Delaware
(State of Incorporation)
|
20-3940661
(I.R.S. Employer Identification No.)
|
|
|
575 North Dairy Ashford, Suite 1200
Houston, Texas 77079
(281) 874-2700
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
|
Yes
|
þ
|
No
|
o
|
Yes
|
þ
|
No
|
o
|
Large Accelerated Filer
|
o
|
|
Accelerated Filer
|
þ
|
|
Non-Accelerated Filer
|
o
|
|
Smaller Reporting Company
|
o
|
Emerging Growth Company
|
o
|
|
|
|
|
|
|
|
|
|
o
|
Yes
|
o
|
No
|
þ
|
Yes
|
þ
|
No
|
o
|
Common Stock ($.01 Par Value) (Class of Stock)
|
11,652,637 Shares outstanding at May 1, 2018
|
|
|
Page
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Part I
|
FINANCIAL INFORMATION
|
|
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Item 1.
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Condensed Consolidated Financial Statements
|
|
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||
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Item 2.
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Item 3.
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||
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Item 4.
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||
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Part II
|
OTHER INFORMATION
|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
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||
Item 4.
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||
Item 5.
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||
Item 6.
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||
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March 31, 2018
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|
December 31, 2017
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||||
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|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
237
|
|
|
$
|
7,806
|
|
Accounts receivable, net
|
21,133
|
|
|
27,263
|
|
||
Fair value of commodity derivatives
|
2,704
|
|
|
5,148
|
|
||
Other current assets
|
2,877
|
|
|
2,352
|
|
||
Total Current Assets
|
26,951
|
|
|
42,569
|
|
||
Property and Equipment:
|
|
|
|
|
|
||
Property and Equipment, full cost method, including
$55,725 and $50,377 of unproved property costs not being amortized at the end of each period
|
723,828
|
|
|
712,166
|
|
||
Less – Accumulated depreciation, depletion, amortization & impairment
|
(229,901
|
)
|
|
(216,769
|
)
|
||
Property and Equipment, Net
|
493,927
|
|
|
495,397
|
|
||
Other Long-Term Assets
|
13,517
|
|
|
13,304
|
|
||
Total Assets
|
$
|
534,395
|
|
|
$
|
551,270
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
32,289
|
|
|
$
|
44,437
|
|
Fair value of commodity derivatives
|
7,666
|
|
|
5,075
|
|
||
Accrued capital costs
|
20,445
|
|
|
10,883
|
|
||
Accrued interest
|
2,298
|
|
|
2,106
|
|
||
Undistributed oil and gas revenues
|
10,713
|
|
|
12,996
|
|
||
Total Current Liabilities
|
73,411
|
|
|
75,497
|
|
||
|
|
|
|
|
|
||
Long-Term Debt, net
|
245,371
|
|
|
265,325
|
|
||
Asset Retirement Obligations
|
4,185
|
|
|
8,678
|
|
||
Other Long-Term Liabilities
|
7,601
|
|
|
8,312
|
|
||
Commitments and Contingencies (Note 11)
|
|
|
|
|
|
||
Stockholders' Equity:
|
|
|
|
|
|
||
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, 40,000,000 shares authorized, 11,713,859 and 11,621,385 shares issued and 11,652,637 and 11,570,621 shares outstanding, respectively
|
117
|
|
|
116
|
|
||
Additional paid-in capital
|
281,303
|
|
|
279,111
|
|
||
Treasury stock, held at cost, 61,222 and 50,764 shares
|
(1,742
|
)
|
|
(1,452
|
)
|
||
Retained earnings (Accumulated deficit)
|
(75,851
|
)
|
|
(84,317
|
)
|
||
Total Stockholders’ Equity
|
203,827
|
|
|
193,458
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
534,395
|
|
|
$
|
551,270
|
|
|
|
|
|
|
|
||
See accompanying Notes to Condensed Consolidated Financial Statements.
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Treasury Stock
|
|
Retained Earnings (Accumulated Deficit)
|
|
Total
|
||||||||||
Balance, December 31, 2016
|
$
|
101
|
|
|
$
|
232,917
|
|
|
$
|
(675
|
)
|
|
$
|
(156,288
|
)
|
|
$
|
76,055
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of treasury shares (28,279 shares)
|
—
|
|
|
—
|
|
|
(777
|
)
|
|
—
|
|
|
(777
|
)
|
|||||
Issuance common stock (1,403,508 shares)
|
14
|
|
|
39,166
|
|
|
—
|
|
|
—
|
|
|
39,180
|
|
|||||
Issuance of restricted stock (141,818 shares)
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
7,029
|
|
|
—
|
|
|
—
|
|
|
7,029
|
|
|||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
71,971
|
|
|
71,971
|
|
|||||
Balance, December 31, 2017
|
$
|
116
|
|
|
$
|
279,111
|
|
|
$
|
(1,452
|
)
|
|
$
|
(84,317
|
)
|
|
$
|
193,458
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shared issued from option exercise (29,199 shares)
|
—
|
|
|
708
|
|
|
—
|
|
|
—
|
|
|
708
|
|
|||||
Purchase of treasury shares (10,458 shares)
|
—
|
|
|
—
|
|
|
(290
|
)
|
|
—
|
|
|
(290
|
)
|
|||||
Issuance of restricted stock (63,275 shares)
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
1,485
|
|
|
—
|
|
|
—
|
|
|
1,485
|
|
|||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
8,466
|
|
|
8,466
|
|
|||||
Balance, March 31, 2018
|
$
|
117
|
|
|
$
|
281,303
|
|
|
$
|
(1,742
|
)
|
|
$
|
(75,851
|
)
|
|
$
|
203,827
|
|
|
|||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
8,466
|
|
|
$
|
17,710
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
|
|
|
|
||||
Depreciation, depletion, and amortization
|
13,131
|
|
|
9,715
|
|
||
Accretion of asset retirement obligations
|
159
|
|
|
564
|
|
||
Share-based compensation expense
|
1,359
|
|
|
1,503
|
|
||
(Gain) Loss on derivatives, net
|
6,355
|
|
|
(10,937
|
)
|
||
Cash settlement (paid) received on derivatives
|
977
|
|
|
(811
|
)
|
||
Settlements of asset retirement obligations
|
(120
|
)
|
|
(411
|
)
|
||
Write down of debt issuance cost
|
—
|
|
|
450
|
|
||
Other
|
129
|
|
|
(315
|
)
|
||
Change in operating assets and liabilities-
|
|
|
|
|
|
||
(Increase) decrease in accounts receivable and other current assets
|
4,005
|
|
|
(1,942
|
)
|
||
Increase (decrease) in accounts payable and accrued liabilities
|
(9,497
|
)
|
|
(3,436
|
)
|
||
Increase (decrease) in accrued interest
|
192
|
|
|
(354
|
)
|
||
Net Cash Provided by (used in) Operating Activities
|
25,156
|
|
|
11,736
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Additions to property and equipment
|
(33,753
|
)
|
|
(25,417
|
)
|
||
Proceeds from the sale of property and equipment
|
26,969
|
|
|
432
|
|
||
Payments on property sale obligations
|
(6,042
|
)
|
|
—
|
|
||
Transfer of company funds from restricted cash
|
—
|
|
|
(15
|
)
|
||
Transfer of company funds to restricted cash
|
—
|
|
|
653
|
|
||
Net Cash Provided by (Used in) Investing Activities
|
(12,826
|
)
|
|
(24,347
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from bank borrowings
|
35,100
|
|
|
43,000
|
|
||
Payments of bank borrowings
|
(55,100
|
)
|
|
(69,000
|
)
|
||
Net proceeds from issuances of common stock
|
708
|
|
|
39,381
|
|
||
Purchase of treasury shares
|
(290
|
)
|
|
(267
|
)
|
||
Payments of debt issuance costs
|
(317
|
)
|
|
—
|
|
||
Net Cash Provided by (Used in) Financing Activities
|
$
|
(19,899
|
)
|
|
$
|
13,114
|
|
|
|
|
|
||||
Net increase (decrease) in Cash, Cash Equivalents and Restricted Cash
|
(7,569
|
)
|
|
503
|
|
||
Cash, Cash Equivalents and Restricted Cash, at Beginning of Period
|
8,026
|
|
|
497
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
457
|
|
|
$
|
1,000
|
|
|
|
|
|
|
|
||
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
||
Cash paid during period for interest, net of amounts capitalized
|
$
|
5,170
|
|
|
$
|
2,959
|
|
Changes in capital accounts payable and capital accruals
|
$
|
12,177
|
|
|
$
|
7,365
|
|
Changes in other long-term liabilities for capital expenditures
|
$
|
(1,250
|
)
|
|
$
|
—
|
|
See accompanying Notes to Condensed Consolidated Financial Statements
|
|
|
|
•
|
the estimated quantities of proved oil and natural gas reserves used to compute depletion of oil and natural gas properties, the related present value of estimated future net cash flows there-from, and the ceiling test impairment calculation,
|
•
|
estimates related to the collectability of accounts receivable and the credit worthiness of our customers,
|
•
|
estimates of the counterparty bank risk related to letters of credit that our customers may have issued on our behalf,
|
•
|
estimates of future costs to develop and produce reserves,
|
•
|
accruals related to oil and gas sales, capital expenditures and lease operating expenses,
|
•
|
estimates in the calculation of share-based compensation expense,
|
•
|
estimates of our ownership in properties prior to final division of interest determination,
|
•
|
the estimated future cost and timing of asset retirement obligations,
|
•
|
estimates made in our income tax calculations,
|
•
|
estimates in the calculation of the fair value of commodity derivative assets and liabilities,
|
•
|
estimates in the assessment of current litigation claims against the Company, and
|
•
|
estimates in amounts due with respect to open state regulatory audits.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Property and Equipment
|
|
|
|
||||
Proved oil and gas properties
|
$
|
664,742
|
|
|
$
|
658,519
|
|
Unproved oil and gas properties
|
55,725
|
|
|
50,377
|
|
||
Furniture, fixtures, and other equipment
|
3,361
|
|
|
3,270
|
|
||
Less – Accumulated depreciation, depletion, amortization & impairment
|
(229,901
|
)
|
|
(216,769
|
)
|
||
Property and Equipment, Net
|
$
|
493,927
|
|
|
$
|
495,397
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Trade accounts payable
|
$
|
15,440
|
|
|
$
|
20,884
|
|
Accrued operating expenses
|
2,964
|
|
|
3,490
|
|
||
Accrued compensation costs
|
1,956
|
|
|
5,334
|
|
||
Asset retirement obligations – current portion
|
467
|
|
|
2,109
|
|
||
Accrued non-income based taxes
|
4,058
|
|
|
3,898
|
|
||
Accrued corporate and legal fees
|
2,982
|
|
|
2,784
|
|
||
Other payables
|
4,422
|
|
|
5,938
|
|
||
Total accounts payable and accrued liabilities
|
$
|
32,289
|
|
|
$
|
44,437
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||
Cash and cash equivalents
|
$
|
237
|
|
|
$
|
7,806
|
|
|
$
|
168
|
|
Long-term restricted cash
(1)
|
220
|
|
|
220
|
|
|
832
|
|
|||
Total cash, cash equivalents and restricted cash
|
$
|
457
|
|
|
$
|
8,026
|
|
|
$
|
1,000
|
|
|
|
Three Months Ended March 31, 2018
|
Three Months Ended March 31, 2017
|
||||
Oil, natural gas and NGLs sales:
|
|
|
|
||||
Oil
|
|
$
|
11,439
|
|
$
|
7,201
|
|
Natural gas
|
|
35,767
|
|
31,063
|
|
||
NGLs
|
|
5,560
|
|
4,148
|
|
||
Other
|
|
(14
|
)
|
—
|
|
||
Total
|
|
$
|
52,752
|
|
$
|
42,412
|
|
|
Shares
|
|
Wtd. Avg. Exer. Price
|
|||
Options outstanding, beginning of period
|
508,730
|
|
|
$
|
26.82
|
|
Options granted
|
—
|
|
|
$
|
—
|
|
Options forfeited
|
(16,968
|
)
|
|
$
|
26.96
|
|
Options expired
|
(8,356
|
)
|
|
$
|
26.96
|
|
Options exercised
|
(29,199
|
)
|
|
$
|
24.27
|
|
Options outstanding, end of period
|
454,207
|
|
|
$
|
26.98
|
|
Options exercisable, end of period
|
136,938
|
|
|
$
|
25.93
|
|
|
Shares
|
|
Grant Date Price
|
|||
Restricted stock units outstanding, beginning of period
|
346,740
|
|
|
$
|
26.99
|
|
Restricted stock units granted
|
78,300
|
|
|
$
|
27.80
|
|
Restricted stock units forfeited
|
(12,280
|
)
|
|
$
|
26.91
|
|
Restricted stock units vested
|
(62,577
|
)
|
|
$
|
25.58
|
|
Restricted stock units outstanding, end of period
|
350,183
|
|
|
$
|
27.43
|
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Net Income (Loss)
|
|
Shares
|
|
Per Share
Amount |
|
Net Income (Loss)
|
|
Shares
|
|
Per Share
Amount |
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) and Share Amounts
|
$
|
8,466
|
|
|
11,602
|
|
|
$
|
0.73
|
|
|
$
|
17,710
|
|
|
11,232
|
|
|
$
|
1.58
|
|
Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restricted Stock Awards
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
||||||||
Restricted Stock Unit Awards
|
|
|
18
|
|
|
|
|
|
|
76
|
|
|
|
||||||||
Stock Option Awards
|
|
|
107
|
|
|
|
|
|
|
15
|
|
|
|
||||||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) and Assumed Share Conversions
|
$
|
8,466
|
|
|
11,727
|
|
|
$
|
0.72
|
|
|
$
|
17,710
|
|
|
11,323
|
|
|
$
|
1.57
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Credit Facility Borrowings
(1)
|
$
|
53,000
|
|
|
$
|
73,000
|
|
Second Lien Notes due 2024
|
200,000
|
|
|
200,000
|
|
||
|
253,000
|
|
|
273,000
|
|
||
Unamortized discount on Second Lien Notes due 2024
|
(1,941
|
)
|
|
(1,992
|
)
|
||
Unamortized debt issuance cost on Second Lien Notes due 2024
(2)
|
(5,688
|
)
|
|
(5,683
|
)
|
||
Long-Term Debt, net
|
$
|
245,371
|
|
|
$
|
265,325
|
|
•
|
a ratio of total debt to EBITDA, as defined in the Credit Agreement, for the most recently completed four fiscal quarters, not to exceed
4.0
to 1.0 as of the last day of each fiscal quarter; and
|
•
|
a current ratio, as defined in the Credit Agreement and which includes in the numerator available borrowings undrawn under the borrowing base, of not less than
1.0
to 1.0 as of the last day of each fiscal quarter.
|
Oil Derivative Swaps
(NYMEX WTI Settlements)
|
Total Volumes
(Bbls)
|
|
Weighted Average Price
|
|||
2018 Contracts
|
|
|
|
|||
2Q18
|
140,400
|
|
|
$
|
52.57
|
|
3Q18
|
130,400
|
|
|
$
|
52.40
|
|
4Q18
|
122,800
|
|
|
$
|
52.23
|
|
|
|
|
|
|||
2019 Contracts
|
|
|
|
|||
1Q19
|
107,700
|
|
|
$
|
52.77
|
|
2Q19
|
103,200
|
|
|
$
|
52.72
|
|
3Q19
|
99,000
|
|
|
$
|
52.79
|
|
4Q19
|
95,000
|
|
|
$
|
52.73
|
|
|
|
|
|
|||
2020 Contracts
|
|
|
|
|||
1Q20
|
81,300
|
|
|
$
|
52.42
|
|
2Q20
|
77,850
|
|
|
$
|
52.38
|
|
3Q20
|
74,700
|
|
|
$
|
52.34
|
|
4Q20
|
72,000
|
|
|
$
|
52.29
|
|
NGL Contracts
|
Total Volumes (Bbls)
|
|
Weighted Average Price
|
|||
2018 Contracts
|
|
|
|
|||
2Q18
|
118,200
|
|
|
$
|
24.78
|
|
3Q18
|
112,200
|
|
|
$
|
24.78
|
|
4Q18
|
148,200
|
|
|
$
|
24.78
|
|
Natural Gas Basis Derivative Swap
(East Texas Houston Ship Channel vs NYMEX Settlements)
|
Total Volumes
(MMBtu) |
|
Weighted Average Price
|
|||
2018 Contracts
|
|
|
|
|||
2Q18
|
5,765,000
|
|
|
$
|
(0.040
|
)
|
3Q18
|
9,460,000
|
|
|
$
|
(0.020
|
)
|
4Q18
|
10,550,000
|
|
|
$
|
(0.080
|
)
|
|
|
|
|
|||
2019 Contracts
|
|
|
|
|||
1Q19
|
1,200,000
|
|
|
$
|
(0.100
|
)
|
2Q19
|
1,205,000
|
|
|
$
|
0.020
|
|
3Q19
|
1,210,000
|
|
|
$
|
0.020
|
|
4Q19
|
1,210,000
|
|
|
$
|
(0.050
|
)
|
Oil Basis Contracts
|
Total Volumes (Bbls)
|
|
Weighted Average Price
|
|||
2018 Contracts
|
|
|
|
|||
2Q18
|
80,000
|
|
|
$
|
4.13
|
|
3Q18
|
120,000
|
|
|
$
|
4.13
|
|
4Q18
|
120,000
|
|
|
$
|
4.13
|
|
|
Fair Value Measurements at
|
||||||||||||||
(in millions)
|
Total
|
|
Quoted Prices in
Active markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
5.1
|
|
|
$
|
—
|
|
|
$
|
5.1
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
Oil Basis Derivatives
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
1.4
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
Oil Derivatives
|
$
|
7.4
|
|
|
$
|
—
|
|
|
$
|
7.4
|
|
|
$
|
—
|
|
Oil Basis Derivatives
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
7.2
|
|
|
$
|
—
|
|
|
$
|
7.2
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
Oil Derivatives
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
5.2
|
|
|
$
|
—
|
|
Oil Basis Derivatives
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
Asset Retirement Obligations as of December 31, 2016
|
$
|
32,256
|
|
Accretion expense
|
2,322
|
|
|
Liabilities incurred for new wells and facilities construction
|
253
|
|
|
Reductions due to sold wells and facilities
|
(21,466
|
)
|
|
Reductions due to plugged wells and facilities
|
(2,366
|
)
|
|
Revisions in estimates
|
(212
|
)
|
|
Asset Retirement Obligations as of December 31, 2017
|
$
|
10,787
|
|
Accretion expense
|
159
|
|
|
Liabilities incurred for new wells and facilities construction
|
7
|
|
|
Reductions due to sold wells and facilities
|
(6,265
|
)
|
|
Reductions due to plugged wells and facilities
|
(121
|
)
|
|
Revisions in estimates
|
85
|
|
|
Asset Retirement Obligations as of March 31, 2018
|
$
|
4,652
|
|
•
|
a ratio of total debt to EBITDA, as defined in the Credit Agreement, for the most recently completed four fiscal quarters, not to exceed 4.0 to 1.0 as of the last day of each fiscal quarter; and
|
•
|
a current ratio, as defined in the Credit Agreement, and which includes in the numerator available borrowings undrawn under the borrowing base, of not less than 1.0 to 1.0 as of the last day of each fiscal quarter.
|
•
|
Revenues and net income (loss):
The Company's oil and gas revenues were
$52.8 million
for the
three months ended March 31, 2018
, compared to
$42.4 million
for the
three months ended March 31, 2017
. Revenues were higher primarily due to overall higher production as well as higher oil and NGL pricing, partially offset by lower natural gas pricing. The Company's net income was
$8.5 million
for the
three months ended March 31, 2018
, compared to
$17.7 million
for the
three months ended March 31, 2017
. The decrease was primarily due to higher production partially offset by a loss on commodity derivatives.
|
•
|
Capital expenditures:
The Company's capital expenditures on a cash basis were
$33.8 million
for the
three months ended March 31, 2018
compared to
$25.4 million
for the
three months ended March 31, 2017
. The expenditures for the
three months ended March 31, 2018
were primarily driven by development activity in our Fasken and Oro Grande fields in the Eagle Ford, while expenditures for the
three months ended March 31, 2017
were primarily driven by development activity at our Fasken and AWP fields in the Eagle Ford play.
|
•
|
Working capital:
The Company had a working capital deficit of
$46.5 million
at
March 31, 2018
and a deficit of
$32.9 million
at
December 31, 2017
. The working capital computation does not include available liquidity through our Credit Facility.
|
•
|
Cash Flows:
For the
three months ended March 31, 2018
, the Company generated cash from operating activities of
$25.2 million
, of which
$5.3 million
was attributable to changes in working capital. Cash used for property additions was
$33.8 million
. This excluded
$12.2 million
attributable to a net increase of capital related payables and accrued costs. Additionally,
$6.0 million
was paid during
three months ended March 31, 2018
for property sale obligations related to the sale of our former Bay De Chene field. The Company’s net payments on the revolving Credit Facility were
$20.0 million
which includes the pay down on Credit Facility borrowings with proceeds from our AWP Olmos sale.
|
Fields
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
||||||||
|
|
Oil and Gas Sales
(In Millions) |
Net Oil and Gas Production
Volumes (MMcfe) |
|
Oil and Gas Sales
(In Millions) |
Net Oil and Gas Production
Volumes (MMcfe) |
||||||
Artesia Wells
|
|
$
|
12.4
|
|
2,524
|
|
|
$
|
4.2
|
|
1,016
|
|
AWP
|
|
12.0
|
|
2,452
|
|
|
13.6
|
|
3,146
|
|
||
Fasken
|
|
23.7
|
|
7,988
|
|
|
24.4
|
|
8,012
|
|
||
Other
(1)
|
|
4.7
|
|
1,505
|
|
|
0.2
|
|
32
|
|
||
Total
|
|
$
|
52.8
|
|
14,469
|
|
|
$
|
42.4
|
|
12,206
|
|
•
|
Price variances that had an approximate
$2.4 million
favorable
impact on sales due to the higher oil and NGL pricing, partially offset by lower natural gas pricing; and
|
•
|
Volume variances that had an
$8.0 million
favorable
impact on sales due to overall higher volume production.
|
|
|
Three Months Ended March 31, 2018
|
Three Months Ended March 31, 2017
|
||||
Production volumes:
|
|
|
|
||||
Oil (MBbl)
(1)
|
|
177
|
|
146
|
|
||
Natural gas (MMcf)
|
|
11,917
|
|
10,104
|
|
||
Natural gas liquids (MBbl)
(1)
|
|
248
|
|
204
|
|
||
Total (MMcfe)
|
|
14,469
|
|
12,206
|
|
||
|
|
|
|
||||
Oil, Natural gas and Natural gas liquids sales:
|
|
|
|
||||
Oil
|
|
$
|
11,439
|
|
$
|
7,201
|
|
Natural gas
|
|
35,767
|
|
31,063
|
|
||
Natural gas liquids
|
|
5,560
|
|
4,148
|
|
||
Total
|
|
$
|
52,766
|
|
$
|
42,412
|
|
|
|
|
|
||||
Average realized price:
|
|
|
|
||||
Oil
|
|
$
|
64.59
|
|
$
|
49.26
|
|
Natural gas
|
|
3.00
|
|
3.07
|
|
||
Natural gas liquids
|
|
22.39
|
|
20.33
|
|
||
Average per Mcfe
|
|
$
|
3.65
|
|
$
|
3.47
|
|
|
|
|
|
||||
Price impact of cash-settled derivatives:
|
|
|
|
||||
Oil
|
|
$
|
(8.36
|
)
|
$
|
(2.82
|
)
|
Natural gas
|
|
0.20
|
|
(0.03
|
)
|
||
Natural gas liquids
|
|
(0.76
|
)
|
—
|
|
||
Average per Mcfe
|
|
$
|
0.05
|
|
$
|
(0.05
|
)
|
|
|
|
|
||||
Average realized price including cash settled derivatives:
|
|
|
|
||||
Oil
|
|
$
|
56.22
|
|
$
|
46.44
|
|
Natural gas
|
|
3.20
|
|
3.05
|
|
||
Natural gas liquids
|
|
21.63
|
|
20.33
|
|
||
Average per Mcfe
|
|
$
|
3.70
|
|
$
|
3.42
|
|
|
|
|
|
||||
|
Costs and Expenses
|
Three Months Ended March 31, 2018
|
Three Months Ended March 31, 2017
|
||||
General and administrative, net
|
$
|
5,576
|
|
$
|
9,834
|
|
Depreciation, depletion, and amortization
|
13,131
|
|
9,715
|
|
||
Accretion of asset retirement obligation
|
159
|
|
564
|
|
||
Lease operating cost
|
4,961
|
|
5,773
|
|
||
Transportation and gas processing
|
5,025
|
|
4,385
|
|
||
Severance and other taxes
|
3,031
|
|
1,618
|
|
||
Interest expense, net
|
5,890
|
|
3,607
|
|
||
Total Costs and Expenses
|
$
|
37,773
|
|
$
|
35,496
|
|
•
|
Depreciation, depletion, amortization;
|
•
|
Accretion of asset retirement obligation;
|
•
|
Interest expense;
|
•
|
Impairment of oil and natural gas properties;
|
•
|
Net losses (gains) on commodity derivative contracts;
|
•
|
Amounts collected (paid) for commodity derivative contracts held to settlement; and
|
•
|
Share-based compensation expense.
|
3.1
|
|
3.2
|
|
10.1+*
|
|
31.1*
|
|
31.2*
|
|
32*#
|
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Schema Document
|
101.CAL*
|
XBRL Calculation Linkbase Document
|
101.LAB*
|
XBRL Label Linkbase Document
|
101.PRE*
|
XBRL Presentation Linkbase Document
|
101.DEF*
|
XBRL Definition Linkbase Document
|
|
|
|
SILVERBOW RESOURCES, INC.
(Registrant)
|
|
Date:
|
May 9, 2018
|
|
By:
|
/s/ G. Gleeson Van Riet
|
|
|
|
|
G. Gleeson Van Riet
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
Date:
|
May 9, 2018
|
|
By:
|
/s/ Gary G. Buchta
|
|
|
|
|
Gary G. Buchta
Controller
|
Participant:
|
[[FIRSTNAME]] [[MIDDLENAME]] [[LASTNAME]]
|
Date of Grant:
|
[[GRANTDATE]]
|
Award Type and Description:
|
Performance Award granted pursuant to Article X of the Plan. This Award represents the right to receive Shares in an amount up to 200% of the Target PSUs (defined below), subject to the terms and conditions set forth herein and in the Agreement.
Your right to receive settlement of this Award in an amount ranging from 0% to 200% of the Target PSUs shall vest and become earned and nonforfeitable upon (i) your satisfaction of the continued employment or service requirements described below under “
Service Requirement
” and (ii) the Committee’s certification of the level of achievement of the Performance Goal (defined below). The portion of the Target PSUs actually earned upon satisfaction of the foregoing requirements is referred to herein as the “
Earned PSUs
.”
|
Target Number of PSUs:
|
[[SHARESGRANTED]]
(the “
Target PSUs
”).
|
Performance Period:
|
____________ (the “
Performance Period Commencement Date
”) through _______________(the “
Performance Period End Date
”).
|
Service Requirement:
|
Except as expressly provided in
Section 3
of the Agreement, you must remain continuously employed by, or continuously provide services to, the Company or an Affiliate, as applicable, from the Date of Grant through the Performance Period End Date to be eligible to receive payment of this Award, which payment is based on the level of achievement with respect to the Performance Goal (as defined below).
|
Performance Goal
:
|
The “
Performance Goal
” for the Performance Period is based on the Company’s achievement with respect to relative total stockholder return, as described in
Exhibit B
attached hereto.
|
Settlement:
|
Settlement of the Earned PSUs shall be made solely in Shares, which shall be delivered to you in accordance with
Section 4
of the Agreement.
|
|
1
|
|
|
2
|
|
SILVERBOW RESOURCES, INC.
|
|
[Officer name and titie]
|
|
PARTICIPANT
|
[Participant Name]
|
Level
|
Relative TSR Performance (Percentile Rank vs. Peers)
|
Earned PSUs (% of Target)*
|
Below Threshold
|
Below 25
th
Percentile
|
0%
|
Threshold
|
25
th
Percentile
|
50%
|
Target
|
50
th
Percentile
|
100%
|
Stretch
|
≥ 90
th
Percentile
|
200%
|
|
Exhibit B-1
|
|
1.
|
If an entity in the Performance Peer Group spins-off a subsidiary, such spin-off should be treated as a dividend.
|
2.
|
If two entities in the Performance Peer Group merge, the TSR of the target entity shall be measured on the effective date of the merger. The TSR of the surviving entity shall continue to be measured as if the acquisition did not occur.
|
3.
|
If an entity in the Performance Peer Group merges with another entity that is not in the Performance Peer Group, the TSR of the target entity shall be measured on the effective date of the merger.
|
4.
|
If an entity in the Performance Peer Group becomes a private company, the TSR of such entity shall be measured on the date such entity goes private.
|
5.
|
If an entity in the Performance Peer Group goes bankrupt, the TSR of such entity shall be deemed to be negative 100%.
|
|
Exhibit B-3
|
|
|
Exhibit B-3
|
|
1.
|
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;
|
2.
|
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;
|
3.
|
The registrant's other certifying officer 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 15(d)-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
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(d)
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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
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4.
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The registrant's other certifying officer 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):
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(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
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(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.
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Date:
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May 9, 2018
|
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/s/ Sean C. Woolverton
|
|
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Sean C. Woolverton
Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2018, of SilverBow Resources, Inc. (the “registrant”);
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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;
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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;
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4.
|
The registrant's other certifying officer 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 15(d)-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;
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(b)
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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;
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(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 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.
|
Date:
|
May 9, 2018
|
|
/s/ G. Gleeson Van Riet
|
|
|
|
G. Gleeson Van Riet
Executive Vice President and
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
May 9, 2018
|
|
/s/ Sean C. Woolverton
|
|
|
|
Sean C. Woolverton Chief Executive Officer
|
|
|
|
|
Date:
|
May 9, 2018
|
|
/s/ G. Gleeson Van Riet
|
|
|
|
G. Gleeson Van Riet Executive Vice President and Chief Financial Officer
|