding drilling contracts. The impact of those charges to the financial statements was immaterial. As of September 30, 2019, we had 19 contract drilling contracts with terms ranging from one month to almost three years.

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

Mid-stream Contracts Revenues

Revenues are generated from 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. These tables show the changes in our mid-stream contract asset and contract liability balances during the nine months ended September 30, 2019:

Contract Assets

Amount

(In thousands)

Balance at December 31, 2018

⁽¹⁾

13,164

Amounts invoiced in excess of revenue recognized

(165)

Balance at September 30, 2019

⁽¹⁾

12,999

_______________________

1.At December 31, 2018, total contract assets are included in prepaid expenses and other and other assets of $0.3 million and $12.9 million, respectively, in our Consolidated Balance Sheet. At September 30, 2019, total contract assets included prepaid expenses and other and other assets of $5.0 million and $8.0 million, respectively, in our Condensed Consolidated Balance Sheet.


Contract Liabilities		Amount
		(In thousands)
Balance at December 31, 2018	⁽¹⁾	$	9,882
New contract				60
Revenue included in beginning balance				(2,155)
Balance at September 30, 2019	⁽¹⁾	$	7,787

______________________

1.At December 31, 2018, 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 Consolidated Balance Sheet. At September 30, 2019, total contract liabilities included current portion of other long-term liabilities and other long-term liabilities of $2.9 million and $4.9 million, respectively, in our Condensed Consolidated Balance Sheet.

Included below is the 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	October - December 2019		2020		2021		2022		2023 and Beyond		Total Remaining Impact to Revenue
		(In thousands)
Demand fee contracts	3-9 years	$	646	$	(3,775)	$	(3,501)	$	1,382	$	36	$	(5,212)