ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 72-1235413 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
625 E. Kaliste Saloom Road | |
Lafayette, Louisiana | 70508 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | ý |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
Successor | Predecessor | |||||||
September 30, 2017 | December 31, 2016 | |||||||
Assets | (Unaudited) | (Note 1) | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 245,714 | $ | 190,581 | ||||
Restricted cash | 37,684 | — | ||||||
Accounts receivable | 35,670 | 48,464 | ||||||
Fair value of derivative contracts | 2,565 | — | ||||||
Current income tax receivable | 27,672 | 26,086 | ||||||
Other current assets | 9,295 | 10,151 | ||||||
Total current assets | 358,600 | 275,282 | ||||||
Oil and gas properties, full cost method of accounting: | ||||||||
Proved | 714,515 | 9,616,236 | ||||||
Less: accumulated depreciation, depletion and amortization | (330,921 | ) | (9,178,442 | ) | ||||
Net proved oil and gas properties | 383,594 | 437,794 | ||||||
Unevaluated | 102,283 | 373,720 | ||||||
Other property and equipment, net | 18,433 | 26,213 | ||||||
Fair value of derivative contracts | 1,040 | — | ||||||
Other assets, net | 18,252 | 26,474 | ||||||
Total assets | $ | 882,202 | $ | 1,139,483 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable to vendors | $ | 33,120 | $ | 19,981 | ||||
Undistributed oil and gas proceeds | 5,439 | 15,073 | ||||||
Accrued interest | 10,244 | 809 | ||||||
Fair value of derivative contracts | 368 | — | ||||||
Asset retirement obligations | 84,654 | 88,000 | ||||||
Current portion of long-term debt | 421 | 408 | ||||||
Other current liabilities | 28,503 | 18,602 | ||||||
Total current liabilities | 162,749 | 142,873 | ||||||
Long-term debt | 235,567 | 352,376 | ||||||
Asset retirement obligations | 182,956 | 154,019 | ||||||
Fair value of derivative contracts | 74 | — | ||||||
Other long-term liabilities | 10,110 | 17,315 | ||||||
Total liabilities not subject to compromise | 591,456 | 666,583 | ||||||
Liabilities subject to compromise | — | 1,110,182 | ||||||
Total liabilities | 591,456 | 1,776,765 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Predecessor common stock ($.01 par value; authorized 30,000,000 shares; issued 5,610,020 shares) | — | 56 | ||||||
Predecessor treasury stock (1,658 shares, at cost) | — | (860 | ) | |||||
Predecessor additional paid-in capital | — | 1,659,731 | ||||||
Successor common stock ($.01 par value; authorized 60,000,000 shares; issued 19,998,019 shares) | 200 | — | ||||||
Successor additional paid-in capital | 555,323 | — | ||||||
Accumulated deficit | (264,777 | ) | (2,296,209 | ) | ||||
Total stockholders’ equity | 290,746 | (637,282 | ) | |||||
Total liabilities and stockholders’ equity | $ | 882,202 | $ | 1,139,483 |
Successor | Predecessor | |||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||
Operating revenue: | ||||||||
Oil production | $ | 61,841 | $ | 71,116 | ||||
Natural gas production | 5,451 | 15,601 | ||||||
Natural gas liquids production | 2,473 | 6,666 | ||||||
Other operational income | 9,760 | 1,044 | ||||||
Total operating revenue | 79,525 | 94,427 | ||||||
Operating expenses: | ||||||||
Lease operating expenses | 11,778 | 16,976 | ||||||
Transportation, processing and gathering expenses | 1,076 | 10,633 | ||||||
Production taxes | 188 | 835 | ||||||
Depreciation, depletion and amortization | 27,553 | 58,918 | ||||||
Write-down of oil and gas properties | — | 36,484 | ||||||
Accretion expense | 8,095 | 10,082 | ||||||
Salaries, general and administrative expenses | 15,887 | 15,425 | ||||||
Incentive compensation expense | 4,646 | 2,160 | ||||||
Restructuring fees | 129 | 5,784 | ||||||
Other operational expenses | 703 | 9,059 | ||||||
Derivative expense, net | 6,685 | 199 | ||||||
Total operating expenses | 76,740 | 166,555 | ||||||
Gain (loss) on Appalachia Properties divestiture | (132 | ) | — | |||||
Income (loss) from operations | 2,653 | (72,128 | ) | |||||
Other (income) expense: | ||||||||
Interest expense | 3,529 | 16,924 | ||||||
Interest income | (366 | ) | (58 | ) | ||||
Other income | (276 | ) | (272 | ) | ||||
Other expense | 47 | 16 | ||||||
Total other expense | 2,934 | 16,610 | ||||||
Loss before income taxes | (281 | ) | (88,738 | ) | ||||
Provision (benefit) for income taxes: | ||||||||
Current | (1,578 | ) | (991 | ) | ||||
Deferred | — | 1,888 | ||||||
Total income taxes | (1,578 | ) | 897 | |||||
Net income (loss) | $ | 1,297 | $ | (89,635 | ) | |||
Basic income (loss) per share | $ | 0.06 | $ | (16.01 | ) | |||
Diluted income (loss) per share | $ | 0.06 | $ | (16.01 | ) | |||
Average shares outstanding | 19,997 | 5,600 | ||||||
Average shares outstanding assuming dilution | 19,997 | 5,600 |
Successor | Predecessor | |||||||||||
Period from March 1, 2017 through September 30, 2017 | Period from January 1, 2017 through February 28, 2017 | Nine Months Ended September 30, 2016 | ||||||||||
Operating revenue: | ||||||||||||
Oil production | $ | 143,556 | $ | 45,837 | $ | 204,102 | ||||||
Natural gas production | 14,201 | 13,476 | 43,327 | |||||||||
Natural gas liquids production | 6,264 | 8,706 | 15,119 | |||||||||
Other operational income | 9,936 | 903 | 1,737 | |||||||||
Derivative income, net | 1,414 | — | — | |||||||||
Total operating revenue | 175,371 | 68,922 | 264,285 | |||||||||
Operating expenses: | ||||||||||||
Lease operating expenses | 33,154 | 8,820 | 55,349 | |||||||||
Transportation, processing and gathering expenses | 3,045 | 6,933 | 18,657 | |||||||||
Production taxes | 446 | 682 | 1,894 | |||||||||
Depreciation, depletion and amortization | 76,553 | 37,429 | 166,707 | |||||||||
Write-down of oil and gas properties | 256,435 | — | 284,337 | |||||||||
Accretion expense | 19,698 | 5,447 | 30,147 | |||||||||
Salaries, general and administrative expenses | 37,718 | 9,629 | 48,193 | |||||||||
Incentive compensation expense | 4,646 | 2,008 | 11,809 | |||||||||
Restructuring fees | 739 | — | 16,173 | |||||||||
Other operational expenses | 3,292 | 530 | 49,266 | |||||||||
Derivative expense, net | — | 1,778 | 687 | |||||||||
Total operating expenses | 435,726 | 73,256 | 683,219 | |||||||||
Gain (loss) on Appalachia Properties divestiture | (105 | ) | 213,453 | — | ||||||||
Income (loss) from operations | (260,460 | ) | 209,119 | (418,934 | ) | |||||||
Other (income) expense: | ||||||||||||
Interest expense | 8,320 | — | 49,764 | |||||||||
Interest income | (575 | ) | (45 | ) | (474 | ) | ||||||
Other income | (719 | ) | (315 | ) | (840 | ) | ||||||
Other expense | 861 | 13,336 | 27 | |||||||||
Reorganization items, net | — | (437,744 | ) | — | ||||||||
Total other (income) expense | 7,887 | (424,768 | ) | 48,477 | ||||||||
Income (loss) before income taxes | (268,347 | ) | 633,887 | (467,411 | ) | |||||||
Provision (benefit) for income taxes: | ||||||||||||
Current | (3,570 | ) | 3,570 | (4,178 | ) | |||||||
Deferred | — | — | 10,947 | |||||||||
Total income taxes | (3,570 | ) | 3,570 | 6,769 | ||||||||
Net income (loss) | $ | (264,777 | ) | $ | 630,317 | $ | (474,180 | ) | ||||
Basic income (loss) per share | $ | (13.24 | ) | $ | 110.99 | $ | (84.90 | ) | ||||
Diluted income (loss) per share | $ | (13.24 | ) | $ | 110.99 | $ | (84.90 | ) | ||||
Average shares outstanding | 19,997 | 5,634 | 5,585 | |||||||||
Average shares outstanding assuming dilution | 19,997 | 5,634 | 5,585 |
Successor | Predecessor | |||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||
Net income (loss) | $ | 1,297 | $ | (89,635 | ) | |||
Other comprehensive loss, net of tax effect: | ||||||||
Derivatives | — | (3,467 | ) | |||||
Comprehensive income (loss) | $ | 1,297 | $ | (93,102 | ) |
Successor | Predecessor | ||||||||||||
Period from March 1, 2017 through September 30, 2017 | Period from January 1, 2017 through February 28, 2017 | Nine Months Ended September 30, 2016 | |||||||||||
Net income (loss) | $ | (264,777 | ) | $ | 630,317 | $ | (474,180 | ) | |||||
Other comprehensive income (loss), net of tax effect: | |||||||||||||
Derivatives | — | — | (20,107 | ) | |||||||||
Foreign currency translation | — | — | 6,073 | ||||||||||
Comprehensive income (loss) | $ | (264,777 | ) | $ | 630,317 | $ | (488,214 | ) |
Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||
Balance, December 31, 2015 (Predecessor) | $ | 55 | $ | (860 | ) | $ | 1,648,687 | $ | (1,705,623 | ) | $ | 17,952 | $ | (39,789 | ) | ||||||||
Net loss | — | — | — | (590,586 | ) | — | (590,586 | ) | |||||||||||||||
Adjustment for fair value accounting of derivatives, net of tax | — | — | — | — | (24,025 | ) | (24,025 | ) | |||||||||||||||
Adjustment for foreign currency translation, net of tax | — | — | — | — | 6,073 | 6,073 | |||||||||||||||||
Exercise of stock options, vesting of restricted stock and granting of stock awards | 1 | — | (732 | ) | — | — | (731 | ) | |||||||||||||||
Amortization of stock compensation expense | — | — | 11,776 | — | — | 11,776 | |||||||||||||||||
Balance, December 31, 2016 (Predecessor) | 56 | (860 | ) | 1,659,731 | (2,296,209 | ) | — | (637,282 | ) | ||||||||||||||
Net income | — | — | — | 630,317 | — | 630,317 | |||||||||||||||||
Exercise of stock options, vesting of restricted stock and granting of stock awards | — | — | (172 | ) | — | — | (172 | ) | |||||||||||||||
Amortization of stock compensation expense | — | — | 3,527 | — | — | 3,527 | |||||||||||||||||
Balance, February 28, 2017 (Predecessor) | 56 | (860 | ) | 1,663,086 | (1,665,892 | ) | — | (3,610 | ) | ||||||||||||||
Cancellation of Predecessor equity | (56 | ) | 860 | (1,663,086 | ) | 1,665,892 | — | 3,610 | |||||||||||||||
Balance, February 28, 2017 (Predecessor) | — | — | — | — | — | — | |||||||||||||||||
Issuance of Successor common stock and warrants | 200 | — | 554,428 | — | — | 554,628 | |||||||||||||||||
Balance, February 28, 2017 (Successor) | 200 | — | 554,428 | — | — | 554,628 | |||||||||||||||||
Net loss | — | — | — | (264,777 | ) | — | (264,777 | ) | |||||||||||||||
Exercise of stock options, vesting of restricted stock and granting of stock awards | — | — | (19 | ) | — | — | (19 | ) | |||||||||||||||
Amortization of stock compensation expense | — | — | 914 | — | — | 914 | |||||||||||||||||
Balance, September 30, 2017 (Successor) | $ | 200 | $ | — | $ | 555,323 | $ | (264,777 | ) | $ | — | $ | 290,746 |
Successor | Predecessor | |||||||||||
Period from March 1, 2017 through September 30, 2017 | Period from January 1, 2017 through February 28, 2017 | Nine Months Ended September 30, 2016 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | (264,777 | ) | $ | 630,317 | $ | (474,180 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation, depletion and amortization | 76,553 | 37,429 | 166,707 | |||||||||
Write-down of oil and gas properties | 256,435 | — | 284,337 | |||||||||
Accretion expense | 19,698 | 5,447 | 30,147 | |||||||||
Deferred income tax provision | — | — | 10,947 | |||||||||
(Gain) loss on sale of oil and gas properties | 105 | (213,453 | ) | — | ||||||||
Settlement of asset retirement obligations | (53,129 | ) | (3,641 | ) | (15,106 | ) | ||||||
Non-cash stock compensation expense | 893 | 2,645 | 6,407 | |||||||||
Non-cash derivative expense | 1,210 | 1,778 | 1,261 | |||||||||
Non-cash interest expense | 3 | — | 14,278 | |||||||||
Non-cash reorganization items | — | (458,677 | ) | — | ||||||||
Other non-cash expense | 877 | 172 | 6,081 | |||||||||
Change in current income taxes | (5,156 | ) | 3,570 | 21,584 | ||||||||
Decrease in accounts receivable | 6,059 | 6,354 | 3,968 | |||||||||
(Increase) decrease in other current assets | 2,382 | (2,274 | ) | (4,426 | ) | |||||||
Increase (decrease) in accounts payable | 10,662 | (4,652 | ) | 3,217 | ||||||||
Increase (decrease) in other current liabilities | 17,944 | (9,653 | ) | (14,222 | ) | |||||||
Investment in derivative contracts | (2,416 | ) | (3,736 | ) | — | |||||||
Other | 3,054 | 2,490 | (8,107 | ) | ||||||||
Net cash provided by (used in) operating activities | 70,397 | (5,884 | ) | 32,893 | ||||||||
Cash flows from investing activities: | ||||||||||||
Investment in oil and gas properties | (42,837 | ) | (8,754 | ) | (200,622 | ) | ||||||
Proceeds from sale of oil and gas properties, net of expenses | 17,777 | 505,383 | — | |||||||||
Investment in fixed and other assets | (158 | ) | (61 | ) | (1,231 | ) | ||||||
Change in restricted funds | 37,863 | (75,547 | ) | 1,046 | ||||||||
Net cash provided by (used in) investing activities | 12,645 | 421,021 | (200,807 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from bank borrowings | — | — | 477,000 | |||||||||
Repayments of bank borrowings | — | (341,500 | ) | (135,500 | ) | |||||||
Repayments of building loan | (275 | ) | (24 | ) | (285 | ) | ||||||
Cash payment to noteholders | — | (100,000 | ) | — | ||||||||
Debt issuance costs | — | (1,055 | ) | (900 | ) | |||||||
Net payments for share-based compensation | (19 | ) | (173 | ) | (752 | ) | ||||||
Net cash provided by (used in) financing activities | (294 | ) | (442,752 | ) | 339,563 | |||||||
Effect of exchange rate changes on cash | — | — | (9 | ) | ||||||||
Net change in cash and cash equivalents | 82,748 | (27,615 | ) | 171,640 | ||||||||
Cash and cash equivalents, beginning of period | 162,966 | 190,581 | 10,759 | |||||||||
Cash and cash equivalents, end of period | $ | 245,714 | $ | 162,966 | $ | 182,399 |
• | Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were cancelled, and on the Effective Date, reorganized Stone issued an aggregate of 20.0 million shares of new common stock (the “New Common Stock”). |
• | The Predecessor Company’s 2022 Notes and 2017 Convertible Notes were cancelled and the holders of such notes received their pro rata share of (a) $100 million of cash, (b) 19.0 million shares of the New Common Stock, representing 95% of the New Common Stock and (c) $225 million of 7.5% Senior Second Lien Notes due 2022 (the “2022 Second Lien Notes”). |
• | The Predecessor Company’s common stockholders received their pro rata share of 1.0 million shares of the New Common Stock, representing 5% of the New Common Stock, and warrants to purchase approximately 3.5 million shares of New Common Stock. The warrants have an exercise price of $42.04 per share and a term of four years, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company. |
• | The Predecessor Company’s Pre-Emergence Credit Agreement was amended and restated as the Amended Credit Agreement (as defined in Note 10 – Debt). The obligations owed to the lenders under the Pre-Emergence Credit Agreement were converted to obligations under the Amended Credit Agreement. |
• | All claims of creditors with unsecured claims, other than the claims by the holders of the 2022 Notes and 2017 Convertible Notes, including vendors, were unaltered and paid in full in the ordinary course of business to the extent the claims were undisputed. |
February 28, 2017 | ||||
Enterprise value | $ | 419,720 | ||
Plus: Cash and other assets | 371,169 | |||
Less: Fair value of debt | (236,261 | ) | ||
Less: Fair value of warrants | (15,648 | ) | ||
Fair value of Successor common stock | $ | 538,980 | ||
Shares issued upon emergence | 20,000 | |||
Per share value | $ | 26.95 |
February 28, 2017 | ||||
Enterprise value | $ | 419,720 | ||
Plus: Cash and other assets | 371,169 | |||
Plus: Asset retirement obligations (current and long-term) | 290,067 | |||
Plus: Working capital and other liabilities | 58,055 | |||
Reorganization value of Successor assets | $ | 1,139,011 |
Predecessor Company | Reorganization Adjustments | Fresh Start Adjustments | Successor Company | ||||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 198,571 | $ | (35,605 | ) | (1) | $ | — | $ | 162,966 | |||||
Restricted cash | — | 75,547 | (1) | — | 75,547 | ||||||||||
Accounts receivable | 42,808 | 9,301 | (2) | — | 52,109 | ||||||||||
Fair value of derivative contracts | 1,267 | — | — | 1,267 | |||||||||||
Current income tax receivable | 22,516 | — | — | 22,516 | |||||||||||
Other current assets | 10,924 | 875 | (3) | (124 | ) | (12) | 11,675 | ||||||||
Total current assets | 276,086 | 50,118 | (124 | ) | 326,080 | ||||||||||
Oil and gas properties, full cost method of accounting: | |||||||||||||||
Proved | 9,633,907 | (188,933 | ) | (1) | (8,774,122 | ) | (12) | 670,852 | |||||||
Less: accumulated DD&A | (9,215,679 | ) | — | 9,215,679 | (12) | — | |||||||||
Net proved oil and gas properties | 418,228 | (188,933 | ) | 441,557 | 670,852 | ||||||||||
Unevaluated | 371,140 | (127,838 | ) | (1) | (146,292 | ) | (12) | 97,010 | |||||||
Other property and equipment, net | 25,586 | (101 | ) | (4) | (4,423 | ) | (13) | 21,062 | |||||||
Fair value of derivative contracts | 1,819 | — | — | 1,819 | |||||||||||
Other assets, net | 26,516 | (4,328 | ) | (5) | — | 22,188 | |||||||||
Total assets | $ | 1,119,375 | $ | (271,082 | ) | $ | 290,718 | $ | 1,139,011 | ||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable to vendors | $ | 20,512 | $ | — | $ | — | $ | 20,512 | |||||||
Undistributed oil and gas proceeds | 5,917 | (4,139 | ) | (1) | — | 1,778 | |||||||||
Accrued interest | 266 | — | — | 266 | |||||||||||
Asset retirement obligations | 92,597 | — | — | 92,597 | |||||||||||
Fair value of derivative contracts | 476 | — | — | 476 | |||||||||||
Current portion of long-term debt | 411 | — | — | 411 | |||||||||||
Other current liabilities | 17,032 | (195 | ) | (6) | — | 16,837 | |||||||||
Total current liabilities | 137,211 | (4,334 | ) | — | 132,877 | ||||||||||
Long-term debt | 352,350 | (116,500 | ) | (7) | — | 235,850 | |||||||||
Asset retirement obligations | 151,228 | (8,672 | ) | (1) | 54,914 | (14) | 197,470 | ||||||||
Fair value of derivative contracts | 653 | — | — | 653 | |||||||||||
Other long-term liabilities | 17,533 | — | — | 17,533 | |||||||||||
Total liabilities not subject to compromise | 658,975 | (129,506 | ) | 54,914 | 584,383 | ||||||||||
Liabilities subject to compromise | 1,110,182 | (1,110,182 | ) | (8) | — | — | |||||||||
Total liabilities | 1,769,157 | (1,239,688 | ) | 54,914 | 584,383 | ||||||||||
Commitments and contingencies | |||||||||||||||
Stockholders’ equity: | |||||||||||||||
Common stock (Predecessor) | 56 | (56 | ) | (9) | — | — | |||||||||
Treasury stock (Predecessor) | (860 | ) | 860 | (9) | — | — | |||||||||
Additional paid-in capital (Predecessor) | 1,660,810 | (1,660,810 | ) | (9) | — | — | |||||||||
Common stock (Successor) | — | 200 | (10) | — | 200 | ||||||||||
Additional paid-in capital (Successor) | — | 554,428 | (10) | — | 554,428 | ||||||||||
Accumulated deficit | (2,309,788 | ) | 2,073,984 | (11) | 235,804 | (15) | — | ||||||||
Total stockholders’ equity | (649,782 | ) | 968,606 | 235,804 | 554,628 | ||||||||||
Total liabilities and stockholders’ equity | $ | 1,119,375 | $ | (271,082 | ) | $ | 290,718 | $ | 1,139,011 |
1. | Reflects the net cash proceeds received from the sale of the Appalachia Properties in connection with the Plan and net cash payments made as of the Effective Date from implementation of the Plan: |
Sources: | ||||
Net cash proceeds from sale of Appalachia Properties (a) | $ | 512,472 | ||
Total sources | 512,472 | |||
Uses: | ||||
Cash transferred to restricted account (b) | 75,547 | |||
Break-up fee to Tug Hill | 10,800 | |||
Repayment of outstanding borrowings under Pre-Emergence Credit Agreement | 341,500 | |||
Repayment of 2017 Convertible Notes and 2022 Notes | 100,000 | |||
Other fees and expenses (c) | 20,230 | |||
Total uses | 548,077 | |||
Net uses | $ | (35,605 | ) |
(c) | Other fees and expenses include approximately $15,180 of emergence and success fees, $2,600 of professional fees and $2,395 of payments made to seismic providers in settlement of their bankruptcy claims. |
2. | Reflects a receivable for a $10,000 indemnity escrow with release delayed until emergence from bankruptcy, net of a $699 reimbursement to Tug Hill in connection with the sale of the Appalachia Properties (see Note 7 – Divestiture). |
3. | Reflects the payment of a claim to a seismic provider as a prepayment/deposit. |
4. | Reflects the sale of vehicles in connection with the sale of the Appalachia Properties. |
5. | Reflects the write-off of $2,577 of unamortized debt issuance costs related to the Pre-Emergence Credit Agreement and the reversal of a $1,750 prepayment made to Tug Hill in October 2016. |
6. | Reflects the accrual of $2,008 in expected bonus payments under the KEIP (as defined in Note 5 – Share–Based Compensation and Employee Benefit Plans) and a $395 termination fee in connection with the early termination of an office lease, less the settlement of a property tax accrual of $2,598 in connection with the sale of the Appalachia Properties. |
7. | Reflects the repayment of $341,500 of outstanding borrowings under the Pre-Emergence Credit Agreement and the issuance of $225,000 of 2022 Second Lien Notes as part of the settlement of the Predecessor Company 2017 Convertible Notes and 2022 Notes. |
8. | Liabilities subject to compromise were settled as follows in accordance with the Plan: |
1 ¾% Senior Convertible Notes due 2017 | $ | 300,000 | ||
7 ½% Senior Notes due 2022 | 775,000 | |||
Accrued interest | 35,182 | |||
Liabilities subject to compromise of the Predecessor Company | 1,110,182 | |||
Cash payment to senior noteholders | (100,000 | ) | ||
Issuance of 2022 Second Lien Notes to former holders of the senior notes | (225,000 | ) | ||
Fair value of equity issued to unsecured creditors | (538,980 | ) | ||
Fair value of warrants issued to unsecured creditors | (15,648 | ) | ||
Gain on settlement of liabilities subject to compromise | $ | 230,554 |
9. | Reflects the cancellation of the Predecessor Company’s common stock, treasury stock and additional paid-in capital. |
10. | Reflects the issuance of Successor Company equity. In accordance with the Plan, the Successor Company issued 19.0 million shares of New Common Stock to the former holders of the 2017 Convertible Notes and the 2022 Notes and 1.0 million shares of New Common Stock to the Predecessor Company’s common stockholders. These amounts are subject to dilution by warrants issued to the Predecessor Company common stockholders, totaling approximately 3.5 million shares, with an exercise price of $42.04 per share and a term of four years. The fair value of the warrants was estimated at $4.43 per share using a Black-Scholes-Merton valuation model. |
Gain on settlement of liabilities subject to compromise | $ | 230,554 | ||
Professional and other fees paid at emergence | (10,648 | ) | ||
Write-off of unamortized deferred financing costs | (2,577 | ) | ||
Other reorganization adjustments | (1,915 | ) | ||
Net impact to reorganization items | 215,414 | |||
Gain on sale of Appalachia Properties | 213,453 | |||
Cancellation of Predecessor Company equity | 1,662,282 | |||
Other adjustments to accumulated deficit | (17,165 | ) | ||
Net impact to accumulated deficit | $ | 2,073,984 |
12. | Fair value adjustments to oil and gas properties, associated inventory and unproved acreage. See above for a detailed discussion of the fair value methodology. |
13. | Fair value adjustment for an office building owned by the Company. The income and sales comparison approaches were used in determining the fair value, using anticipated future earnings and an appropriate expected rate of return, as well as relying upon recent sales or offerings of similar assets. |
14. | Fair value adjustments to the Company’s asset retirement obligations using estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate. |
15. | Reflects the cumulative effect of the fresh start accounting adjustments discussed above. |
Predecessor | ||||||
Period from January 1, 2017 through February 28, 2017 | ||||||
Gain on settlement of liabilities subject to compromise | $ | 230,554 | ||||
Fresh start valuation adjustments | 235,804 | |||||
Reorganization professional fees and other expenses | (20,512 | ) | ||||
Write-off of deferred financing costs | (2,577 | ) | ||||
Other reorganization items | (5,525 | ) | ||||
Gain on reorganization items, net | $ | 437,744 |
Successor | Predecessor | |||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||
Income (numerator): | ||||||||
Basic: | ||||||||
Net income (loss) | $ | 1,297 | $ | (89,635 | ) | |||
Net income attributable to participating securities | (4 | ) | — | |||||
Net income (loss) attributable to common stock - basic | $ | 1,293 | $ | (89,635 | ) | |||
Diluted: | ||||||||
Net income (loss) | $ | 1,297 | $ | (89,635 | ) | |||
Net income attributable to participating securities | (4 | ) | — | |||||
Net income (loss) attributable to common stock - diluted | $ | 1,293 | $ | (89,635 | ) | |||
Weighted average shares (denominator): | ||||||||
Weighted average shares - basic | 19,997 | 5,600 | ||||||
Dilutive effect of stock options | — | — | ||||||
Dilutive effect of warrants | — | — | ||||||
Dilutive effect of convertible notes | — | — | ||||||
Weighted average shares - diluted | 19,997 | 5,600 | ||||||
Basic income (loss) per share | $ | 0.06 | $ | (16.01 | ) | |||
Diluted income (loss) per share | $ | 0.06 | $ | (16.01 | ) |
Successor | Predecessor | |||||||||||
Period from March 1, 2017 through September 30, 2017 | Period from January 1, 2017 through February 28, 2017 | Nine Months Ended September 30, 2016 | ||||||||||
Income (numerator): | ||||||||||||
Basic: | ||||||||||||
Net income (loss) | $ | (264,777 | ) | $ | 630,317 | $ | (474,180 | ) | ||||
Net income attributable to participating securities | — | (4,995 | ) | — | ||||||||
Net income (loss) attributable to common stock - basic | $ | (264,777 | ) | $ | 625,322 | $ | (474,180 | ) | ||||
Diluted: | ||||||||||||
Net income (loss) | $ | (264,777 | ) | $ | 630,317 | $ | (474,180 | ) | ||||
Net income attributable to participating securities | — | (4,995 | ) | — | ||||||||
Net income (loss) attributable to common stock - diluted | $ | (264,777 | ) | $ | 625,322 | $ | (474,180 | ) | ||||
Weighted average shares (denominator): | ||||||||||||
Weighted average shares - basic | 19,997 | 5,634 | 5,585 | |||||||||
Dilutive effect of stock options | — | — | — | |||||||||
Dilutive effect of warrants | — | — | — | |||||||||
Dilutive effect of convertible notes | — | — | — | |||||||||
Weighted average shares - diluted | 19,997 | 5,634 | 5,585 | |||||||||
Basic income (loss) per share | $ | (13.24 | ) | $ | 110.99 | $ | (84.90 | ) | ||||
Diluted income (loss) per share | $ | (13.24 | ) | $ | 110.99 | $ | (84.90 | ) |
Net consideration received for sale of Appalachia Properties | $ | 522.5 | |||
Add: | Release of funds held in suspense | 4.1 | |||
Transfer of asset retirement obligations | 8.7 | ||||
Other adjustments, net | 2.6 | ||||
Less: | Transaction costs | (7.1 | ) | ||
Carrying value of properties sold | (317.3 | ) | |||
Gain on sale | $ | 213.5 |
Put Contracts (NYMEX) | |||||||
Oil | |||||||
Daily Volume (Bbls/d) | Price ($ per Bbl) | ||||||
2017 | February - December | 2,000 | $ | 50.00 | |||
2017 | July - December | 1,000 | 41.10 | ||||
2018 | January - December | 1,000 | 54.00 | ||||
2018 | January - December | 1,000 | 45.00 |
Fixed-Price Swaps (NYMEX) | ||||||||||||||
Natural Gas | Oil | |||||||||||||
Daily Volume (MMBtus/d) | Swap Price ($ per MMBtu) | Daily Volume (Bbls/d) | Swap Price ($ per Bbl) | |||||||||||
2017 | March - December | 1,000 | $ | 53.90 | ||||||||||
2017 | July - December | 11,000 | $ | 3.00 | ||||||||||
2017 | October - December | 1,000 | 52.10 | |||||||||||
2018 | January - December | 1,000 | 52.50 | |||||||||||
2018 | January - December | 1,000 | 51.98 | |||||||||||
2018 | January - December | 1,000 | 53.67 | |||||||||||
2019 | January - December | 1,000 | 51.00 | |||||||||||
2019 | January - December | 1,000 | 51.57 |
Collar Contracts (NYMEX) | ||||||||||||||||||||||
Natural Gas | Oil | |||||||||||||||||||||
Daily Volume (MMBtus/d) | Floor Price ($ per MMBtu) | Ceiling Price ($ per MMBtu) | Daily Volume (Bbls/d) | Floor Price ($ per Bbl) | Ceiling Price ($ per Bbl) | |||||||||||||||||
2017 | March - December | 1,000 | $ | 50.00 | $ | 56.45 | ||||||||||||||||
2017 | April - December | 1,000 | 50.00 | 56.75 | ||||||||||||||||||
2018 | January - December | 6,000 | $ | 2.75 | $ | 3.24 | 1,000 | 45.00 | 55.35 |
Fair Value of Derivatives Not Designated or Not Qualifying as Hedging Instruments at | |||||||||||
September 30, 2017 | |||||||||||
(Successor) | |||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||
Description | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||
Commodity contracts | Current assets: Fair value of derivative contracts | $ | 2.6 | Current liabilities: Fair value of derivative contracts | $ | 0.4 | |||||
Long-term assets: Fair value of derivative contracts | 1.0 | Long-term liabilities: Fair value of derivative contracts | 0.1 | ||||||||
$ | 3.6 | $ | 0.5 | ||||||||
Gain (Loss) Recognized in Derivative Income (Expense) | ||||||||||||
Successor | Successor | Predecessor | ||||||||||
Three Months Ended September 30, 2017 | Period from March 1, 2017 through September 30, 2017 | Period from January 1, 2017 through February 28, 2017 | ||||||||||
Description | ||||||||||||
Commodity contracts: | ||||||||||||
Cash settlements | $ | 1.2 | $ | 2.6 | $ | — | ||||||
Change in fair value | (7.9 | ) | (1.2 | ) | (1.8 | ) | ||||||
Total gains (losses) on derivatives not designated or not qualifying as hedging instruments | $ | (6.7 | ) | $ | 1.4 | $ | (1.8 | ) |
Effect of Derivatives Qualifying as Hedging Instruments on the Statement of Operations | |||||||||||||||||
for the Three Months Ended September 30, 2016 | |||||||||||||||||
(Predecessor) | |||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) (a) | Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion) | ||||||||||||||
2016 | Location | 2016 | Location | 2016 | |||||||||||||
Commodity contracts | $ | 2.3 | Operating revenue - oil/natural gas production | $ | 7.7 | Derivative income (expense), net | $ | (0.2 | ) | ||||||||
Total | $ | 2.3 | $ | 7.7 | $ | (0.2 | ) |
Effect of Derivatives Qualifying as Hedging Instruments on the Statement of Operations | |||||||||||||||||
for the Nine Months Ended September 30, 2016 | |||||||||||||||||
(Predecessor) | |||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) (a) | Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion) | ||||||||||||||
2016 | Location | 2016 | Location | 2016 | |||||||||||||
Commodity contracts | $ | (1.7 | ) | Operating revenue - oil/natural gas production | $ | 29.4 | Derivative income (expense), net | $ | (0.7 | ) | |||||||
Total | $ | (1.7 | ) | $ | 29.4 | $ | (0.7 | ) |
As Presented Without Netting | Effects of Netting | With Effects of Netting | ||||||||||
Current assets: Fair value of derivative contracts | $ | 2.6 | $ | (0.4 | ) | $ | 2.2 | |||||
Long-term assets: Fair value of derivative contracts | 1.0 | (0.1 | ) | 0.9 | ||||||||
Current liabilities: Fair value of derivative contracts | (0.4 | ) | 0.4 | — | ||||||||
Long-term liabilities: Fair value of derivative contracts | (0.1 | ) | 0.1 | — |
Successor | Predecessor | |||||||
September 30, 2017 | December 31, 2016 | |||||||
7 ½% Senior Second Lien Notes due 2022 | $ | 225.0 | $ | — | ||||
1 ¾% Senior Convertible Notes due 2017 | — | 300.0 | ||||||
7 ½% Senior Notes due 2022 | — | 775.0 | ||||||
Predecessor revolving credit facility | — | 341.5 | ||||||
4.20% Building Loan | 11.0 | 11.3 | ||||||
Total debt | 236.0 | 1,427.8 | ||||||
Less: current portion of long-term debt | (0.4 | ) | (0.4 | ) | ||||
Less: liabilities subject to compromise | — | (1,075.0 | ) | |||||
Long-term debt | $ | 235.6 | $ | 352.4 |
Asset retirement obligations as of January 1, 2017 (Predecessor) | $ | 242.0 | |
Liabilities settled | (3.6 | ) | |
Divestment of properties | (8.7 | ) | |
Accretion expense | 5.4 | ||
Asset retirement obligations as of February 28, 2017 (Predecessor) | 235.2 | ||
Fair value fresh start adjustment | 54.9 | ||
Asset retirement obligations as of February 28, 2017 (Successor) | 290.1 | ||
Liabilities settled | (53.1 | ) | |
Accretion expense | 19.7 | ||
Revision of estimates | 11.0 | ||
Asset retirement obligations as of September 30, 2017 (Successor) | $ | 267.6 |
Fair Value Measurements | |||||||||||||||
Successor as of | |||||||||||||||
September 30, 2017 | |||||||||||||||
Assets | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Marketable securities (Other assets) | $ | 9.3 | $ | 9.3 | $ | — | $ | — | |||||||
Derivative contracts | 3.6 | — | 0.5 | 3.1 | |||||||||||
Total | $ | 12.9 | $ | 9.3 | $ | 0.5 | $ | 3.1 |
Fair Value Measurements at | |||||||||||||||
Successor as of | |||||||||||||||
September 30, 2017 | |||||||||||||||
Liabilities | Total | Quoted Prices in Active Markets for Identical Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Derivative contracts | $ | 0.5 | $ | — | $ | 0.1 | $ | 0.4 | |||||||
Total | $ | 0.5 | $ | — | $ | 0.1 | $ | 0.4 |
Fair Value Measurements | |||||||||||||||
Predecessor as of | |||||||||||||||
December 31, 2016 | |||||||||||||||
Assets | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Marketable securities (Other assets) | $ | 8.7 | $ | 8.7 | $ | — | $ | — | |||||||
Total | $ | 8.7 | $ | 8.7 | $ | — | $ | — |
Hedging Contracts, net | ||||
Balance as of January 1, 2017 (Predecessor) | $ | — | ||
Total gains/(losses) (realized or unrealized): | ||||
Included in earnings | (0.6 | ) | ||
Included in other comprehensive income | — | |||
Purchases, sales, issuances and settlements | 3.7 | |||
Transfers in and out of Level 3 | — | |||
Balance as of February 28, 2017 (Successor) | 3.1 | |||
Total gains/(losses) (realized or unrealized): | ||||
Included in earnings | (1.3 | ) | ||
Included in other comprehensive income | — | |||
Purchases, sales, issuances and settlements | 1.0 | |||
Transfers in and out of Level 3 | — | |||
Balance as of September 30, 2017 (Successor) | $ | 2.8 | ||
The amount of total gains/(losses) for the period included in earnings (derivative income) attributable to the change in unrealized gain/(losses) relating to derivatives still held at September 30, 2017 | $ | (1.7 | ) |
Cash Flow Hedges | |||||
Three Months Ended September 30, 2016 (Predecessor) | |||||
Beginning balance, net of tax | $ | 7.4 | |||
Other comprehensive income (loss) before reclassifications: | |||||
Change in fair value of derivatives | 2.3 | ||||
Income tax effect | (0.8 | ) | |||
Net of tax | 1.5 | ||||
Amounts reclassified from accumulated other comprehensive income: | |||||
Operating revenue: oil/natural gas production | 7.7 | ||||
Income tax effect | (2.7 | ) | |||
Net of tax | 5.0 | ||||
Other comprehensive loss, net of tax | (3.5 | ) | |||
Ending balance, net of tax | $ | 3.9 |
Cash Flow Hedges | Foreign Currency Items | Total | |||||||||
Nine Months Ended September 30, 2016 (Predecessor) | |||||||||||
Beginning balance, net of tax | $ | 24.0 | $ | (6.0 | ) | $ | 18.0 | ||||
Other comprehensive income (loss) before reclassifications: | |||||||||||
Change in fair value of derivatives | (1.7 | ) | — | (1.7 | ) | ||||||
Income tax effect | 0.6 | — | 0.6 | ||||||||
Net of tax | (1.1 | ) | — | (1.1 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income: | |||||||||||
Operating revenue: oil/natural gas production | 29.4 | — | 29.4 | ||||||||
Other operational expenses | — | (6.0 | ) | (6.0 | ) | ||||||
Income tax effect | (10.4 | ) | — | (10.4 | ) | ||||||
Net of tax | 19.0 | (6.0 | ) | 13.0 | |||||||
Other comprehensive income (loss), net of tax | (20.1 | ) | 6.0 | (14.1 | ) | ||||||
Ending balance, net of tax | $ | 3.9 | $ | — | $ | 3.9 |
• | expected results from risk-weighted drilling success; |
• | estimates of our future oil and natural gas production, including estimates of any increases in oil and natural gas production; |
• | planned capital expenditures and the availability of capital resources to fund capital expenditures; |
• | our outlook on oil and natural gas prices; |
• | estimates of our oil and natural gas reserves; |
• | any estimates of future earnings growth; |
• | the impact of political and regulatory developments; |
• | our outlook on the resolution of pending litigation and government inquiry; |
• | estimates of the impact of new accounting pronouncements on earnings in future periods; |
• | our future financial condition or results of operations and our future revenues and expenses; |
• | the outcome of restructuring efforts and asset sales; |
• | the amount, nature and timing of any potential acquisition or divestiture transactions; |
• | any expected results or benefits associated with our acquisitions; |
• | our access to capital and our anticipated liquidity; |
• | estimates of future income taxes; and |
• | our business strategy and other plans and objectives for future operations, including the Board’s assessment of the Company’s strategic direction. |
• | commodity price volatility, including further or sustained declines in the prices we receive for our oil and natural gas production; |
• | domestic and worldwide economic conditions, which may adversely affect the demand for and supply of oil and natural gas; |
• | the availability of capital on economic terms to fund our operations, capital expenditures, acquisitions and other obligations; |
• | our future level of indebtedness, liquidity and compliance with debt covenants; |
• | our future financial condition, results of operations, revenues, cash flows and expenses; |
• | the potential need to sell certain assets or raise additional capital; |
• | our ability to post additional collateral for current bonds or comply with new supplemental bonding requirements imposed by BOEM; |
• | declines in the value of our oil and gas properties resulting in a decrease in our borrowing base under our bank credit facility and impairments; |
• | our ability to develop, explore for, acquire and replace oil and natural gas reserves and sustain production; |
• | the impact of a financial crisis on our business operations, financial condition and ability to raise capital; |
• | the ability of financial counterparties to perform or fulfill their obligations under existing agreements; |
• | third-party interruption of sales to market; |
• | inflation; |
• | lack of availability and cost of goods and services; |
• | market conditions relating to potential acquisition and divestiture transactions; |
• | regulatory and environmental risks associated with drilling and production activities; |
• | our ability to establish operations or production on our acreage prior to the expiration of related leaseholds; |
• | availability of drilling and production equipment, facilities, field service providers, gathering, processing and transportation; |
• | competition in the oil and gas industry; |
• | our inability to retain and attract key personnel; |
• | drilling and other operating risks, including the consequences of a catastrophic event; |
• | unsuccessful exploration and development drilling activities; |
• | hurricanes and other weather conditions; |
• | availability, cost and adequacy of insurance coverage; |
• | adverse effects of changes in applicable tax, environmental, derivatives, permitting, bonding and other regulatory requirements and legislation, as well as agency interpretation and enforcement and judicial decisions regarding the foregoing; |
• | uncertainty inherent in estimating proved oil and natural gas reserves and in projecting future rates of production and timing of development expenditures; and |
• | other risks described in this Form 10-Q and our 2016 Annual Report on Form 10-K. |
• | remaining proved oil and natural gas reserve volumes and the timing of their production; |
• | estimated costs to develop and produce proved oil and natural gas reserves; |
• | accruals of exploration costs, development costs, operating costs and production revenue; |
• | timing and future costs to abandon our oil and gas properties; |
• | estimated fair value of derivative positions; |
• | classification of unevaluated property costs; |
• | capitalized general and administrative costs and interest; |
• | estimates of fair value in business combinations; |
• | estimates of reorganization value and enterprise value; |
• | fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting; |
• | current and deferred income taxes; and |
• | contingencies. |
• | Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were cancelled, and on the Effective Date, reorganized Stone issued an aggregate of 20.0 million shares of New Common Stock. |
• | The Predecessor Company’s 2022 Notes and 2017 Convertible Notes were cancelled and the holders of such notes received their pro rata share of (a) $100 million of cash, (b) 19.0 million shares of the New Common Stock, representing 95% of the New Common Stock and (c) $225 million of 2022 Second Lien Notes. |
• | The Predecessor Company’s common stockholders received their pro rata share of 1.0 million shares of the New Common Stock, representing 5% of the New Common Stock, and warrants to purchase approximately 3.5 million shares of New Common Stock. |
• | The Predecessor Company’s Pre-Emergence Credit Agreement was amended and restated as the Amended Credit Agreement. The obligations owed to the lenders under the Pre-Emergence Credit Agreement were converted to obligations under the Amended Credit Agreement. |
• | All claims of creditors with unsecured claims, other than the claims by the holders of the 2022 Notes and 2017 Convertible Notes, including vendors, were unaltered and paid in full in the ordinary course of business to the extent the claims were undisputed. |
Payments Due By Period | |||||||||||||||||||
Total | Remaining Period in 2017 | Years 2018 - 2019 | Years 2020 - 2021 | Years 2022 and Beyond | |||||||||||||||
Contractual Obligations and Commitments: | |||||||||||||||||||
7.50% Second Lien Notes due 2022 | $ | 225,000 | $ | — | $ | — | $ | — | $ | 225,000 | |||||||||
4.20% Building Loan | 11,075 | 104 | 868 | 944 | 9,159 | ||||||||||||||
Interest and commitment fees (1) | 85,505 | 4,515 | 36,063 | 35,391 | 9,536 | ||||||||||||||
Asset retirement obligations including accretion | 618,877 | 70,490 | 81,322 | 36,176 | 430,889 | ||||||||||||||
Rig commitments (2) | 800 | 800 | — | — | — | ||||||||||||||
Seismic data commitments | 16,255 | 7,690 | 8,565 | — | — | ||||||||||||||
Operating lease obligations | 256 | 96 | 160 | — | — | ||||||||||||||
Total Contractual Obligations and Commitments | $ | 957,768 | $ | 83,695 | $ | 126,978 | $ | 72,511 | $ | 674,584 |
(1) | Includes interest payable on the 2022 Second Lien Notes and Building Loan. Assumes 0.375% fee on unused commitments under the Amended Credit Agreement. |
(2) | Represents minimum committed future expenditures for rig services. |
Successor | Predecessor | |||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||
Production: | ||||||||
Oil (MBbls) | 1,285 | 1,563 | ||||||
Natural gas (MMcf) | 2,220 | 8,096 | ||||||
NGLs (MBbls) | 114 | 686 | ||||||
Oil, natural gas and NGLs (MBoe) | 1,769 | 3,598 | ||||||
Revenue data (in thousands): (1) | ||||||||
Oil revenue | $ | 61,841 | $ | 71,116 | ||||
Natural gas revenue | 5,451 | 15,601 | ||||||
NGL revenue | 2,473 | 6,666 | ||||||
Total oil, natural gas and NGL revenue | $ | 69,765 | $ | 93,383 | ||||
Average prices: (2) | ||||||||
Oil (per Bbl) | $ | 48.13 | $ | 45.50 | ||||
Natural gas (per Mcf) | 2.46 | 1.93 | ||||||
NGLs (per Bbl) | 21.69 | 9.72 | ||||||
Oil, natural gas and NGLs (per Boe) | 39.44 | 25.95 | ||||||
Expenses (per MBoe): | ||||||||
Lease operating expenses | $ | 6.66 | $ | 4.72 | ||||
Transportation, processing and gathering expenses | 0.61 | 2.96 | ||||||
SG&A expenses (3) | 8.98 | 4.29 | ||||||
DD&A expense on oil and gas properties | 15.10 | 16.08 |
(1) | Includes the cash settlement of effective hedging contracts for the three months ended September 30, 2016. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges, and accordingly, cash settlements on our derivative contracts for periods subsequent to January 1, 2017 are reflected in derivative income (expense). |
(2) | Prices for the three months ended September 30, 2016 include the realized impact of derivative instrument settlements, which increased the price of oil by $3.40 per Bbl and increased the price of natural gas by $0.30 per Mcf. |
(3) | Excludes incentive compensation expense. |
Successor | Predecessor | |||||||||||
Period from March 1, 2017 through September 30, 2017 | Period from January 1, 2017 through February 28, 2017 | Nine Months Ended September 30, 2016 | ||||||||||
Production: | ||||||||||||
Oil (MBbls) | 2,994 | 908 | 4,746 | |||||||||
Natural gas (MMcf) | 5,593 | 5,037 | 20,042 | |||||||||
NGLs (MBbls) | 293 | 408 | 1,294 | |||||||||
Oil, natural gas and NGLs (MBoe) | 4,219 | 2,156 | 9,380 | |||||||||
Revenue data (in thousands): (1) | ||||||||||||
Oil revenue | $ | 143,556 | $ | 45,837 | $ | 204,102 | ||||||
Natural gas revenue | 14,201 | 13,476 | 43,327 | |||||||||
NGLs revenue | 6,264 | 8,706 | 15,119 | |||||||||
Total oil, natural gas and NGL revenue | $ | 164,021 | $ | 68,019 | $ | 262,548 | ||||||
Average prices: (2) | ||||||||||||
Oil (per Bbl) | $ | 47.95 | $ | 50.48 | $ | 43.01 | ||||||
Natural gas (per Mcf) | 2.54 | 2.68 | 2.16 | |||||||||
NGLs (per Bbl) | 21.38 | 21.34 | 11.68 | |||||||||
Oil, natural gas and NGLs (per Boe) | 38.88 | 31.55 | 27.99 | |||||||||
Expenses (per MBoe): | ||||||||||||
Lease operating expenses | $ | 7.86 | $ | 4.09 | $ | 5.90 | ||||||
Transportation, processing and gathering expenses | 0.72 | 3.22 | 1.99 | |||||||||
SG&A expenses (3) | 8.94 | 4.47 | 5.14 | |||||||||
DD&A expense on oil and gas properties | 17.65 | 17.05 | 17.42 |
(1) | Includes the cash settlement of effective hedging contracts for the nine months ended September 30, 2016. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges, and accordingly, cash settlements on our derivative contracts for periods subsequent to January 1, 2017 are reflected in derivative income (expense). |
(2) | Prices for the nine months ended September 30, 2016 include the realized impact of derivative instrument settlements, which increased the price of oil by $4.15 per Bbl and increased the price of natural gas by $0.48 per Mcf. |
(3) | Excludes incentive compensation expense. |
Exhibit Number | Description | ||
3.1 | |||
3.2 | |||
*†10.1 | |||
*†10.2 | |||
*†10.3 | |||
*31.1 | |||
*31.2 | |||
*#32.1 | |||
*101.INS | XBRL Instance Document | ||
*101.SCH | XBRL Taxonomy Extension Schema Document | ||
*101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
*101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
*101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed or furnished herewith. | |
# | Not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. | |
† | Identifies management contracts and compensatory plans or arrangements. |
STONE ENERGY CORPORATION | |||
Date: | November 1, 2017 | By: | /s/ Kenneth H. Beer |
Kenneth H. Beer | |||
Executive Vice President and Chief Financial Officer | |||
(On behalf of the Registrant and as | |||
Principal Financial Officer) |
Page | ||
Purpose | 3 | |
Definitions | 3 | |
Administration | 4 | |
Participation | 4 | |
Incentive Pool Calculation | 4 | |
Index Group | 5 | |
Awards | 5 | |
Timing of Award Payments | 5 | |
Duration of Revised Annual Incentive Compensation Plan | 5 | |
Miscellaneous Plan Provisions | 6 | |
Effectiveness | 6 | |
Exhibit A | 7 |
(1) | Designation of employees to be included in the Plan for the Plan Year; |
(2) | Reviewing and proposing changes in the composition of an index group if the Compensation Committee determines such group is needed; and |
(3) | Determining the Annual Incentive Pool for the Plan Year based on current economic and financial conditions prevailing at the time and pursuant to the Plan. |
Threshold | Target | Stretch | Weighting | |
Production | 16.7 mboed | 18.5 mboed | 20.4 mboed | 15% |
LOE | $77 million | $70 million | $63 million | 15% |
EBITDA | $152 million | $169 million | $186 million | 20% |
SG&A (4Q) | $12.6 million | $11.5 million | $10.4 million | 15% |
Reserves Enhancement | 1 Event | 2 Events | 3 Events | 15% |
Safety / Environmental | Matrix Blue | Matrix Green | Matrix Brown | 20% |
Total | 100% | |||
• | Targets as presented to Board March 2017 |
• | 6/15/17 Plan at strip pricing and Bank definition for EBITDA |
• | 4Q Results – Excludes non-recurring items and stock compensation |
• | Rampart commercial success |
• | JV drilling transaction(s) |
• | Acquisition transaction(s) |
• | Threshold: Better than lowest historical point |
• | Stretch: Perform better than historical bests |
0.45 | |||||||||||
0.40 | |||||||||||
0.35 | |||||||||||
Safety & | 0.30 | ||||||||||
Environment | 0.25 | ||||||||||
Score | 0.20 | ||||||||||
0.15 | |||||||||||
0.10 | |||||||||||
0.05 | 20 Points | 15 - 10 Points | 10 - 5 Points | 5 - 0 Points | |||||||
0.00 | 0.000 | 0.200 | 0.400 | 0.600 | 0.800 | 1.000 | 1.200 | 1.400 | 1.600 | 1.800 |
EMPLOYEE | SEVERANCE |
Kenneth H. Beer | 1.5x Annual Pay |
Lisa S. Jaubert | 1.5x Annual Pay |
Keith A. Seilhan | 1.5x Annual Pay |
Thomas L. Messonier | 1.0x Annual Pay |
Florence M. Ziegler | 1.0x Annual Pay |
1. | I have reviewed this Quarterly Report on Form 10-Q of Stone Energy Corporation (“registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ James M. Trimble | |
November 1, 2017 | James M. Trimble |
Interim Chief Executive Officer and President |
1. | I have reviewed this Quarterly Report on Form 10-Q of Stone Energy Corporation (“registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Kenneth H. Beer | |
November 1, 2017 | Kenneth H. Beer |
Executive Vice President and Chief Financial Officer |
i. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
ii. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
November 1, 2017 | /s/ James M. Trimble |
James M. Trimble | |
Interim Chief Executive Officer and President | |
/s/ Kenneth H. Beer | |
Kenneth H. Beer | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 01, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | SGY | |
Entity Registrant Name | STONE ENERGY CORP | |
Entity Central Index Key | 0000904080 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,999,112 |
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Common stock, par value (in usd per share) | $ 0.01 | |
Common stock, shares authorized (in shares) | 60,000,000 | |
Common stock, shares issued (in shares) | 19,998,019 | |
Predecessor | ||
Common stock, par value (in usd per share) | $ 0.01 | |
Common stock, shares authorized (in shares) | 30,000,000 | |
Common stock, shares issued (in shares) | 5,610,020 | |
Treasury stock, shares (in shares) | 1,658 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Feb. 28, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Net income (loss) | $ (1,297) | $ 264,777 | |||
Other comprehensive loss, net of tax effect: | |||||
Derivatives | 0 | 0 | |||
Foreign currency translation | 0 | ||||
Comprehensive income (loss) | $ 1,297 | $ (264,777) | |||
Predecessor | |||||
Net income (loss) | $ (630,317) | $ 89,635 | $ 474,180 | ||
Other comprehensive loss, net of tax effect: | |||||
Derivatives | 0 | (3,467) | (20,107) | ||
Foreign currency translation | 0 | 6,073 | |||
Comprehensive income (loss) | $ 630,317 | $ (93,102) | $ (488,214) |
FINANCIAL STATEMENT PRESENTATION |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
FINANCIAL STATEMENT PRESENTATION | FINANCIAL STATEMENT PRESENTATION Interim Financial Statements The condensed consolidated financial statements of Stone Energy Corporation (“Stone” or the “Company”) and its subsidiaries as of September 30, 2017 (Successor) and for the three month period ended September 30, 2017 (Successor), the periods from March 1, 2017 through September 30, 2017 (Successor), January 1, 2017 through February 28, 2017 (Predecessor) and the three and nine months ended September 30, 2016 (Predecessor) are unaudited and reflect all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The condensed consolidated balance sheet as of December 31, 2016 (Predecessor) has been derived from the audited financial statements as of that date contained in our Annual Report on Form 10-K for the year ended December 31, 2016 (our “2016 Annual Report on Form 10-K”). The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our 2016 Annual Report on Form 10-K, although, as described below, such prior financial statements will not be comparable to the interim financial statements due to the adoption of fresh start accounting on February 28, 2017. For additional information, see Note 3 – Fresh Start Accounting. The results of operations for the period from March 1, 2017 through September 30, 2017 (Successor) are not necessarily indicative of future financial results. Certain prior period amounts have been reclassified to conform to current period presentation. Emergence from Voluntary Reorganization Under Chapter 11 Proceedings On December 14, 2016, the Company and its subsidiaries Stone Energy Offshore, L.L.C. (“Stone Offshore”) and Stone Energy Holding, L.L.C. (together with the Company, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) seeking relief under the provisions of Chapter 11 of Title 11 (“Chapter 11”) of the United States Bankruptcy Code (the “Bankruptcy Code”). On February 15, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016 (the “Plan”), as modified by the Confirmation Order, and on February 28, 2017, the Plan became effective (the “Effective Date”) and the Debtors emerged from bankruptcy, with the bankruptcy cases then being closed by Final Decree Closing Chapter 11 Cases and Terminating Claims Agent Services entered by the Bankruptcy Court on April 20, 2017. Upon emergence from bankruptcy, the Company adopted fresh start accounting in accordance with the provisions of Accounting Standards Codification (“ASC”) 852, “Reorganizations”, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date. As a result of the adoption of fresh start accounting, the Company’s unaudited condensed consolidated financial statements subsequent to February 28, 2017 will not be comparable to its financial statements prior to that date. See Note 3 – Fresh Start Accounting for further details on the impact of fresh start accounting on the Company’s unaudited condensed consolidated financial statements. References to “Successor” or “Successor Company” relate to the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to “Predecessor” or “Predecessor Company” relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. Use of Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects are uncertain and, accordingly, these estimates may change as new events occur, as additional information is obtained and as the Company’s operating environment changes. Actual results could differ from those estimates. Estimates are used primarily when accounting for depreciation, depletion and amortization (“DD&A”) expense, unevaluated property costs, estimated future net cash flows from proved reserves, costs to abandon oil and gas properties, income taxes, accruals of capitalized costs, operating costs and production revenue, capitalized general and administrative costs and interest, insurance recoveries, estimated fair value of derivative contracts, contingencies and fair value estimates, including estimates of reorganization value, enterprise value and the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements. The standard may be applied retrospectively or using a modified retrospective approach, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, deferring the effective date of ASU 2014-09 by one year. As a result, the standard is effective for interim and annual periods beginning on or after December 15, 2017. We expect to apply the modified retrospective approach upon adoption of this standard. Although we are still evaluating the effect that this new standard may have on our financial statements and related disclosures, we do not anticipate that the implementation of this new standard will have a material effect. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard is effective for public entities for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years, with earlier application permitted. Upon adoption the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718)” to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and forfeitures, as well as classification in the statement of cash flows. ASU 2016-09 became effective for us on January 1, 2017. Under ASU 2016-09, the Company elected to not apply a forfeiture estimate and will recognize a credit in compensation expense to the extent awards are forfeited. The implementation of this new standard did not have a material effect on our financial statements or related disclosures. In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815)” to improve the financial reporting of hedging relationships to better reflect an entity’s hedging strategies. The standard expands an entity’s ability to apply hedge accounting for both non-financial and financial risk components and amends the presentation and disclosure requirements. Additionally, ASU 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be recorded in the same income statement line as the earnings effect of the hedged item. The standard is effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The standard must be adopted by applying a modified retrospective approach to existing designated hedging relationships as of the adoption date, with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. |
REORGANIZATION |
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Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REORGANIZATION | REORGANIZATION On December 14, 2016, the Debtors filed Bankruptcy Petitions seeking relief under the provisions of Chapter 11 of the Bankruptcy Code to pursue a prepackaged plan of reorganization. On February 15, 2017, the Bankruptcy Court entered an order confirming the Plan, and on February 28, 2017, the Plan became effective and the Debtors emerged from bankruptcy. Prior to the filing of the Bankruptcy Petitions, the Debtors and certain holders of the 1 3⁄4% Senior Convertible Notes due 2017 (the “2017 Convertible Notes”) and the 7 1⁄2% Senior Notes due 2022 (the “2022 Notes”) (collectively, the “Notes” and the holders thereof, the “Noteholders”) and the lenders (the “Banks”) under the Fourth Amended and Restated Credit Agreement, dated as of June 24, 2014, as amended, modified, or otherwise supplemented from time to time (the “Pre-Emergence Credit Agreement”), entered into an Amended and Restated Restructuring Support Agreement (the “A&R RSA”). The A&R RSA contained certain covenants on the part of the Company and the Noteholders and Banks who are signatories to the A&R RSA, including that such Noteholders and Banks would support the Company’s sale of Stone’s producing properties and acreage, including approximately 86,000 net acres, in the Appalachia regions of Pennsylvania and West Virginia (the “Appalachia Properties”) to TH Exploration III, LLC, an affiliate of Tug Hill, Inc. (“Tug Hill”), pursuant to the terms of a Purchase and Sale Agreement dated October 20, 2016, as amended on December 9, 2016 (the “Tug Hill PSA”) for a purchase price of at least $350 million and approval of the Bankruptcy Court. Pursuant to the terms of the Tug Hill PSA, Stone agreed to sell the Appalachia Properties to Tug Hill for $360 million in cash, subject to customary purchase price adjustments. Pursuant to Bankruptcy Court orders dated January 11, 2017 and January 31, 2017, two additional bidders were allowed to participate in competitive bidding on the Appalachia Properties. On January 18, 2017, the Bankruptcy Court approved certain bidding procedures (the “Bidding Procedures”) in connection with the sale of the Appalachia Properties. In accordance with the Bidding Procedures, Stone conducted an auction for the sale of the Appalachia Properties on February 8, 2017 and upon conclusion, selected the final bid submitted by EQT Corporation, through its wholly-owned subsidiary EQT Production Company (“EQT”), with a final purchase price of $527 million in cash, subject to customary purchase price adjustments and approval by the Bankruptcy Court, with an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments, as the prevailing bid. On February 9, 2017, the Company entered into a purchase and sale agreement with EQT (the “EQT PSA”), reflecting the terms of the prevailing bid and on February 10, 2017, the Bankruptcy Court entered a sale order approving the sale of the Appalachia Properties to EQT. We completed the sale of the Appalachia Properties to EQT on February 27, 2017 for a final purchase price of $527 million in cash, subject to customary purchase price adjustments. At the close of the sale of the Appalachia Properties, the Tug Hill PSA was terminated, and the Company used a portion of the cash consideration received to pay Tug Hill a break-up fee and expense reimbursements totaling approximately $11.5 million, which is recognized as other expense in the statement of operations for the period of January 1, 2017 through February 28, 2017 (Predecessor). See Note 7 – Divestiture for additional information on the sale of the Appalachia Properties. Upon emergence from bankruptcy, pursuant to the terms of the Plan, the following significant transactions occurred:
For further information regarding the equity and debt instruments of the Predecessor Company and the Successor Company, see Note 4 – Stockholders’ Equity and Note 10 – Debt. FRESH START ACCOUNTING Upon emergence from bankruptcy, the Company qualified for and adopted fresh start accounting in accordance with the provisions of ASC 852, “Reorganizations” as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. See Note 2 – Reorganization for the terms of the Plan. The Company applied fresh start accounting as of February 28, 2017. Fresh start accounting required the Company to present its assets, liabilities and equity as if it were a new entity upon emergence from bankruptcy, with no beginning retained earnings or deficit as of the fresh start reporting date. As described in Note 1 – Financial Statement Presentation, the new entity is referred to as Successor or Successor Company, and includes the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to Predecessor or Predecessor Company relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. Reorganization Value Under fresh start accounting, reorganization value represents the fair value of the Successor Company’s total assets and is intended to approximate the amount a willing buyer would pay for the assets immediately after restructuring. Upon application of fresh start accounting, the Company allocated the reorganization value to its individual assets based on their estimated fair values. The Company’s reorganization value is derived from an estimate of enterprise value. Enterprise value represents the estimated fair value of an entity’s long-term debt and stockholders’ equity. In support of the Plan, the Company estimated the enterprise value of the core assets (as defined in the Plan) of the Successor Company to be in the range of $300 million to $450 million, which was subsequently approved by the Bankruptcy Court. This valuation analysis was prepared using reserve information, development schedules, other financial information and financial projections and applying standard valuation techniques, including net asset value analysis, precedent transactions analyses and public comparable company analyses. Based on the estimates and assumptions used in determining the enterprise value, the Company ultimately estimated the enterprise value of the Successor Company’s core assets to be approximately $420 million. Valuation of Assets The Company’s principal assets are its oil and gas properties, which the Company accounts for under the full cost accounting method. With the assistance of valuation experts, the Company determined the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the bankruptcy emergence date. The fair value analysis performed by valuation experts was based on the Company’s estimates of reserves as developed internally by the Company’s reserve engineers. For purposes of estimating the fair value of the Company’s proved, probable and possible reserves, an income approach was used, which estimated fair value based on the anticipated cash flows associated with the Company’s reserves, risked by reserve category and discounted using a weighted average cost of capital of 12.5%. The discount factor was derived from a weighted average cost of capital computation which utilized a blended expected cost of debt and expected returns on equity for similar market participants. Future revenues were based upon forward strip oil and natural gas prices as of the emergence date, adjusted for differentials realized by the Company, and adjusted for a 2% annual escalation after 2021. Development and operating costs were based on the Company’s recent cost trends adjusted for inflation. The discounted cash flow models also included estimates not typically included in proved reserves such as depreciation and income tax expenses. The proved reserve locations were limited to wells expected to be drilled in the Company’s five year development plan. As a result of this analysis, the Company concluded the fair value of its proved reserves was $380.8 million and the fair value of its probable and possible reserves was $16.8 million as of the Effective Date. The Company also reviewed its undeveloped leasehold acreage and inventory. An analysis of comparable market transactions indicated a fair value of undeveloped acreage and inventory totaling $80.2 million. These amounts are reflected in the Fresh Start Adjustments item number 12 below. The fair value of the Company’s asset retirement obligations was estimated at $290.1 million and was based on estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate of 12%. See further discussion in Fresh Start Adjustments below for details on the specific assumptions used in the valuation of the Company’s various other assets. The following table reconciles the enterprise value per the Plan to the estimated fair value (for fresh start accounting purposes) of the Successor Company’s common stock as of February 28, 2017 (in thousands, except per share value):
The following table reconciles the enterprise value per the Plan to the estimated reorganization value as of the Effective Date (in thousands):
Reorganization value and enterprise value were estimated using numerous projections and assumptions that are inherently subject to significant uncertainties and resolution of contingencies that are beyond our control. Accordingly, the estimates set forth herein are not necessarily indicative of actual outcomes, and there can be no assurance that the estimates, projections or assumptions will be realized. Condensed Consolidated Balance Sheet The adjustments set forth in the following condensed consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and carried out by the Company (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs. The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 28, 2017 (in thousands):
Reorganization Adjustments (dollar amounts in thousands, except per share values)
(a) The closing of the sale of the Appalachia Properties occurred on February 27, 2017, but as emergence was contingent on such closing, the effects of the transaction are reflected as reorganization adjustments. See Note 7 – Divestiture for additional details on the sale. Total consideration received for the sale of the Appalachia Properties of $522,472 included cash consideration of $512,472 received at closing and a $10,000 indemnity escrow which was released subsequent to emergence from bankruptcy (see Reorganization Adjustments item number 2 below). (b) Reflects the movement of $75,000 of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the provisions of the Amended Credit Agreement (as defined in Note 10 – Debt), and $547 held in a restricted cash account for certain cure amounts in connection with the Chapter 11 proceedings.
11.Reflects the cumulative impact of the reorganization adjustments discussed above:
Fresh Start Adjustments
Reorganization Items Reorganization items represent liabilities settled, net of amounts incurred subsequent to the Chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in the Company’s unaudited condensed consolidated statement of operations. The following table summarizes reorganization items, net (in thousands):
The cash payments for reorganization items for the period from January 1, 2017 through February 28, 2017 include approximately $10.6 million of emergence and success fees and approximately $9.1 million of other reorganization professional fees and expenses paid on the Effective Date. |
FRESH START ACCOUNTING |
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Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRESH START ACCOUNTING | REORGANIZATION On December 14, 2016, the Debtors filed Bankruptcy Petitions seeking relief under the provisions of Chapter 11 of the Bankruptcy Code to pursue a prepackaged plan of reorganization. On February 15, 2017, the Bankruptcy Court entered an order confirming the Plan, and on February 28, 2017, the Plan became effective and the Debtors emerged from bankruptcy. Prior to the filing of the Bankruptcy Petitions, the Debtors and certain holders of the 1 3⁄4% Senior Convertible Notes due 2017 (the “2017 Convertible Notes”) and the 7 1⁄2% Senior Notes due 2022 (the “2022 Notes”) (collectively, the “Notes” and the holders thereof, the “Noteholders”) and the lenders (the “Banks”) under the Fourth Amended and Restated Credit Agreement, dated as of June 24, 2014, as amended, modified, or otherwise supplemented from time to time (the “Pre-Emergence Credit Agreement”), entered into an Amended and Restated Restructuring Support Agreement (the “A&R RSA”). The A&R RSA contained certain covenants on the part of the Company and the Noteholders and Banks who are signatories to the A&R RSA, including that such Noteholders and Banks would support the Company’s sale of Stone’s producing properties and acreage, including approximately 86,000 net acres, in the Appalachia regions of Pennsylvania and West Virginia (the “Appalachia Properties”) to TH Exploration III, LLC, an affiliate of Tug Hill, Inc. (“Tug Hill”), pursuant to the terms of a Purchase and Sale Agreement dated October 20, 2016, as amended on December 9, 2016 (the “Tug Hill PSA”) for a purchase price of at least $350 million and approval of the Bankruptcy Court. Pursuant to the terms of the Tug Hill PSA, Stone agreed to sell the Appalachia Properties to Tug Hill for $360 million in cash, subject to customary purchase price adjustments. Pursuant to Bankruptcy Court orders dated January 11, 2017 and January 31, 2017, two additional bidders were allowed to participate in competitive bidding on the Appalachia Properties. On January 18, 2017, the Bankruptcy Court approved certain bidding procedures (the “Bidding Procedures”) in connection with the sale of the Appalachia Properties. In accordance with the Bidding Procedures, Stone conducted an auction for the sale of the Appalachia Properties on February 8, 2017 and upon conclusion, selected the final bid submitted by EQT Corporation, through its wholly-owned subsidiary EQT Production Company (“EQT”), with a final purchase price of $527 million in cash, subject to customary purchase price adjustments and approval by the Bankruptcy Court, with an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments, as the prevailing bid. On February 9, 2017, the Company entered into a purchase and sale agreement with EQT (the “EQT PSA”), reflecting the terms of the prevailing bid and on February 10, 2017, the Bankruptcy Court entered a sale order approving the sale of the Appalachia Properties to EQT. We completed the sale of the Appalachia Properties to EQT on February 27, 2017 for a final purchase price of $527 million in cash, subject to customary purchase price adjustments. At the close of the sale of the Appalachia Properties, the Tug Hill PSA was terminated, and the Company used a portion of the cash consideration received to pay Tug Hill a break-up fee and expense reimbursements totaling approximately $11.5 million, which is recognized as other expense in the statement of operations for the period of January 1, 2017 through February 28, 2017 (Predecessor). See Note 7 – Divestiture for additional information on the sale of the Appalachia Properties. Upon emergence from bankruptcy, pursuant to the terms of the Plan, the following significant transactions occurred:
For further information regarding the equity and debt instruments of the Predecessor Company and the Successor Company, see Note 4 – Stockholders’ Equity and Note 10 – Debt. FRESH START ACCOUNTING Upon emergence from bankruptcy, the Company qualified for and adopted fresh start accounting in accordance with the provisions of ASC 852, “Reorganizations” as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. See Note 2 – Reorganization for the terms of the Plan. The Company applied fresh start accounting as of February 28, 2017. Fresh start accounting required the Company to present its assets, liabilities and equity as if it were a new entity upon emergence from bankruptcy, with no beginning retained earnings or deficit as of the fresh start reporting date. As described in Note 1 – Financial Statement Presentation, the new entity is referred to as Successor or Successor Company, and includes the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to Predecessor or Predecessor Company relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. Reorganization Value Under fresh start accounting, reorganization value represents the fair value of the Successor Company’s total assets and is intended to approximate the amount a willing buyer would pay for the assets immediately after restructuring. Upon application of fresh start accounting, the Company allocated the reorganization value to its individual assets based on their estimated fair values. The Company’s reorganization value is derived from an estimate of enterprise value. Enterprise value represents the estimated fair value of an entity’s long-term debt and stockholders’ equity. In support of the Plan, the Company estimated the enterprise value of the core assets (as defined in the Plan) of the Successor Company to be in the range of $300 million to $450 million, which was subsequently approved by the Bankruptcy Court. This valuation analysis was prepared using reserve information, development schedules, other financial information and financial projections and applying standard valuation techniques, including net asset value analysis, precedent transactions analyses and public comparable company analyses. Based on the estimates and assumptions used in determining the enterprise value, the Company ultimately estimated the enterprise value of the Successor Company’s core assets to be approximately $420 million. Valuation of Assets The Company’s principal assets are its oil and gas properties, which the Company accounts for under the full cost accounting method. With the assistance of valuation experts, the Company determined the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the bankruptcy emergence date. The fair value analysis performed by valuation experts was based on the Company’s estimates of reserves as developed internally by the Company’s reserve engineers. For purposes of estimating the fair value of the Company’s proved, probable and possible reserves, an income approach was used, which estimated fair value based on the anticipated cash flows associated with the Company’s reserves, risked by reserve category and discounted using a weighted average cost of capital of 12.5%. The discount factor was derived from a weighted average cost of capital computation which utilized a blended expected cost of debt and expected returns on equity for similar market participants. Future revenues were based upon forward strip oil and natural gas prices as of the emergence date, adjusted for differentials realized by the Company, and adjusted for a 2% annual escalation after 2021. Development and operating costs were based on the Company’s recent cost trends adjusted for inflation. The discounted cash flow models also included estimates not typically included in proved reserves such as depreciation and income tax expenses. The proved reserve locations were limited to wells expected to be drilled in the Company’s five year development plan. As a result of this analysis, the Company concluded the fair value of its proved reserves was $380.8 million and the fair value of its probable and possible reserves was $16.8 million as of the Effective Date. The Company also reviewed its undeveloped leasehold acreage and inventory. An analysis of comparable market transactions indicated a fair value of undeveloped acreage and inventory totaling $80.2 million. These amounts are reflected in the Fresh Start Adjustments item number 12 below. The fair value of the Company’s asset retirement obligations was estimated at $290.1 million and was based on estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate of 12%. See further discussion in Fresh Start Adjustments below for details on the specific assumptions used in the valuation of the Company’s various other assets. The following table reconciles the enterprise value per the Plan to the estimated fair value (for fresh start accounting purposes) of the Successor Company’s common stock as of February 28, 2017 (in thousands, except per share value):
The following table reconciles the enterprise value per the Plan to the estimated reorganization value as of the Effective Date (in thousands):
Reorganization value and enterprise value were estimated using numerous projections and assumptions that are inherently subject to significant uncertainties and resolution of contingencies that are beyond our control. Accordingly, the estimates set forth herein are not necessarily indicative of actual outcomes, and there can be no assurance that the estimates, projections or assumptions will be realized. Condensed Consolidated Balance Sheet The adjustments set forth in the following condensed consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and carried out by the Company (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs. The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 28, 2017 (in thousands):
Reorganization Adjustments (dollar amounts in thousands, except per share values)
(a) The closing of the sale of the Appalachia Properties occurred on February 27, 2017, but as emergence was contingent on such closing, the effects of the transaction are reflected as reorganization adjustments. See Note 7 – Divestiture for additional details on the sale. Total consideration received for the sale of the Appalachia Properties of $522,472 included cash consideration of $512,472 received at closing and a $10,000 indemnity escrow which was released subsequent to emergence from bankruptcy (see Reorganization Adjustments item number 2 below). (b) Reflects the movement of $75,000 of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the provisions of the Amended Credit Agreement (as defined in Note 10 – Debt), and $547 held in a restricted cash account for certain cure amounts in connection with the Chapter 11 proceedings.
11.Reflects the cumulative impact of the reorganization adjustments discussed above:
Fresh Start Adjustments
Reorganization Items Reorganization items represent liabilities settled, net of amounts incurred subsequent to the Chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in the Company’s unaudited condensed consolidated statement of operations. The following table summarizes reorganization items, net (in thousands):
The cash payments for reorganization items for the period from January 1, 2017 through February 28, 2017 include approximately $10.6 million of emergence and success fees and approximately $9.1 million of other reorganization professional fees and expenses paid on the Effective Date. |
STOCKHOLDERS' EQUITY |
9 Months Ended |
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Sep. 30, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Common Stock As discussed in Note 2 – Reorganization, upon emergence from bankruptcy, all existing shares of Predecessor common stock were cancelled, and the Successor Company issued an aggregate of 20.0 million shares of New Common Stock, par value $0.01 per share, to the Predecessor Company’s existing common stockholders and holders of the 2017 Convertible Notes and the 2022 Notes pursuant to the Plan. Warrants As discussed in Note 2 – Reorganization, the Predecessor Company’s existing common stockholders received warrants to purchase approximately 3.5 million shares of New Common Stock. The warrants have an exercise price of $42.04 per share and a term of four years, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company. The Company allocated $15.6 million of the enterprise value to the warrants which is reflected in “Successor additional paid-in capital” on the unaudited condensed consolidated balance sheet at September 30, 2017 (Successor). |
SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS |
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Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | SHARE–BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Predecessor Awards Immediately prior to emergence, the vesting of all Predecessor outstanding, unvested share-based awards for non-executive employees was accelerated and, as a result, all unrecognized compensation cost related to such awards was recognized, with $1.7 million expensed as salaries, general and administrative (“SG&A”) expense in the Predecessor Company statement of operations during the period from January 1, 2017 through February 28, 2017, and $0.6 million capitalized into oil and gas properties. Upon emergence from bankruptcy, all Predecessor outstanding, unvested restricted shares held by the Company’s executives were cancelled and exchanged for a proportionate share of the 5% of New Common Stock, plus a proportionate share of the warrants for ownership of up to 15% of the Successor Company’s common equity. Vesting continues in accordance with the applicable vesting provisions of the original awards. As of September 30, 2017, there was $14 thousand of unrecognized compensation cost related to unvested restricted shares held by the Company’s executives. The current weighted average remaining vesting period of such awards is approximately three months. All other Predecessor Company executive share-based awards were cancelled upon emergence from bankruptcy. The board of directors of the Predecessor Company received grants of stock, totaling 10,404 shares, during the period from January 1, 2017 through February 28, 2017, representing the pro-rated portion of their annual retainer for such period. The aggregate grant date value of such stock totaled $69 thousand and was recognized as SG&A expense in the Predecessor Company statement of operations for the period from January 1, 2017 through February 28, 2017. Pursuant to the Plan, as of the Effective Date, all non-employee directors of the Predecessor Company ceased to serve on the Company’s board of directors. Successor Awards On March 1, 2017, the board of directors of the Successor Company (the “Board”) received grants of restricted stock units under the 2017 LTIP (see 2017 Long-Term Incentive Plan below). The restricted stock units are scheduled to vest in full on the day prior to the annual meeting of the Company’s stockholders in May 2018, subject to: (i) the director’s continued service on the Board through the vesting date, and (ii) earlier vesting upon the occurrence of a change of control event or the termination of the director’s service due to death or removal from the Board without cause. A total of 62,137 restricted stock units were granted with an aggregate grant date fair value of $1.7 million, based on a per share grant date fair value of $26.95. As of September 30, 2017, there was $0.9 million of unrecognized compensation cost related to such restricted stock units, with a current weighted average remaining vesting period of approximately seven months. 2017 Long-Term Incentive Plan On the Effective Date, pursuant to the Plan, the Stone Energy Corporation 2017 Long-Term Incentive Plan (the “2017 LTIP”) became effective, replacing the Stone Energy Corporation 2009 Amended and Restated Stock Incentive Plan (As Amended and Restated December 17, 2015). The types of awards that may be granted under the 2017 LTIP include stock options, restricted stock, restricted stock units, dividend equivalents and other forms of awards granted or denominated in shares of New Common Stock, as well as certain cash-based awards. The maximum number of shares of New Common Stock that may be issued or transferred pursuant to awards under the 2017 LTIP is 2,614,379. As of November 1, 2017, other than the grant of the 62,137 restricted stock units to the Board (see Successor Awards above), there have been no other issuances or awards of stock under the 2017 LTIP. Key Executive Incentive Plan Pursuant to the terms of the Executive Claims Settlement Agreement approved by the Bankruptcy Court on January 10, 2017, the Company’s executives agreed to waive their claims related to the Company’s 2016 Performance Incentive Compensation Plan (the “2016 PICP”), and in exchange therefor, the Company adopted the Stone Energy Corporation Key Executive Incentive Plan (“KEIP”), in which the Company’s executives were allowed to participate. Future payments to the Company’s executives under the KEIP were limited to $2 million, or the equivalent of the target bonus under the 2016 PICP for the fourth quarter of 2016, to be paid in two equal installments. The first payment to the Company’s executives under the KEIP was made subsequent to consummation of the bankruptcy cases, on April 24, 2017, and the second payment was made on May 30, 2017. 2017 Annual Incentive Compensation Plan On July 25, 2017, the Board approved the Stone Energy Corporation 2017 Annual Incentive Compensation Plan (the “2017 Annual Incentive Plan”) for all salaried employees (other than the interim chief executive officer) of the Company. The 2017 Annual Incentive Plan is a performance-based incentive program that provides award opportunities based on the Company’s annual performance in certain performance measures as defined by the Board. The 2017 Annual Incentive Plan replaced the Company’s 2005 Annual Incentive Compensation Plan. We recognized a charge of $4.1 million during the three months ended September 30, 2017 (Successor), net of amounts capitalized, representing a pro-rated portion of the 2017 estimated annual incentive compensation awards, for the nine months ended September 30, 2017. This charge is reflected in incentive compensation expense on the statement of operations. Retention Award Agreement On July 25, 2017, the Board approved retention awards and the form of Stone Energy Corporation Retention Award Agreement (the “Retention Award Agreement”) and authorized the Company to enter into Retention Award Agreements with certain executive officers and employees of the Company. The Retention Award Agreement provides for a retention award to certain individuals to be paid in a lump sum cash payment within 30 days of the earliest to occur of (i) the first anniversary (June 1, 2018) of the effective date of the Retention Award Agreement, subject to the individual remaining employed by the Company or a subsidiary of the Company on such date, (ii) a change in control of the Company or (iii) a termination of the individual’s employment with the Company (a) due to death, (b) by the Company without “cause” or (c) by the individual for “good reason.” We recognized a charge of $0.5 million during the three months ended September 30, 2017 (Successor), representing a pro-rated portion of estimated retention awards for the period from June 1, 2017 through September 30, 2017. This charge is reflected in incentive compensation expense on the statement of operations. Executive Severance Plan On July 25, 2017, the Board approved the Stone Energy Corporation Executive Severance Plan (the “Executive Severance Plan”), which provides for the payment of severance and change in control benefits to the executive officers (other than the interim chief executive officer) of the Company. Pursuant to the Executive Severance Plan, if a covered executive officer is terminated (i) by the Company without “cause” or (ii) by the executive officer for “good reason” (each, an “Involuntary Termination”), the executive officer will receive (i) a lump sum cash payment in an amount equal to 1.0x or 1.5x the executive officer’s annual base salary, (ii) a lump sum cash payment equal to 100% of the executive officer’s annual bonus opportunity, at target, prorated by the number of days that have elapsed from January 1 of that calendar year, (iii) six months of health benefit continuation for the executive officer and the executive officer’s dependents, (iv) accelerated vesting of any outstanding and unvested equity awards, (v) certain outplacement services and (vi) any unpaid portion of the executive officer’s annual pay as of the date of the Involuntary Termination. The Executive Severance Plan replaced the Stone Energy Corporation Executive Severance Plan dated December 13, 2016. |
EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE On February 28, 2017, upon emergence from Chapter 11 bankruptcy, the Company’s Predecessor equity was cancelled and new equity was issued. Additionally, the Predecessor Company’s 2017 Convertible Notes were cancelled. See Note 2 – Reorganization and Note 4 – Stockholders’ Equity for further details. The following tables set forth the calculation of basic and diluted weighted average shares outstanding and earnings per share for the indicated periods (in thousands, except per share amounts):
All outstanding stock options were considered antidilutive during the period from January 1, 2017 through February 28, 2017 (Predecessor) (approximately 10,400 shares) because the exercise price of the options exceeded the average price of our common stock for the applicable period. During the three and nine months ended September 30, 2016 (Predecessor), all outstanding stock options were considered antidilutive (approximately 12,900 shares) because we had net losses for such periods. On February 28, 2017, upon emergence from bankruptcy, all outstanding stock options were cancelled. See Note 5 – Share-Based Compensation and Employee Benefit Plans. On February 28, 2017, upon emergence from bankruptcy, the Predecessor Company’s existing common stockholders received warrants to purchase common stock of the Successor Company. See Note 2 – Reorganization. For the three months ended September 30, 2017 (Successor), all outstanding warrants (approximately 3,529,000) were considered antidilutive because the exercise price of the warrants exceeded the average price of our common stock for the applicable period. For the period of March 1, 2017 through September 30, 2017 (Successor), all outstanding warrants (approximately 3,529,000) were antidilutive because we had a net loss for such period. The Predecessor Company had no outstanding restricted stock units. The Board received grants of restricted stock units on March 1, 2017. See Note 5 – Share-Based Compensation and Employee Benefit Plans. For the period from March 1, 2017 through September 30, 2017 (Successor), all outstanding restricted stock units (approximately 62,000) were considered antidilutive because we had a net loss for such period. For the period from January 1, 2017 through February 28, 2017 (Predecessor), the average price of our common stock was less than the effective conversion price for the 2017 Convertible Notes, resulting in no dilutive effect on the diluted earnings per share computation for such period. For the three and nine months ended September 30, 2016 (Predecessor), the 2017 Convertible Notes had no dilutive effect on the diluted earnings per share computation as we had net losses for such periods. On February 28, 2017, upon emergence from bankruptcy, the 2017 Convertible Notes were cancelled. See Note 2 – Reorganization. During the three months ended September 30, 2017 (Successor), there were no issuances of common stock of the Successor Company. During the period from March 1, 2017 through September 30, 2017 (Successor), 1,195 shares of common stock of the Successor Company were issued from authorized shares upon the lapsing of forfeiture restrictions of restricted stock for employees. During the periods from January 1, 2017 through February 28, 2017 (Predecessor) and the three and nine months ended September 30, 2016 (Predecessor), approximately 47,390 shares, 12,900 shares and 75,100 shares of Predecessor Company common stock, respectively, were issued from authorized shares upon the granting of stock awards and the lapsing of forfeiture restrictions of restricted stock for employees and nonemployee directors. |
DIVESTITURE |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DIVESTITURE | DIVESTITURE On February 27, 2017, we completed the sale of the Appalachia Properties to EQT for net cash consideration of approximately $522.5 million, representing gross proceeds of $527.0 million adjusted downward by approximately $4.5 million for purchase price adjustments for operations related to the Appalachia Properties after June 1, 2016, the effective date of the transaction. A portion of the consideration received from the sale of the Appalachia Properties was used to fund the Company’s cash payment obligations under the Plan. See Note 2 – Reorganization. At December 31, 2016, the estimated proved oil and natural gas reserves associated with these assets totaled 18 MMBoe (million barrels of oil equivalent), which represented approximately 34% of our estimated proved oil and natural gas reserves on a volume equivalent basis. We no longer have assets or operations in Appalachia. Since accounting for the sale of these oil and gas properties as a reduction of the capitalized costs of oil and gas properties would have significantly altered the relationship between capitalized costs and reserves, we recognized a gain on the sale of $213.5 million during the period from January 1, 2017 through February 28, 2017 (Predecessor), computed as follows (in millions):
The carrying value of the properties sold was determined by allocating total capitalized costs within the U.S. full cost pool between properties sold and properties retained based on their relative fair values. |
INVESTMENT IN OIL AND GAS PROPERTIES |
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Sep. 30, 2017 | |
Extractive Industries [Abstract] | |
INVESTMENT IN OIL AND GAS PROPERTIES | INVESTMENT IN OIL AND GAS PROPERTIES With the adoption of fresh start accounting, the Company recorded its oil and gas properties at fair value as of February 28, 2017. The Company’s proved, probable and possible reserves and unevaluated properties (including inventory) were assigned values of $380.8 million, $16.8 million and $80.2 million, respectively. See Note 3 – Fresh Start Accounting for a discussion of the valuation approach used. Under the full cost method of accounting, we compare, at the end of each financial reporting period, the present value of estimated future net cash flows from proved reserves (adjusted for designated cash flow hedges and excluding cash flows related to estimated abandonment costs) to the net capitalized costs of proved oil and gas properties, net of related deferred taxes. We refer to this comparison as a ceiling test. If the net capitalized costs of proved oil and gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write down the value of our oil and gas properties to the value of the discounted cash flows. At March 31, 2017 (Successor), our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $256.4 million based on twelve-month average prices, net of applicable differentials, of $45.40 per Bbl of oil, $2.24 per Mcf of natural gas and $19.18 per Bbl of natural gas liquids (“NGLs”). The write-down at March 31, 2017 is reflected in the statement of operations of the Successor Company for the period from March 1, 2017 through September 30, 2017 and was primarily due to differences between the trailing twelve-month average pricing assumption used in calculating the ceiling test and the forward prices used in fresh start accounting to estimate the fair value of our oil and gas properties on the fresh start reporting date of February 28, 2017. Weighted average commodity prices used in the determination of the fair value of our oil and gas properties for purposes of fresh start accounting were $56.01 per Bbl of oil, $2.52 per Mcf of natural gas and $14.18 per Bbl of NGLs, net of applicable differentials. Since none of our derivatives as of March 31, 2017 were designated as cash flow hedges (see Note 9 – Derivative Instruments and Hedging Activities), the write-down at March 31, 2017 was not affected by hedging. At September 30, 2016 (Predecessor), our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $36.5 million based on twelve-month average prices, net of applicable differentials, of $40.51 per Bbl of oil, $1.99 per Mcf of natural gas and $13.88 per Bbl of NGLs. The write-down at September 30, 2016 was decreased by $9.6 million as a result of hedges. At June 30, 2016 (Predecessor), our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $118.6 million based on twelve-month average prices, net of applicable differentials, of $43.49 per Bbl of oil, $1.93 per Mcf of natural gas and $9.33 per Bbl of NGLs. The write-down at June 30, 2016 was decreased by $18.1 million as a result of hedges. At March 31, 2016 (Predecessor), our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $128.9 million based on twelve-month average prices, net of applicable differentials, of $46.72 per Bbl of oil, $2.01 per Mcf of natural gas and $13.65 per Bbl of NGLs. At March 31, 2016, the write-down of oil and gas properties also included $0.3 million related to our Canadian oil and gas properties, which were deemed to be fully impaired at the end of 2015. The write-down at March 31, 2016 was decreased by $23 million as a result of hedges. The September 30, June 30 and March 31, 2016 write-downs are reflected in the statement of operations of the Predecessor Company. |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Our hedging strategy is designed to protect our near and intermediate term cash flows from future declines in oil and natural gas prices. This protection is essential to capital budget planning, which is sensitive to expenditures that must be committed to in advance, such as rig contracts and the purchase of tubular goods. We enter into derivative transactions to secure a commodity price for a portion of our expected future production that is acceptable at the time of the transaction. We do not enter into derivative transactions for trading purposes. All derivatives are recognized as assets or liabilities on the balance sheet and are measured at fair value. At the end of each quarterly period, these derivatives are marked-to-market. If the derivative does not qualify or is not designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in earnings through derivative income (expense) in the statement of operations. If the derivative qualifies and is designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in stockholders’ equity through other comprehensive income (loss), net of related taxes, to the extent the hedge is considered effective. Monthly settlements of effective hedges are reflected in revenue from oil and natural gas production. Monthly settlements of ineffective hedges and derivatives not designated or that do not qualify for hedge accounting are recognized in earnings through derivative income (expense). The resulting cash flows from all monthly settlements are reported as cash flows from operating activities. Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. A small portion of our cash flow hedges were typically determined to be ineffective because oil and natural gas price changes in the markets in which we sell our products were not 100% correlative to changes in the underlying price basis indicative in the derivative contract. We had no outstanding derivatives at December 31, 2016. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income (expense). We have entered into put contracts, fixed-price swaps and collar contracts with various counterparties for a portion of our expected 2017, 2018 and 2019 oil and natural gas production from the Gulf Coast Basin. All of our derivative transactions have been carried out in the over-the-counter market and are not typically subject to margin-deposit requirements. The use of derivative instruments involves the risk that the counterparties will be unable to meet the financial terms of such transactions. The counterparties to all of our derivative instruments have an “investment grade” credit rating. We monitor the credit ratings of our derivative counterparties on an ongoing basis. Although we typically enter into derivative contracts with multiple counterparties to mitigate our exposure to any individual counterparty, if any of our counterparties were to default on its obligations to us under the derivative contracts or seek bankruptcy protection, we may not realize the benefit of some of our derivative instruments and incur a loss. At November 1, 2017, our derivative instruments were with five counterparties, two of which accounted for approximately 64% of our contracted volumes. Currently, all of our outstanding derivative instruments are with lenders under our current bank credit facility. Put contracts are purchased at a rate per unit of hedged production that fluctuates with the commodity futures market. The historical cost of the put contract represents our maximum cash exposure. We are not obligated to make any further payments under the put contract regardless of future commodity price fluctuations. Under put contracts, monthly payments are made to us if the New York Mercantile Exchange (“NYMEX”) prices fall below the agreed upon floor price, while allowing us to fully participate in commodity prices above the floor. Swaps typically provide for monthly payments by us if prices rise above the swap price or monthly payments to us if prices fall below the swap price. Collar contracts typically require payments by us if the NYMEX average closing price is above the ceiling price or payments to us if the NYMEX average closing price is below the floor price. Settlements for our oil put contracts, oil collar contracts and fixed-price oil swaps are based on an average of the NYMEX closing price for West Texas Intermediate crude oil during the entire calendar month. Settlements for our natural gas collar contracts and fixed-price natural gas swaps are based on the NYMEX price for the last day of a respective contract month. The following tables illustrate our derivative positions for calendar years 2017, 2018 and 2019 as of November 1, 2017:
Derivatives not designated or not qualifying as hedging instruments The following table discloses the location and fair value amounts of derivatives not designated or not qualifying as hedging instruments, as reported in our balance sheet, at September 30, 2017 (Successor) (in millions). We had no outstanding hedging instruments at December 31, 2016 (Predecessor).
Gains or losses related to changes in fair value and cash settlements for derivatives not designated or not qualifying as hedging instruments are recorded as derivative income (expense) in the statement of operations. The following table discloses the before tax effect of our derivatives not designated or not qualifying as hedging instruments on the statement of operations for the three months ended September 30, 2017 (Successor), the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through September 30, 2017 (Successor) (in millions).
Derivatives qualifying as hedging instruments None of our derivative contracts outstanding as of September 30, 2017 (Successor) were designated as accounting hedges. We had no outstanding derivatives at December 31, 2016 (Predecessor). At September 30, 2016, we had outstanding derivatives that were designated and qualified as hedging instruments. The following tables disclose the before tax effect of derivatives qualifying as hedging instruments, as reported in the statement of operations, during the three and nine months ended September 30, 2016 (Predecessor) (in millions):
(a) For the three months ended September 30, 2016, effective hedging contracts increased oil revenue by $5.3 million and increased natural gas revenue by $2.4 million.
(a) For the nine months ended September 30, 2016, effective hedging contracts increased oil revenue by $19.7 million and increased natural gas revenue by $9.7 million. Offsetting of derivative assets and liabilities Our derivative contracts are subject to netting arrangements. It is our policy to not offset our derivative contracts in presenting the fair value of these contracts as assets and liabilities in our balance sheet. The following table presents the potential impact of the offset rights associated with our recognized assets and liabilities at September 30, 2017 (Successor) (in millions):
We had no outstanding derivative contracts at December 31, 2016 (Predecessor). |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Our debt balances (net of related unamortized discounts and debt issuance costs) as of September 30, 2017 and December 31, 2016 were as follows (in millions):
Reorganization On December 14, 2016, the Debtors filed Bankruptcy Petitions seeking relief under the provisions of Chapter 11 of the Bankruptcy Code to pursue a prepackaged plan of reorganization. The 2017 Convertible Notes and 2022 Notes were impacted by the Chapter 11 process and were classified in the accompanying condensed consolidated balance sheet at December 31, 2016 as liabilities subject to compromise under the provisions of ASC 852, “Reorganizations”. On February 15, 2017, the Bankruptcy Court entered an order confirming the Plan, and on February 28, 2017, the Plan became effective and the Debtors emerged from bankruptcy. Upon emergence from bankruptcy, pursuant to the terms of the Plan, the Predecessor Company’s 2017 Convertible Notes and 2022 Notes were cancelled, the Predecessor Company’s Pre-Emergence Credit Agreement was amended and restated, and the Company issued the 2022 Second Lien Notes. Current Portion of Long-Term Debt As of September 30, 2017 (Successor), the current portion of long-term debt of $0.4 million represented principal payments due within one year on the 4.20% Building Loan (the “Building Loan”). Successor Revolving Credit Facility On the Effective Date, pursuant to the terms of the Plan, the Company entered into the Fifth Amended and Restated Credit Agreement with the lenders party thereto and Bank of America, N.A. (the “Amended Credit Agreement”), as administrative agent and issuing lender, which amended and replaced the Company’s Pre-Emergence Credit Agreement. The Amended Credit Agreement provides for a reserve-based revolving credit facility and matures on February 28, 2021. The Company’s available borrowings under the Amended Credit Agreement are set at $150 million until the first borrowing base redetermination in November 2017. On September 30, 2017, the Company had no outstanding borrowings and $12.6 million of outstanding letters of credit, leaving $137.4 million of availability under the Amended Credit Agreement. The borrowing base will be redetermined in early November 2017. Interest on loans under the Amended Credit Agreement is calculated using the London Interbank Offering Rate (“LIBOR”) or the base rate, at the election of the Company, plus, in each case, an applicable margin. The applicable margin is determined based on borrowing base utilization and ranges from 2.00% to 3.00% per annum for base rate loans and 3.00% to 4.00% per annum for LIBOR loans. The borrowing base under the Amended Credit Agreement is redetermined semi-annually, in May and November, by the lenders, in accordance with the lenders’ customary practices for oil and gas loans. In addition, we and the lenders each have discretion at any time, but not more than two additional times in any calendar year, to have the borrowing base redetermined. Subject to certain exceptions, the Amended Credit Agreement is required to be guaranteed by all of the material domestic direct and indirect subsidiaries of the Company. As of September 30, 2017, the Amended Credit Agreement is guaranteed by Stone Offshore. The Amended Credit Agreement is secured by substantially all of the Company’s and its subsidiaries’ assets. The Amended Credit Agreement provides for customary optional and mandatory prepayments, affirmative and negative covenants and events of default, including limitation on the incurrence of debt, liens, restrictive agreements, mergers, asset sales, dividends, investments, affiliate transactions and restrictions on commodity hedging. During the continuance of an event of default, the lenders may take a number of actions, including declaring the entire amount then outstanding under the Amended Credit Agreement due and payable. The Amended Credit Agreement also requires maintenance of certain financial covenants, including (i) a consolidated funded debt to EBITDA ratio of not more than 2.75x for the test period ending March 31, 2017, 2.50x for the test period ending June 30, 2017, 3.00x for the test period ending September 30, 2017, 2.75x for the test period ending December 31, 2017, 2.50x for the test periods ending March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively, 2.75x for the test period ending March 31, 2019, 3.00x for the test period ending June 30, 2019, 3.50x for the test periods ending September 30, 2019 and December 31, 2019, respectively, 3.00x for the test period ending March 31, 2020, 2.75x for the test periods ending June 30, 2020 and September 30, 2020, respectively, and 2.50x for the test periods ending December 31, 2020 and March 31, 2021, respectively, (ii) a consolidated interest coverage ratio of not less than 2.75 to 1.00, and (iii) a requirement to maintain minimum liquidity of at least 20% of the borrowing base. We were in compliance with all covenants under the Amended Credit Agreement as of September 30, 2017. Predecessor Revolving Credit Facility On June 24, 2014, the Predecessor Company entered into the Pre-Emergence Credit Agreement with the lenders party thereto and Bank of America, N.A., as administrative agent and issuing lender, with commitments totaling $900 million (subject to borrowing base limitations). The borrowing base under the Pre-Emergence Credit Agreement prior to its amendment and restatement as the Amended Credit Agreement was $150 million. Interest on loans under the Pre-Emergence Credit Agreement was calculated using the LIBOR rate or the base rate, at our election. The margin for loans at the LIBOR rate was determined based on borrowing base utilization and ranged from 1.500% to 2.500%. Prior to emergence from bankruptcy, the Predecessor Company had $341.5 million of outstanding borrowings and $12.5 million of outstanding letters of credit under the Pre-Emergence Credit Agreement. At emergence, the outstanding borrowings were paid in full and the $12.5 million of outstanding letters of credit were converted to obligations under the Amended Credit Agreement. Building Loan On November 20, 2015, we entered into an $11.8 million term loan agreement, the Building Loan, maturing on December 20, 2030. There were no changes to the terms of the Building Loan pursuant to the Plan. As of September 30, 2017, the outstanding balance under the Building Loan totaled $11.0 million. Successor 2022 Second Lien Notes On the Effective Date, pursuant to the terms of the Plan, the Successor Company entered into an indenture by and among the Company, Stone Offshore as guarantor (the “Guarantor”), and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (the “2022 Second Lien Notes Indenture”), and issued $225.0 million of the Company’s 2022 Second Lien Notes pursuant thereto. Interest on the 2022 Second Lien Notes will accrue at a rate of 7.50% per annum payable semi-annually in arrears on May 31 and November 30 of each year in cash, beginning November 30, 2017. At September 30, 2017, $9.8 million had been accrued in connection with the November 30, 2017 interest payment. The 2022 Second Lien Notes are secured on a second lien priority basis by the same collateral that secures the Amended Credit Agreement, including the Company’s oil and natural gas properties, and are guaranteed by the Guarantor. The 2022 Second Lien Notes mature on May 31, 2022. Pursuant to the terms of the Intercreditor Agreement (as defined below), the security interest in those assets that secure the 2022 Second Lien Notes and the related guarantee will be contractually subordinated to liens thereon that secure the Company’s Amended Credit Agreement and certain other permitted obligations as set forth in the 2022 Second Lien Notes Indenture. Consequently, the 2022 Second Lien Notes and the related guarantee will be effectively subordinated to the Amended Credit Agreement and such other permitted secured indebtedness to the extent of the value of such assets. At any time prior to May 31, 2020, the Company may, at its option, on any one or more occasions redeem up to 35% of the aggregate principal amount of the 2022 Second Lien Notes issued under the 2022 Second Lien Notes Indenture at a redemption price of 107.5% of the principal amount of the 2022 Second Lien Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings; provided that at least 65% of the aggregate principal amount of the 2022 Second Lien Notes remains outstanding after each such redemption. On or after May 31, 2020, the Company may redeem all or part of the 2022 Second Lien Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 105.625% for the twelve-month period beginning on May 31, 2020; (ii) 105.625% for the twelve-month period beginning on May 31, 2021; and (iii) 100.000% for the twelve-month period beginning May 31, 2022 and at any time thereafter, plus accrued and unpaid interest at the redemption date. In addition, at any time prior to May 31, 2020, the Company may redeem all or a part of the 2022 Second Lien Notes at a redemption price equal to 100% of the principal amount of the 2022 Second Lien Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest to the redemption date. The 2022 Second Lien Notes Indenture contains covenants that restrict the Company’s ability and the ability of certain of its subsidiaries to: (i) incur additional debt and issue preferred stock; (ii) make payments or distributions on account of the Company’s or its restricted subsidiaries’ capital stock; (iii) sell assets; (iv) restrict dividends or other payments of the Company’s restricted subsidiaries; (v) create liens that secure debt; (vi) enter into transactions with affiliates, and (vii) merge or consolidate with another company. These covenants are subject to a number of important exceptions and qualifications. At any time when the 2022 Second Lien Notes are rated investment grade by both Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and no Default or Event of Default (each as defined in the 2022 Second Lien Notes Indenture) has occurred and is continuing, many of these covenants will terminate. The 2022 Second Lien Notes Indenture also provides for certain events of default. In the case of an event of default arising from certain events of bankruptcy, insolvency or reorganization with respect to the Company or any of the Company’s restricted subsidiaries that is a significant subsidiary, or any group of the Company’s restricted subsidiaries that, taken as a whole, would constitute a significant subsidiary of the Company, all outstanding 2022 Second Lien Notes will become due and immediately payable without further action or notice. If any other event of default occurs and is continuing, the trustee of the 2022 Second Lien Notes or the holders of at least 25% in aggregate principal amount of the then outstanding 2022 Second Lien Notes may declare all the 2022 Second Lien Notes to be due and payable immediately. Intercreditor Agreement On the Effective Date, Bank of America, N.A., as priority lien agent, The Bank of New York Mellon Trust Company, N.A., as second lien collateral agent, and The Bank of New York Mellon Trust Company, N.A., as the 2022 Second Lien Notes trustee, entered into an intercreditor agreement, which was acknowledged and agreed to by the Company and the Guarantor (the “Intercreditor Agreement”) to govern the relationship of holders of the 2022 Second Lien Notes, the lenders under the Amended Credit Agreement and holders of other priority lien obligations, with respect to collateral and certain other matters. Predecessor Senior Notes 2017 Convertible Notes. On March 6, 2012, the Predecessor Company issued in a private offering $300 million in aggregate principal amount of the 2017 Convertible Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2017 Convertible Notes were convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, based on an initial conversion rate of 23.4449 shares of our common stock per $1,000 principal amount of 2017 Convertible Notes, which corresponded to an initial conversion price of approximately $42.65 per share of our common stock at the time of the issuance of the 2017 Convertible Notes. On June 10, 2016, we completed a 1-for-10 reverse stock split with respect to our common stock and proportional adjustments were made to the conversion price and shares as they relate to the 2017 Convertible Notes, resulting in a conversion rate of 2.34449 shares of our common stock with a corresponding conversion price of $426.50 per share. The 2017 Convertible Notes were due on March 1, 2017. Upon emergence from bankruptcy on February 28, 2017, pursuant to the Plan, the $300 million of debt related to the 2017 Convertible Notes was cancelled. See Note 2 – Reorganization for additional details. During the three and nine months ended September 30, 2016 (Predecessor), we recognized $4.1 million and $12.0 million, respectively, of interest expense for the amortization of the discount, $0.4 million and $1.1 million, respectively, of interest expense for the amortization of deferred financing costs and $1.3 million and $3.9 million, respectively, of interest expense related to the contractual interest coupon on the 2017 Convertible Notes. 2022 Notes. On November 8, 2012 and November 27, 2013, respectively, the Predecessor Company completed the public offering of $300 million and $475 million aggregate principal amount of our 2022 Notes. The 2022 Notes were scheduled to mature on November 15, 2022. Upon emergence from bankruptcy, pursuant to the Plan, the $775 million of debt related to the 2022 Notes was cancelled. See Note 2 – Reorganization for additional details. |
ASSET RETIREMENT OBLIGATIONS |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSET RETIREMENT OBLIGATIONS | ASSET RETIREMENT OBLIGATIONS Upon emergence from bankruptcy, as discussed in Note 3 – Fresh Start Accounting, the Company adopted fresh start accounting which included the adjustment of asset retirement obligations to estimated fair values at February 28, 2017. The change in our asset retirement obligations during the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through September 30, 2017 (Successor) is set forth below (in millions, inclusive of current portion):
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As a result of the significant declines in commodity prices and the resulting ceiling test write-downs and net losses incurred, we determined during 2015 that it was more likely than not that a portion of our deferred tax assets will not be realized in the future. Accordingly, we established a valuation allowance against a portion of our deferred tax assets. As of September 30, 2017 (Successor), our valuation allowance totaled $236.7 million. Our assessment of the realizability of our deferred tax assets is based on the weight of all available evidence, both positive and negative, including future reversals of deferred tax liabilities. We had a current income tax receivable of $27.7 million at September 30, 2017 (Successor), which primarily relates to expected tax refunds from the carryback of net operating losses to previous tax years. |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts, and accordingly, changes in the fair value of the derivative were recognized in stockholders’ equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. We had no outstanding derivative contracts at December 31, 2016. During the periods from March 1, 2017 through September 30, 2017 (Successor) and January 1, 2017 through February 28, 2017 (Predecessor), we entered into various commodity derivative contracts (see Note 9 – Derivative Instruments and Hedging Activities). With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income (expense). Changes in accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2016 (Predecessor), were as follows (in millions):
During the nine months ended September 30, 2016 (Predecessor), we reclassified a $6.0 million loss related to cumulative foreign currency translation adjustments from accumulated other comprehensive income into other operational expenses upon the substantial liquidation of our foreign subsidiary, Stone Energy Canada ULC. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS U.S. Generally Accepted Accounting Principles establish a fair value hierarchy that has three levels based on the reliability of the inputs used to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2017 (Successor) and December 31, 2016 (Predecessor), we held certain financial assets that are required to be measured at fair value on a recurring basis, including our commodity derivative instruments and our investments in marketable securities. We utilize the services of an independent third party to assist us in valuing our derivative instruments. The income approach is used in this determination utilizing the third party’s proprietary pricing model. The model accounts for our credit risk and the credit risk of our counterparties in the discount rate applied to estimated future cash inflows and outflows. Our swap contracts are included within the Level 2 fair value hierarchy, and our collar and put contracts are included within the Level 3 fair value hierarchy. Significant unobservable inputs used in establishing fair value for the collars and puts were the volatility impacts in the pricing model as it relates to the call portion of the collar and the floor of the put. For a more detailed description of our derivative instruments, see Note 9 – Derivative Instruments and Hedging Activities. We used the market approach in determining the fair value of our investments in marketable securities, which are included within the Level 1 fair value hierarchy. The following tables present our assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017 (Successor) (in millions).
We had no liabilities measured at fair value on a recurring basis at December 31, 2016 (Predecessor). The following table presents our assets that are measured at fair value on a recurring basis at December 31, 2016 (Predecessor) (in millions).
The table below presents a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period from March 1, 2017 through September 30, 2017 (Successor) and the period from January 1, 2017 through February 28, 2017 (Predecessor) (in millions).
The fair value of cash and cash equivalents approximated book value at September 30, 2017 and December 31, 2016. Upon emergence from bankruptcy on February 28, 2017, the 2017 Convertible Notes and 2022 Notes were cancelled, and the Company issued the 2022 Second Lien Notes. As of December 31, 2016, the fair value of the liability component of the 2017 Convertible Notes was approximately $293.5 million. As of December 31, 2016, the fair value of the 2022 Notes was approximately $465.0 million. As of September 30, 2017, the fair value of the 2022 Second Lien Notes was approximately $220.5 million. The fair values of the 2022 Notes and the 2022 Second Lien Notes were determined based on quotes obtained from brokers, which represent Level 1 inputs. We applied fair value concepts in determining the liability component of the 2017 Convertible Notes at inception and December 31, 2016. The fair value of the liability was estimated using an income approach. The significant inputs in these determinations were market interest rates based on quotes obtained from brokers and represent Level 2 inputs. On February 28, 2017, the Company emerged from bankruptcy and adopted fresh start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. Upon the adoption of fresh start accounting, the Company’s assets and liabilities were recorded at their fair values as of the fresh start reporting date, February 28, 2017. See Note 3 – Fresh Start Accounting for a detailed discussion of the fair value approaches used by the Company. The inputs utilized in the valuation of our most significant asset, our oil and gas properties, included mostly unobservable inputs, which fall within Level 3 of the fair value hierarchy. |
FEDERAL ROYALTY RECOVERY |
9 Months Ended |
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Sep. 30, 2017 | |
Federal Royalty Recovery [Abstract] | |
Federal Royalty Refund | FEDERAL ROYALTY RECOVERY In July 2017, we received a federal royalty recovery totaling $14.1 million as part of a multi-year federal royalty refund claim. Approximately $9.6 million of the refund was recognized as other operational income and $4.5 million as a reduction of lease operating expenses during the three months ended September 30, 2017 (Successor). Included in SG&A expenses during the three months ended September 30, 2017 (Successor) is a $3.9 million success-based consulting fee incurred in connection with the federal royalty recovery. |
REDUCTION IN WORKFORCE |
9 Months Ended |
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Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Reduction in Workforce | REDUCTION IN WORKFORCE During the second quarter of 2017, we implemented workforce reduction plans to better align our employee base with current business needs, resulting in a reduction of approximately 20% of our total workforce. The workforce reductions were complete as of July 31, 2017. In connection with the reductions, we recognized a charge of $5.7 million during the three months ended June 30, 2017 (Successor), consisting primarily of severance payments to affected employees and payment of related employer payroll taxes. This charge is reflected in SG&A expenses on the statement of operations. Approximately $4.5 million of the workforce reduction costs were paid in cash during the second quarter of 2017. At June 30, 2017, we recorded a liability of $1.2 million for severance payments and related employer payroll taxes. The liability was fully paid in July 2017. In addition to the workforce reduction costs, during the three months ended June 30, 2017 (Successor), we recognized a charge of $3.0 million for severance costs related to the sale of the Appalachia Properties and the retirement of the prior chief executive officer of the Company. These severance costs are reflected in SG&A expenses on the statement of operations. |
OTHER OPERATIONAL EXPENSES |
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Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
OTHER OPERATIONAL EXPENSES | OTHER OPERATIONAL EXPENSES Other operational expenses for the period from March 1, 2017 through September 30, 2017 (Successor) totaled $3.3 million, comprised primarily of $2.1 million of stacking charges related to the platform rig at Pompano, while awaiting demobilization. Other operational expenses for the nine months ended September 30, 2016 (Predecessor) totaled $49.3 million. Included in other operational expenses for the nine months ended September 30, 2016 (Predecessor) is a $6.0 million loss on the substantial liquidation of our foreign subsidiary, Stone Energy Canada ULC, representing cumulative foreign currency translation adjustments, which were reclassified from accumulated other comprehensive income during the first quarter of 2016. See Note 14 – Accumulated Other Comprehensive Income (Loss). Also included in other operational expenses for the nine months ended September 30, 2016 (Predecessor) are $15.3 million of rig subsidy and stacking charges related to the ENSCO 8503 deep water drilling rig, an Appalachian drilling rig and the platform rig at Pompano, a $20 million charge related to the termination of our deep water drilling rig contract with Ensco and $7.5 million of charges related to the terminations of the Appalachian drilling rig contract and a contract with an offshore vessel provider. |
COMMITMENTS AND CONTINGENCIES |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES On March 21, 2016, we received notice letters from the Bureau of Ocean Energy Management (“BOEM”) stating that BOEM had determined that we no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM’s guidance to lessees at such time. In late March 2016, we proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which provides for posting some incremental financial assurances in favor of BOEM. On May 13, 2016, we received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that we will continue to make progress with BOEM towards finalizing and implementing our long-term tailored plan. In July 2016, BOEM issued a Notice to Lessees (“NTL”), with an effective date of September 12, 2016, that augments requirements for the posting of additional financial assurances by offshore lessees. The NTL discontinues the policy of Supplemental Bonding Waivers and allows for the ability to self-insure up to 10% of a company’s tangible net worth, where a company can demonstrate a certain level of financial strength. The NTL also provides new procedures for how BOEM determines a lessee’s decommissioning obligations. A global update of the GOM decommissioning estimates was made on August 29, 2016, and BOEM requested that we resubmit our tailored plan to reflect the updated decommissioning estimates. We received a Self-Insurance letter from BOEM dated September 30, 2016 stating that we are not eligible to self-insure any of our additional security obligations and received a Proposal letter from BOEM dated October 20, 2016 indicating that additional security may be required. The September 30, 2016 Self-Insurance determination letter was rescinded by BOEM on March 24, 2017. In the first quarter of 2017, BOEM announced that it would extend the implementation timeline for the new NTL by an additional six months. In September 2017, BOEM again postponed any implementation of the July 2016 NTL, and has indicated they may be issuing a modified or substitute NTL in late 2017. Currently, we have posted an aggregate of approximately $118 million in surety bonds in favor of BOEM, third party bonds and letters of credit, all relating to our offshore abandonment obligations. The bonds represent guarantees by the surety insurance companies that we will operate in accordance with applicable rules and regulations and perform certain plugging and abandonment obligations as specified by applicable working interest purchase and sale agreements. A revised tailored plan may require incremental financial assurance or bonding for non-sole liability properties, dependent on adjustments following ongoing discussions with BOEM and the Bureau of Safety and Environmental Enforcement (“BSEE”), and any modifications to the proposed NTL. There is no assurance that our current tailored plan will be approved by BOEM, and BOEM may require further revisions to our plan. |
NEW YORK STOCK EXCHANGE COMPLIANCE |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NEW YORK STOCK EXCHANGE COMPLIANCE | NEW YORK STOCK EXCHANGE COMPLIANCE On May 17, 2016, we were notified by the New York Stock Exchange (the “NYSE”) that our average global market capitalization had been less than $50 million over a consecutive 30 trading-day period at the same time that our stockholders’ equity was less than $50 million, which is non-compliant with Section 802.01B of the NYSE Listed Company Manual. On June 30, 2016, we submitted our 18-month business plan for curing the average market capitalization and stockholders’ equity deficiencies to the NYSE, and on August 4, 2016, the NYSE accepted the Plan. All of our quarterly updates to the business plan were accepted by the NYSE. Since March 1, 2017, the first day of trading subsequent to the effective date of the Company’s plan of reorganization, the Successor Company has maintained a market capitalization above $50 million. On August 24, 2017, we were notified by the NYSE that we are back in compliance with their continued listing standards as a result of the Company’s consistent positive performance with respect to the original business plan submission and the achievement of compliance with the average global market capitalization and stockholders’ equity listing requirements over the past two quarters. In accordance with the NYSE’s Listed Company Manual, we will be subject to a 12-month follow up period within which the Company will be reviewed to ensure that the Company does not fall below any of the NYSE’s continued listing standards. |
FINANCIAL STATEMENT PRESENTATION (Policies) |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Interim Financial Statements The condensed consolidated financial statements of Stone Energy Corporation (“Stone” or the “Company”) and its subsidiaries as of September 30, 2017 (Successor) and for the three month period ended September 30, 2017 (Successor), the periods from March 1, 2017 through September 30, 2017 (Successor), January 1, 2017 through February 28, 2017 (Predecessor) and the three and nine months ended September 30, 2016 (Predecessor) are unaudited and reflect all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The condensed consolidated balance sheet as of December 31, 2016 (Predecessor) has been derived from the audited financial statements as of that date contained in our Annual Report on Form 10-K for the year ended December 31, 2016 (our “2016 Annual Report on Form 10-K”). The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our 2016 Annual Report on Form 10-K, although, as described below, such prior financial statements will not be comparable to the interim financial statements due to the adoption of fresh start accounting on February 28, 2017. For additional information, see Note 3 – Fresh Start Accounting. The results of operations for the period from March 1, 2017 through September 30, 2017 (Successor) are not necessarily indicative of future financial results. Certain prior period amounts have been reclassified to conform to current period presentation. Emergence from Voluntary Reorganization Under Chapter 11 Proceedings On December 14, 2016, the Company and its subsidiaries Stone Energy Offshore, L.L.C. (“Stone Offshore”) and Stone Energy Holding, L.L.C. (together with the Company, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) seeking relief under the provisions of Chapter 11 of Title 11 (“Chapter 11”) of the United States Bankruptcy Code (the “Bankruptcy Code”). On February 15, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016 (the “Plan”), as modified by the Confirmation Order, and on February 28, 2017, the Plan became effective (the “Effective Date”) and the Debtors emerged from bankruptcy, with the bankruptcy cases then being closed by Final Decree Closing Chapter 11 Cases and Terminating Claims Agent Services entered by the Bankruptcy Court on April 20, 2017. Upon emergence from bankruptcy, the Company adopted fresh start accounting in accordance with the provisions of Accounting Standards Codification (“ASC”) 852, “Reorganizations”, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date. As a result of the adoption of fresh start accounting, the Company’s unaudited condensed consolidated financial statements subsequent to February 28, 2017 will not be comparable to its financial statements prior to that date. See Note 3 – Fresh Start Accounting for further details on the impact of fresh start accounting on the Company’s unaudited condensed consolidated financial statements. References to “Successor” or “Successor Company” relate to the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to “Predecessor” or “Predecessor Company” relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects are uncertain and, accordingly, these estimates may change as new events occur, as additional information is obtained and as the Company’s operating environment changes. Actual results could differ from those estimates. Estimates are used primarily when accounting for depreciation, depletion and amortization (“DD&A”) expense, unevaluated property costs, estimated future net cash flows from proved reserves, costs to abandon oil and gas properties, income taxes, accruals of capitalized costs, operating costs and production revenue, capitalized general and administrative costs and interest, insurance recoveries, estimated fair value of derivative contracts, contingencies and fair value estimates, including estimates of reorganization value, enterprise value and the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements. The standard may be applied retrospectively or using a modified retrospective approach, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, deferring the effective date of ASU 2014-09 by one year. As a result, the standard is effective for interim and annual periods beginning on or after December 15, 2017. We expect to apply the modified retrospective approach upon adoption of this standard. Although we are still evaluating the effect that this new standard may have on our financial statements and related disclosures, we do not anticipate that the implementation of this new standard will have a material effect. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard is effective for public entities for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years, with earlier application permitted. Upon adoption the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718)” to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and forfeitures, as well as classification in the statement of cash flows. ASU 2016-09 became effective for us on January 1, 2017. Under ASU 2016-09, the Company elected to not apply a forfeiture estimate and will recognize a credit in compensation expense to the extent awards are forfeited. The implementation of this new standard did not have a material effect on our financial statements or related disclosures. In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815)” to improve the financial reporting of hedging relationships to better reflect an entity’s hedging strategies. The standard expands an entity’s ability to apply hedge accounting for both non-financial and financial risk components and amends the presentation and disclosure requirements. Additionally, ASU 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be recorded in the same income statement line as the earnings effect of the hedged item. The standard is effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The standard must be adopted by applying a modified retrospective approach to existing designated hedging relationships as of the adoption date, with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. |
Derivatives | Our hedging strategy is designed to protect our near and intermediate term cash flows from future declines in oil and natural gas prices. This protection is essential to capital budget planning, which is sensitive to expenditures that must be committed to in advance, such as rig contracts and the purchase of tubular goods. We enter into derivative transactions to secure a commodity price for a portion of our expected future production that is acceptable at the time of the transaction. We do not enter into derivative transactions for trading purposes. All derivatives are recognized as assets or liabilities on the balance sheet and are measured at fair value. At the end of each quarterly period, these derivatives are marked-to-market. If the derivative does not qualify or is not designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in earnings through derivative income (expense) in the statement of operations. If the derivative qualifies and is designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in stockholders’ equity through other comprehensive income (loss), net of related taxes, to the extent the hedge is considered effective. Monthly settlements of effective hedges are reflected in revenue from oil and natural gas production. Monthly settlements of ineffective hedges and derivatives not designated or that do not qualify for hedge accounting are recognized in earnings through derivative income (expense). The resulting cash flows from all monthly settlements are reported as cash flows from operating activities. Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. A small portion of our cash flow hedges were typically determined to be ineffective because oil and natural gas price changes in the markets in which we sell our products were not 100% correlative to changes in the underlying price basis indicative in the derivative contract. We had no outstanding derivatives at December 31, 2016. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income (expense). We have entered into put contracts, fixed-price swaps and collar contracts with various counterparties for a portion of our expected 2017, 2018 and 2019 oil and natural gas production from the Gulf Coast Basin. All of our derivative transactions have been carried out in the over-the-counter market and are not typically subject to margin-deposit requirements. The use of derivative instruments involves the risk that the counterparties will be unable to meet the financial terms of such transactions. The counterparties to all of our derivative instruments have an “investment grade” credit rating. We monitor the credit ratings of our derivative counterparties on an ongoing basis. Although we typically enter into derivative contracts with multiple counterparties to mitigate our exposure to any individual counterparty, if any of our counterparties were to default on its obligations to us under the derivative contracts or seek bankruptcy protection, we may not realize the benefit of some of our derivative instruments and incur a loss. At November 1, 2017, our derivative instruments were with five counterparties, two of which accounted for approximately 64% of our contracted volumes. Currently, all of our outstanding derivative instruments are with lenders under our current bank credit facility. Put contracts are purchased at a rate per unit of hedged production that fluctuates with the commodity futures market. The historical cost of the put contract represents our maximum cash exposure. We are not obligated to make any further payments under the put contract regardless of future commodity price fluctuations. Under put contracts, monthly payments are made to us if the New York Mercantile Exchange (“NYMEX”) prices fall below the agreed upon floor price, while allowing us to fully participate in commodity prices above the floor. Swaps typically provide for monthly payments by us if prices rise above the swap price or monthly payments to us if prices fall below the swap price. Collar contracts typically require payments by us if the NYMEX average closing price is above the ceiling price or payments to us if the NYMEX average closing price is below the floor price. Settlements for our oil put contracts, oil collar contracts and fixed-price oil swaps are based on an average of the NYMEX closing price for West Texas Intermediate crude oil during the entire calendar month. Settlements for our natural gas collar contracts and fixed-price natural gas swaps are based on the NYMEX price for the last day of a respective contract month. |
Fair Value of Financial Instruments | U.S. Generally Accepted Accounting Principles establish a fair value hierarchy that has three levels based on the reliability of the inputs used to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2017 (Successor) and December 31, 2016 (Predecessor), we held certain financial assets that are required to be measured at fair value on a recurring basis, including our commodity derivative instruments and our investments in marketable securities. We utilize the services of an independent third party to assist us in valuing our derivative instruments. The income approach is used in this determination utilizing the third party’s proprietary pricing model. The model accounts for our credit risk and the credit risk of our counterparties in the discount rate applied to estimated future cash inflows and outflows. Our swap contracts are included within the Level 2 fair value hierarchy, and our collar and put contracts are included within the Level 3 fair value hierarchy. Significant unobservable inputs used in establishing fair value for the collars and puts were the volatility impacts in the pricing model as it relates to the call portion of the collar and the floor of the put. For a more detailed description of our derivative instruments, see Note 9 – Derivative Instruments and Hedging Activities. We used the market approach in determining the fair value of our investments in marketable securities, which are included within the Level 1 fair value hierarchy. |
FRESH START ACCOUNTING (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Enterprise Value to Estimated Fair Value of Successor Common Stock | The following table reconciles the enterprise value per the Plan to the estimated fair value (for fresh start accounting purposes) of the Successor Company’s common stock as of February 28, 2017 (in thousands, except per share value):
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Reconciliation of Enterprise Value to Estimated Reorganization Value | The following table reconciles the enterprise value per the Plan to the estimated reorganization value as of the Effective Date (in thousands):
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Schedule of Fresh-Start Adjustments | The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 28, 2017 (in thousands):
Reorganization Adjustments (dollar amounts in thousands, except per share values)
(a) The closing of the sale of the Appalachia Properties occurred on February 27, 2017, but as emergence was contingent on such closing, the effects of the transaction are reflected as reorganization adjustments. See Note 7 – Divestiture for additional details on the sale. Total consideration received for the sale of the Appalachia Properties of $522,472 included cash consideration of $512,472 received at closing and a $10,000 indemnity escrow which was released subsequent to emergence from bankruptcy (see Reorganization Adjustments item number 2 below). (b) Reflects the movement of $75,000 of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the provisions of the Amended Credit Agreement (as defined in Note 10 – Debt), and $547 held in a restricted cash account for certain cure amounts in connection with the Chapter 11 proceedings.
11.Reflects the cumulative impact of the reorganization adjustments discussed above:
Fresh Start Adjustments
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Summary of Reorganization Items | The following table summarizes reorganization items, net (in thousands):
The cash payments for reorganization items for the period from January 1, 2017 through February 28, 2017 include approximately $10.6 million of emergence and success fees and approximately $9.1 million of other reorganization professional fees and expenses paid on the Effective Date. |
EARNINGS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Weighted Average Shares Outstanding Earnings Per Share | The following tables set forth the calculation of basic and diluted weighted average shares outstanding and earnings per share for the indicated periods (in thousands, except per share amounts):
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DIVESTITURE (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Gain Recognized in Sale | Since accounting for the sale of these oil and gas properties as a reduction of the capitalized costs of oil and gas properties would have significantly altered the relationship between capitalized costs and reserves, we recognized a gain on the sale of $213.5 million during the period from January 1, 2017 through February 28, 2017 (Predecessor), computed as follows (in millions):
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hedging Positions | The following tables illustrate our derivative positions for calendar years 2017, 2018 and 2019 as of November 1, 2017:
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Gains or Losses Related to Changes in Fair Value and Cash Settlements on Derivatives Not Qualifying as Hedging Instruments | The following table discloses the before tax effect of our derivatives not designated or not qualifying as hedging instruments on the statement of operations for the three months ended September 30, 2017 (Successor), the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through September 30, 2017 (Successor) (in millions).
The following table discloses the location and fair value amounts of derivatives not designated or not qualifying as hedging instruments, as reported in our balance sheet, at September 30, 2017 (Successor) (in millions). We had no outstanding hedging instruments at December 31, 2016 (Predecessor).
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Before Tax Effect of Derivative Instruments in Statement of Operations | The following tables disclose the before tax effect of derivatives qualifying as hedging instruments, as reported in the statement of operations, during the three and nine months ended September 30, 2016 (Predecessor) (in millions):
(a) For the three months ended September 30, 2016, effective hedging contracts increased oil revenue by $5.3 million and increased natural gas revenue by $2.4 million.
(a) For the nine months ended September 30, 2016, effective hedging contracts increased oil revenue by $19.7 million and increased natural gas revenue by $9.7 million. |
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Summary of Offsetting Liabilities | The following table presents the potential impact of the offset rights associated with our recognized assets and liabilities at September 30, 2017 (Successor) (in millions):
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Summary of Offsetting Assets | The following table presents the potential impact of the offset rights associated with our recognized assets and liabilities at September 30, 2017 (Successor) (in millions):
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DEBT (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Our debt balances (net of related unamortized discounts and debt issuance costs) as of September 30, 2017 and December 31, 2016 were as follows (in millions):
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ASSET RETIREMENT OBLIGATIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Asset Retirement Obligations | The change in our asset retirement obligations during the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through September 30, 2017 (Successor) is set forth below (in millions, inclusive of current portion):
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Income Loss | Changes in accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2016 (Predecessor), were as follows (in millions):
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FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value Recurring Basis | The following tables present our assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017 (Successor) (in millions).
We had no liabilities measured at fair value on a recurring basis at December 31, 2016 (Predecessor). The following table presents our assets that are measured at fair value on a recurring basis at December 31, 2016 (Predecessor) (in millions).
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table below presents a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period from March 1, 2017 through September 30, 2017 (Successor) and the period from January 1, 2017 through February 28, 2017 (Predecessor) (in millions).
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FRESH START ACCOUNTING - Reconciliation of Enterprise Value to Estimated Fair Value of Successor Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 7 Months Ended | ||
---|---|---|---|---|
Mar. 01, 2017 |
Feb. 28, 2017 |
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Reorganizations [Abstract] | ||||
Enterprise value | $ 419,720 | |||
Plus: Cash and other assets | 371,169 | |||
Less: Fair value of debt | (236,261) | |||
Less: Fair value of warrants | (15,648) | $ (15,600) | $ (15,600) | |
Fair value of Successor common stock | $ 538,980 | |||
Shares issued upon emergence (in shares) | 20,000,000 | 20,000,000 | 0 | 1,195 |
Per share value (in usd per share) | $ 26.949 |
FRESH START ACCOUNTING - Reconciliation of Enterprise Value to Estimated Reorganization Value (Details) $ in Thousands |
Feb. 28, 2017
USD ($)
|
---|---|
Reorganizations [Abstract] | |
Enterprise value | $ 419,720 |
Plus: Cash and other assets | 371,169 |
Plus: Asset retirement obligations (current and long-term) | 290,067 |
Plus: Working capital and other liabilities | 58,055 |
Reorganization value of Successor assets | $ 1,139,011 |
FRESH START ACCOUNTING - Cumulative Impact of the Reorganization Adjustments (Details) - Exchange of Stock for Stock $ in Thousands |
Feb. 28, 2017
USD ($)
|
---|---|
Fresh-Start Adjustment [Line Items] | |
Gain on settlement of liabilities subject to compromise | $ 230,554 |
Professional and other fees paid at emergence | (10,648) |
Write-off of unamortized deferred financing costs | (2,577) |
Other reorganization adjustments | (1,915) |
Net impact to reorganization items | 215,414 |
Gain on sale of Appalachia Properties | 213,453 |
Cancellation of Predecessor Company equity | 1,662,282 |
Other adjustments to accumulated deficit | (17,165) |
Net impact to accumulated deficit | $ 2,073,984 |
FRESH START ACCOUNTING - Reorganization Items (Details) - USD ($) $ in Thousands |
2 Months Ended | 7 Months Ended | 9 Months Ended |
---|---|---|---|
Feb. 28, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Fresh-Start Adjustment [Line Items] | |||
Gain on reorganization items, net | $ 0 | ||
Predecessor | |||
Fresh-Start Adjustment [Line Items] | |||
Gain on settlement of liabilities subject to compromise | $ 230,554 | ||
Fresh start valuation adjustments | 235,804 | ||
Reorganization professional fees and other expenses | (20,512) | ||
Write-off of deferred financing costs | (2,577) | ||
Other reorganization items | (5,525) | ||
Gain on reorganization items, net | $ 437,744 | $ 0 |
STOCKHOLDERS' EQUITY - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 7 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Mar. 01, 2017 |
Feb. 28, 2017 |
Sep. 30, 2017 |
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Class of Stock [Line Items] | |||||
New shares issued in reorganization (in shares) | 20,000,000 | 20,000,000 | 0 | 1,195 | |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |
Warrants allocated of the enterprise value | $ 15,648 | $ 15,600 | $ 15,600 | $ 15,600 | |
Predecessor Company's Common Stockholders | |||||
Class of Stock [Line Items] | |||||
Warrants issued in reorganization (in shares) | 3,500,000 | ||||
Exercise price of warrants or rights (in usd per share) | $ 42.04 | $ 42.04 | $ 42.04 | ||
Exercise period for warrants | 4 years |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Gains or Losses Related to Changes in Fair Value and Cash Settlements on Derivatives Not Qualifying as Hedging Instruments (Details) - Not Designated as Hedging Instrument - Commodity contracts - USD ($) $ in Millions |
2 Months Ended | 3 Months Ended | 7 Months Ended |
---|---|---|---|
Feb. 28, 2017 |
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | |||
Cash settlements | $ 1.2 | $ 2.6 | |
Change in fair value | (7.9) | (1.2) | |
Total gains (losses) on non-qualifying hedges | $ (6.7) | $ 1.4 | |
Predecessor | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Cash settlements | $ 0.0 | ||
Change in fair value | (1.8) | ||
Total gains (losses) on non-qualifying hedges | $ (1.8) |
ASSET RETIREMENT OBLIGATIONS - Changes in Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|---|
Feb. 28, 2017 |
Feb. 28, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||||||
Asset retirement obligations beginning balance | $ 290,100 | |||||
Liabilities settled | (53,100) | |||||
Accretion expense | $ 8,095 | 19,698 | ||||
Revision of estimates | 11,000 | |||||
Asset retirement obligations ending balance | $ 290,100 | $ 290,100 | $ 267,600 | 267,600 | ||
Predecessor | ||||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||||||
Asset retirement obligations beginning balance | 242,000 | $ 235,200 | ||||
Liabilities settled | (3,600) | |||||
Divestment of properties | (8,700) | |||||
Accretion expense | 5,447 | $ 10,082 | $ 30,147 | |||
Fair value fresh start adjustment | 54,900 | |||||
Asset retirement obligations ending balance | $ 235,200 | $ 235,200 |
INCOME TAXES (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Valuation Allowance [Line Items] | |
Current income tax receivable | $ 27,672 |
Ceiling Test Write Downs From Decline in Commodity Prices | |
Valuation Allowance [Line Items] | |
Valuation allowance | $ 236,700 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Additional Information (Details) - Predecessor $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2016
contract
|
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of derivative instruments outstanding | contract | 0 | |
Other operational expenses | Foreign Currency Items | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Amount reclassified from accumulated other comprehensive income | $ | $ 6.0 |
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Liabilities, fair value | $ 500,000 | |
7 ½% Senior Notes due 2022 | ||
Debt Instrument [Line Items] | ||
Fair value of notes | $ 220,500,000 | |
Predecessor | ||
Debt Instrument [Line Items] | ||
Liabilities, fair value | $ 0 | |
Predecessor | 1 3⁄4% Senior Convertible Notes due 2017 | ||
Debt Instrument [Line Items] | ||
Fair value disclosures | 293,500,000 | |
Predecessor | 7 ½% Senior Notes due 2022 | ||
Debt Instrument [Line Items] | ||
Fair value of notes | $ 465,000,000 |
FAIR VALUE MEASUREMENTS - Hedging Contracts (Details) - USD ($) $ in Millions |
2 Months Ended | 7 Months Ended |
---|---|---|
Feb. 28, 2017 |
Sep. 30, 2017 |
|
Hedging Contracts, net | ||
Balance, beginning of the period | $ 3.1 | |
Total gains/(losses) (realized or unrealized): | ||
Included in earnings | (1.3) | |
Included in other comprehensive income | 0.0 | |
Purchases, sales, issuances and settlements | 1.0 | |
Transfers in and out of Level 3 | 0.0 | |
Balance, end of the period | $ 3.1 | 2.8 |
The amount of total gains/(losses) for the period included in earnings (derivative income) attributable to the change in unrealized gain/(losses) relating to derivatives still held at September 30, 2017 | $ (1.7) | |
Predecessor | ||
Hedging Contracts, net | ||
Balance, beginning of the period | 0.0 | |
Total gains/(losses) (realized or unrealized): | ||
Included in earnings | (0.6) | |
Included in other comprehensive income | 0.0 | |
Purchases, sales, issuances and settlements | 3.7 | |
Transfers in and out of Level 3 | $ 0.0 |
FEDERAL ROYALTY RECOVERY (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended |
---|---|---|
Jul. 31, 2017 |
Sep. 30, 2017 |
|
Royalty Revenues [Line Items] | ||
Federal royalty recovery revenue | $ 14.1 | |
Consulting fees | $ 3.9 | |
Other Revenue, Net | ||
Royalty Revenues [Line Items] | ||
Federal royalty recovery revenue | 9.6 | |
Oil And Gas Property, Lease Operating Expense | ||
Royalty Revenues [Line Items] | ||
Federal royalty recovery revenue | $ 4.5 |
REDUCTION IN WORKFORCE (Details) $ in Millions |
3 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Restructuring Cost and Reserve [Line Items] | |
Reduction in total workforce, percent | 20.00% |
Severance costs | $ 5.7 |
Payments for restructuring | 4.5 |
Severance payments and related employer payroll taxes | 1.2 |
Appalachia Properties | |
Restructuring Cost and Reserve [Line Items] | |
Severance costs | $ 3.0 |
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - Bureau of Ocean Energy Management - Predecessor - USD ($) $ in Millions |
Sep. 12, 2016 |
Sep. 30, 2017 |
---|---|---|
Loss Contingencies [Line Items] | ||
Percentage of maximum net worth allowed for self insurance | 10.00% | |
Surety bond | $ 118 |
NEW YORK STOCK EXCHANGE COMPLIANCE (Details) - USD ($) |
May 17, 2016 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Fresh-Start Adjustment [Line Items] | |||
NASDAQ listing rules, minimum market value of publicly held shares | $ 50,000,000 | ||
Stockholders' equity | $ 290,746,000 | ||
Predecessor | |||
Fresh-Start Adjustment [Line Items] | |||
NASDAQ listing rules, minimum market value of publicly held shares | $ 50,000,000 | ||
NASDAQ listing rules, number of consecutive business days | 30 days | ||
Stockholders' equity | $ 50,000,000 | $ (637,282,000) |
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