x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Oklahoma
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73-0767549
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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20 N. Broadway, Oklahoma City, Oklahoma
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73102
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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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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our strategy;
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•
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our business and financial plans;
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•
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our future operations;
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•
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our crude oil and natural gas reserves and related development plans;
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•
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technology;
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•
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crude oil, natural gas liquids, and natural gas prices and differentials;
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•
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the timing and amount of future production of crude oil and natural gas and flaring activities;
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•
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the amount, nature and timing of capital expenditures;
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•
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estimated revenues, expenses and results of operations;
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•
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drilling and completing of wells;
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•
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competition;
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•
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marketing of crude oil and natural gas;
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•
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transportation of crude oil, natural gas liquids, and natural gas to markets;
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•
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property exploitation or property acquisitions and dispositions;
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•
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costs of exploiting and developing our properties and conducting other operations;
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•
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our financial position;
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•
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general economic conditions;
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•
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credit markets;
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•
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our liquidity and access to capital;
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•
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the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us and of scheduled or potential regulatory or legal changes;
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•
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our future operating and financial results;
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our commodity or other hedging arrangements; and
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•
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the ability and willingness of current or potential lenders, hedging contract counterparties, customers, and working interest owners to fulfill their obligations to us or to enter into transactions with us in the future on terms that are acceptable to us.
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ITEM 1.
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Financial Statements
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June 30, 2016
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December 31, 2015
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In thousands, except par values and share data
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(Unaudited)
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Assets
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Current assets:
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||||
Cash and cash equivalents
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$
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16,560
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$
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11,463
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Receivables:
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||||
Crude oil and natural gas sales
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385,483
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378,622
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Affiliated parties
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96
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122
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Joint interest and other, net
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260,784
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232,293
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Derivative assets
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16,693
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93,922
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Inventories
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102,896
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94,151
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Prepaid expenses and other
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14,700
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11,766
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Total current assets
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797,212
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822,339
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Net property and equipment, based on successful efforts method of accounting
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13,541,129
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14,063,328
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Noncurrent derivative assets
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3,045
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14,560
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Other noncurrent assets
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18,350
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19,581
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Total assets
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$
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14,359,736
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$
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14,919,808
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Liabilities and shareholders’ equity
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Current liabilities:
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Accounts payable trade
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$
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412,851
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$
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553,285
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Revenues and royalties payable
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186,258
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187,000
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Payables to affiliated parties
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185
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69
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Accrued liabilities and other
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192,359
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176,947
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Derivative liabilities
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24,227
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3,583
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Current portion of long-term debt
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2,179
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2,144
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Total current liabilities
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818,059
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923,028
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Long-term debt, net of current portion
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7,149,279
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7,115,644
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Other noncurrent liabilities:
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Deferred income tax liabilities, net
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1,896,238
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2,090,228
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Asset retirement obligations, net of current portion
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105,277
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101,251
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Noncurrent derivative liabilities
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9,290
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3,706
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Other noncurrent liabilities
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14,644
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17,051
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Total other noncurrent liabilities
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2,025,449
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2,212,236
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Commitments and contingencies (Note 7)
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Shareholders’ equity:
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Preferred stock, $0.01 par value; 25,000,000 shares authorized; no shares issued and outstanding
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—
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—
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Common stock, $0.01 par value; 1,000,000,000 shares authorized; 374,581,304 shares issued and outstanding at June 30, 2016; 372,959,080 shares issued and outstanding at December 31, 2015
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3,746
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3,730
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Additional paid-in capital
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1,360,933
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1,345,624
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Accumulated other comprehensive loss
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(2,903
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)
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(3,354
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)
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Retained earnings
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3,005,173
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3,322,900
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Total shareholders’ equity
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4,366,949
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4,668,900
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Total liabilities and shareholders’ equity
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$
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14,359,736
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$
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14,919,808
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Three months ended June 30,
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Six months ended June 30,
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||||||||||||
In thousands, except per share data
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2016
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2015
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2016
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2015
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||||||||
Revenues
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Crude oil and natural gas sales
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$
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525,711
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$
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790,102
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$
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929,302
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$
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1,371,294
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Crude oil and natural gas sales to affiliates
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—
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—
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—
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1,400
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||||
Gain (loss) on crude oil and natural gas derivatives, net
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(82,257
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)
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(4,737
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)
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(40,145
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)
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28,018
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Crude oil and natural gas service operations
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7,757
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11,009
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15,227
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21,306
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Total revenues
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451,211
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796,374
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904,384
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1,422,018
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Operating costs and expenses
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Production expenses
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74,083
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91,667
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152,724
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183,021
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Production expenses to affiliates
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—
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68
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—
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1,654
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|
||||
Production taxes and other expenses
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39,141
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61,545
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69,634
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109,908
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|
||||
Exploration expenses
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1,674
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|
109
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4,739
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|
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14,449
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Crude oil and natural gas service operations
|
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3,576
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|
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7,092
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6,618
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|
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10,986
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|
||||
Depreciation, depletion, amortization and accretion
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441,761
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452,957
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905,752
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839,469
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||||
Property impairments
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66,112
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76,872
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|
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145,039
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224,432
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General and administrative expenses
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36,246
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44,190
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68,654
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89,571
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||||
Net gain on sale of assets and other
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|
(100,835
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)
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(20,573
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)
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(99,127
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)
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(22,643
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)
|
||||
Total operating costs and expenses
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561,758
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713,927
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1,254,033
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1,450,847
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|
||||
Income (loss) from operations
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(110,547
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)
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82,447
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(349,649
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)
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(28,829
|
)
|
||||
Other income (expense):
|
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|
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|
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||||||||
Interest expense
|
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(81,922
|
)
|
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(78,442
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)
|
|
(162,875
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)
|
|
(153,505
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)
|
||||
Other
|
|
435
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|
|
540
|
|
|
819
|
|
|
886
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|
||||
|
|
(81,487
|
)
|
|
(77,902
|
)
|
|
(162,056
|
)
|
|
(152,619
|
)
|
||||
Income (loss) before income taxes
|
|
(192,034
|
)
|
|
4,545
|
|
|
(511,705
|
)
|
|
(181,448
|
)
|
||||
Provision (benefit) for income taxes
|
|
(72,632
|
)
|
|
4,142
|
|
|
(193,978
|
)
|
|
(49,880
|
)
|
||||
Net income (loss)
|
|
$
|
(119,402
|
)
|
|
$
|
403
|
|
|
$
|
(317,727
|
)
|
|
$
|
(131,568
|
)
|
Basic net income (loss) per share
|
|
$
|
(0.32
|
)
|
|
$
|
—
|
|
|
$
|
(0.86
|
)
|
|
$
|
(0.36
|
)
|
Diluted net income (loss) per share
|
|
$
|
(0.32
|
)
|
|
$
|
—
|
|
|
$
|
(0.86
|
)
|
|
$
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(119,402
|
)
|
|
$
|
403
|
|
|
$
|
(317,727
|
)
|
|
$
|
(131,568
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
25
|
|
|
625
|
|
|
451
|
|
|
(2,480
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
|
25
|
|
|
625
|
|
|
451
|
|
|
(2,480
|
)
|
||||
Comprehensive income (loss)
|
|
$
|
(119,377
|
)
|
|
$
|
1,028
|
|
|
$
|
(317,276
|
)
|
|
$
|
(134,048
|
)
|
In thousands, except share data
|
|
Shares
outstanding |
|
Common
stock |
|
Additional
paid-in capital |
|
Accumulated
other comprehensive loss |
|
Retained
earnings |
|
Total
shareholders’ equity |
|||||||||||
Balance at December 31, 2015
|
|
372,959,080
|
|
|
$
|
3,730
|
|
|
$
|
1,345,624
|
|
|
$
|
(3,354
|
)
|
|
$
|
3,322,900
|
|
|
$
|
4,668,900
|
|
Net loss (unaudited)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(317,727
|
)
|
|
(317,727
|
)
|
|||||
Other comprehensive income, net of tax (unaudited)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
451
|
|
|
—
|
|
|
451
|
|
|||||
Stock-based compensation (unaudited)
|
|
—
|
|
|
—
|
|
|
21,041
|
|
|
—
|
|
|
—
|
|
|
21,041
|
|
|||||
Restricted stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Granted (unaudited)
|
|
2,007,078
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Repurchased and canceled (unaudited)
|
|
(279,019
|
)
|
|
(3
|
)
|
|
(5,732
|
)
|
|
—
|
|
|
—
|
|
|
(5,735
|
)
|
|||||
Forfeited (unaudited)
|
|
(105,835
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Balance at June 30, 2016 (unaudited)
|
|
374,581,304
|
|
|
$
|
3,746
|
|
|
$
|
1,360,933
|
|
|
$
|
(2,903
|
)
|
|
$
|
3,005,173
|
|
|
$
|
4,366,949
|
|
|
|
Six months ended June 30,
|
||||||
In thousands
|
|
2016
|
|
2015
|
||||
Cash flows from operating activities
|
|
|
||||||
Net loss
|
|
$
|
(317,727
|
)
|
|
$
|
(131,568
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation, depletion, amortization and accretion
|
|
908,021
|
|
|
838,216
|
|
||
Property impairments
|
|
145,039
|
|
|
224,432
|
|
||
Non-cash loss on derivatives, net
|
|
114,972
|
|
|
8,599
|
|
||
Stock-based compensation
|
|
21,046
|
|
|
27,429
|
|
||
Benefit for deferred income taxes
|
|
(193,990
|
)
|
|
(49,890
|
)
|
||
Dry hole costs
|
|
206
|
|
|
8,003
|
|
||
Gain on sale of assets, net
|
|
(97,016
|
)
|
|
(22,643
|
)
|
||
Other, net
|
|
4,752
|
|
|
5,388
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(34,939
|
)
|
|
138,882
|
|
||
Inventories
|
|
(8,745
|
)
|
|
1,938
|
|
||
Other current assets
|
|
(2,125
|
)
|
|
50,561
|
|
||
Accounts payable trade
|
|
(53,859
|
)
|
|
(106,174
|
)
|
||
Revenues and royalties payable
|
|
(742
|
)
|
|
(17,589
|
)
|
||
Accrued liabilities and other
|
|
15,347
|
|
|
(60,162
|
)
|
||
Other noncurrent assets and liabilities
|
|
(2,519
|
)
|
|
1,390
|
|
||
Net cash provided by operating activities
|
|
497,721
|
|
|
916,812
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Exploration and development
|
|
(625,126
|
)
|
|
(1,972,887
|
)
|
||
Purchase of producing crude oil and natural gas properties
|
|
—
|
|
|
(557
|
)
|
||
Purchase of other property and equipment
|
|
(4,867
|
)
|
|
(22,449
|
)
|
||
Proceeds from sale of assets and other
|
|
112,199
|
|
|
32,590
|
|
||
Net cash used in investing activities
|
|
(517,794
|
)
|
|
(1,963,303
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
||||
Credit facility borrowings
|
|
638,000
|
|
|
1,375,000
|
|
||
Repayment of credit facility
|
|
(606,000
|
)
|
|
(315,000
|
)
|
||
Repayment of other debt
|
|
(1,064
|
)
|
|
(1,032
|
)
|
||
Debt issuance costs
|
|
(40
|
)
|
|
(2,110
|
)
|
||
Repurchase of restricted stock for tax withholdings
|
|
(5,735
|
)
|
|
(5,192
|
)
|
||
Net cash provided by financing activities
|
|
25,161
|
|
|
1,051,666
|
|
||
Effect of exchange rate changes on cash
|
|
9
|
|
|
(4,098
|
)
|
||
Net change in cash and cash equivalents
|
|
5,097
|
|
|
1,077
|
|
||
Cash and cash equivalents at beginning of period
|
|
11,463
|
|
|
24,381
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
16,560
|
|
|
$
|
25,458
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
In thousands, except per share data
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Income (loss) (numerator):
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) - basic and diluted
|
|
$
|
(119,402
|
)
|
|
$
|
403
|
|
|
$
|
(317,727
|
)
|
|
$
|
(131,568
|
)
|
Weighted average shares (denominator):
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares - basic
|
|
370,435
|
|
|
369,510
|
|
|
370,248
|
|
|
369,448
|
|
||||
Non-vested restricted stock (1)
|
|
—
|
|
|
1,363
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares - diluted
|
|
370,435
|
|
|
370,873
|
|
|
370,248
|
|
|
369,448
|
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.32
|
)
|
|
$
|
—
|
|
|
$
|
(0.86
|
)
|
|
$
|
(0.36
|
)
|
Diluted
|
|
$
|
(0.32
|
)
|
|
$
|
—
|
|
|
$
|
(0.86
|
)
|
|
$
|
(0.36
|
)
|
(1)
|
During the three and six months ended
June 30, 2016
and the six months ended June 30,
2015
, the Company had a net loss and therefore the potential dilutive effect of approximately
1,940,700
,
1,486,200
, and
1,472,300
weighted average restricted shares, respectively, were not included in the calculation of diluted net loss per share because to do so would have been anti-dilutive to the computations.
|
In thousands
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Tubular goods and equipment
|
|
$
|
16,245
|
|
|
$
|
15,633
|
|
Crude oil
|
|
86,651
|
|
|
78,518
|
|
||
Total
|
|
$
|
102,896
|
|
|
$
|
94,151
|
|
|
|
Six months ended June 30,
|
||||||
In thousands
|
|
2016
|
|
2015
|
||||
Supplemental cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
156,358
|
|
|
$
|
148,454
|
|
Cash paid for income taxes
|
|
—
|
|
|
27
|
|
||
Cash received for income tax refunds
|
|
20
|
|
|
50,000
|
|
||
Non-cash investing activities:
|
|
|
|
|
||||
Asset retirement obligation additions and revisions, net
|
|
1,042
|
|
|
4,945
|
|
Crude Oil - ICE Brent
|
|
|
|
|
|||
|
|
|
|
|
|||
Period and Type of Contract
|
|
Bbls
|
|
Ceiling Price
|
|||
July 2016 - December 2016
|
|
|
|
|
|||
Written call options - ICE Brent (1)
|
|
736,000
|
|
|
$
|
107.70
|
|
|
|
|
|
|
|
Collars
|
|||||||||||||
Natural Gas - NYMEX Henry Hub
|
|
Swaps Weighted Average Price
|
|
Floors
|
|
Ceilings
|
|||||||||||||
|
|
|
|
|
|
|
Weighted Average Price
|
|
|
|
Weighted Average Price
|
||||||||
Period and Type of Contract
|
|
MMBtus
|
|
|
Range
|
|
|
Range
|
|
||||||||||
July 2016 - December 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Swaps - Henry Hub
|
|
78,110,000
|
|
|
$
|
3.00
|
|
|
|
|
|
|
|
|
|
||||
January 2017 - December 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Swaps - Henry Hub
|
|
25,550,000
|
|
|
$
|
3.35
|
|
|
|
|
|
|
|
|
|
||||
Collars - Henry Hub
|
|
65,700,000
|
|
|
|
|
$2.40 - $3.00
|
|
$
|
2.47
|
|
|
$2.92 - $3.88
|
|
$
|
3.08
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
In thousands
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cash received on derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Natural gas fixed price swaps
|
|
$
|
38,778
|
|
|
$
|
5,551
|
|
|
$
|
77,967
|
|
|
$
|
23,942
|
|
Natural gas collars
|
|
—
|
|
|
7,631
|
|
|
—
|
|
|
12,675
|
|
||||
Cash received on derivatives, net
|
|
38,778
|
|
|
13,182
|
|
|
77,967
|
|
|
36,617
|
|
||||
Non-cash gain (loss) on derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Crude oil written call options
|
|
6
|
|
|
3
|
|
|
38
|
|
|
3,927
|
|
||||
Natural gas fixed price swaps
|
|
(101,308
|
)
|
|
(9,296
|
)
|
|
(98,915
|
)
|
|
(2,804
|
)
|
||||
Natural gas collars
|
|
(19,733
|
)
|
|
(8,626
|
)
|
|
(19,235
|
)
|
|
(9,722
|
)
|
||||
Non-cash gain (loss) on derivatives, net
|
|
(121,035
|
)
|
|
(17,919
|
)
|
|
(118,112
|
)
|
|
(8,599
|
)
|
||||
Gain (loss) on crude oil and natural gas derivatives, net
|
|
$
|
(82,257
|
)
|
|
$
|
(4,737
|
)
|
|
$
|
(40,145
|
)
|
|
$
|
28,018
|
|
In thousands
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Commodity derivative assets:
|
|
|
|
|
||||
Gross amounts of recognized assets
|
|
$
|
37,249
|
|
|
$
|
120,385
|
|
Gross amounts offset on balance sheet
|
|
(17,511
|
)
|
|
(11,903
|
)
|
||
Net amounts of assets on balance sheet
|
|
19,738
|
|
|
108,482
|
|
||
Commodity derivative liabilities:
|
|
|
|
|
||||
Gross amounts of recognized liabilities
|
|
(51,028
|
)
|
|
(19,192
|
)
|
||
Gross amounts offset on balance sheet
|
|
17,511
|
|
|
11,903
|
|
||
Net amounts of liabilities on balance sheet
|
|
$
|
(33,517
|
)
|
|
$
|
(7,289
|
)
|
In thousands
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Derivative assets
|
|
$
|
16,693
|
|
|
$
|
93,922
|
|
Noncurrent derivative assets
|
|
3,045
|
|
|
14,560
|
|
||
Net amounts of assets on balance sheet
|
|
19,738
|
|
|
108,482
|
|
||
Derivative liabilities
|
|
(24,227
|
)
|
|
(3,583
|
)
|
||
Noncurrent derivative liabilities
|
|
(9,290
|
)
|
|
(3,706
|
)
|
||
Net amounts of liabilities on balance sheet
|
|
(33,517
|
)
|
|
(7,289
|
)
|
||
Total derivative assets (liabilities), net
|
|
$
|
(13,779
|
)
|
|
$
|
101,193
|
|
•
|
Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date.
|
•
|
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
•
|
Level 3: Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management’s best estimate of fair value.
|
|
|
Fair value measurements at June 30, 2016 using:
|
|
|
||||||||||||
In thousands
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Derivative assets (liabilities):
|
|
|
|
|
|
|
|
|
||||||||
Swaps
|
|
$
|
—
|
|
|
$
|
8,652
|
|
|
$
|
—
|
|
|
$
|
8,652
|
|
Collars
|
|
—
|
|
|
(22,430
|
)
|
|
—
|
|
|
(22,430
|
)
|
||||
Written call options
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Total
|
|
$
|
—
|
|
|
$
|
(13,779
|
)
|
|
$
|
—
|
|
|
$
|
(13,779
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Fair value measurements at December 31, 2015 using:
|
|
|
||||||||||||
In thousands
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Derivative assets (liabilities):
|
|
|
|
|
|
|
|
|
||||||||
Swaps
|
|
$
|
—
|
|
|
$
|
104,426
|
|
|
$
|
—
|
|
|
$
|
104,426
|
|
Collars
|
|
—
|
|
|
(3,195
|
)
|
|
—
|
|
|
(3,195
|
)
|
||||
Written call options
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
||||
Total
|
|
$
|
—
|
|
|
$
|
101,193
|
|
|
$
|
—
|
|
|
$
|
101,193
|
|
Unobservable Input
|
|
Assumption
|
Future production
|
|
Future production estimates for each property
|
Forward commodity prices
|
|
Forward NYMEX strip prices through 2020 (adjusted for differentials), escalating 3% per year thereafter
|
Operating costs
|
|
Estimated costs for the current year, escalating 3% per year thereafter
|
Productive life of field
|
|
Ranging from 0 to 33 years
|
Discount rate
|
|
10%
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
In thousands
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Proved property impairments
|
|
$
|
—
|
|
|
$
|
5,028
|
|
|
$
|
—
|
|
|
$
|
75,043
|
|
Unproved property impairments
|
|
66,112
|
|
|
71,844
|
|
|
145,039
|
|
|
149,389
|
|
||||
Total
|
|
$
|
66,112
|
|
|
$
|
76,872
|
|
|
$
|
145,039
|
|
|
$
|
224,432
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
In thousands
|
|
Carrying
Amount |
|
Estimated Fair Value
|
|
Carrying
Amount |
|
Estimated Fair Value
|
||||||||
Debt:
|
|
|
||||||||||||||
Revolving credit facility
|
|
$
|
885,000
|
|
|
$
|
885,000
|
|
|
$
|
853,000
|
|
|
$
|
853,000
|
|
Term loan
|
|
498,556
|
|
|
500,000
|
|
|
498,274
|
|
|
500,000
|
|
||||
Note payable
|
|
13,251
|
|
|
12,000
|
|
|
14,309
|
|
|
12,500
|
|
||||
7.375% Senior Notes due 2020
|
|
196,878
|
|
|
206,000
|
|
|
196,574
|
|
|
179,200
|
|
||||
7.125% Senior Notes due 2021
|
|
395,732
|
|
|
414,000
|
|
|
395,365
|
|
|
388,300
|
|
||||
5% Senior Notes due 2022
|
|
1,997,004
|
|
|
1,940,000
|
|
|
1,996,831
|
|
|
1,480,400
|
|
||||
4.5% Senior Notes due 2023
|
|
1,483,470
|
|
|
1,398,800
|
|
|
1,482,451
|
|
|
1,061,000
|
|
||||
3.8% Senior Notes due 2024
|
|
990,443
|
|
|
877,500
|
|
|
989,932
|
|
|
700,300
|
|
||||
4.9% Senior Notes due 2044
|
|
691,124
|
|
|
590,800
|
|
|
691,052
|
|
|
430,500
|
|
||||
Total debt
|
|
$
|
7,151,458
|
|
|
$
|
6,824,100
|
|
|
$
|
7,117,788
|
|
|
$
|
5,605,200
|
|
In thousands
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Revolving credit facility
|
|
$
|
885,000
|
|
|
$
|
853,000
|
|
Term loan
|
|
498,556
|
|
|
498,274
|
|
||
Note payable
|
|
13,251
|
|
|
14,309
|
|
||
7.375% Senior Notes due 2020
|
|
196,878
|
|
|
196,574
|
|
||
7.125% Senior Notes due 2021
|
|
395,732
|
|
|
395,365
|
|
||
5% Senior Notes due 2022
|
|
1,997,004
|
|
|
1,996,831
|
|
||
4.5% Senior Notes due 2023
|
|
1,483,470
|
|
|
1,482,451
|
|
||
3.8% Senior Notes due 2024
|
|
990,443
|
|
|
989,932
|
|
||
4.9% Senior Notes due 2044
|
|
691,124
|
|
|
691,052
|
|
||
Total debt
|
|
$
|
7,151,458
|
|
|
$
|
7,117,788
|
|
Less: Current portion of long-term debt
|
|
2,179
|
|
|
2,144
|
|
||
Long-term debt, net of current portion
|
|
$
|
7,149,279
|
|
|
$
|
7,115,644
|
|
|
|
2020 Notes
|
|
2021 Notes
|
|
2022 Notes
|
|
2023 Notes
|
|
2024 Notes
|
|
2044 Notes
|
Face value (in thousands)
|
|
$200,000
|
|
$400,000
|
|
$2,000,000
|
|
$1,500,000
|
|
$1,000,000
|
|
$700,000
|
Maturity date
|
|
Oct 1, 2020
|
|
April 1, 2021
|
|
Sep 15, 2022
|
|
April 15, 2023
|
|
June 1, 2024
|
|
June 1, 2044
|
Interest payment dates
|
|
April 1, Oct 1
|
|
April 1, Oct 1
|
|
March 15, Sep 15
|
|
April 15, Oct 15
|
|
June 1, Dec 1
|
|
June 1, Dec 1
|
Call premium redemption period (1)
|
|
Oct 1, 2015
|
|
April 1, 2016
|
|
March 15, 2017
|
|
—
|
|
—
|
|
—
|
Make-whole redemption period (2)
|
|
—
|
|
—
|
|
March 15, 2017
|
|
Jan 15, 2023
|
|
Mar 1, 2024
|
|
Dec 1, 2043
|
(1)
|
On or after these dates, the Company has the option to redeem all or a portion of its senior notes of the applicable series at the decreasing redemption prices specified in the respective senior note indentures (together, the “Indentures”) plus any accrued and unpaid interest to the date of redemption.
|
(2)
|
At any time prior to these dates, the Company has the option to redeem all or a portion of its senior notes of the applicable series at the “make-whole” redemption prices or amounts specified in the Indentures plus any accrued and unpaid interest to the date of redemption.
|
|
|
Number of
non-vested shares |
|
Weighted average
grant-date fair value |
|||
Non-vested restricted shares outstanding at December 31, 2015
|
|
3,249,611
|
|
|
$
|
48.20
|
|
Granted
|
|
2,007,078
|
|
|
21.56
|
|
|
Vested
|
|
(1,033,278
|
)
|
|
39.38
|
|
|
Forfeited
|
|
(105,835
|
)
|
|
43.70
|
|
|
Non-vested restricted shares outstanding at June 30, 2016
|
|
4,117,576
|
|
|
$
|
37.54
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
In thousands
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Beginning accumulated other comprehensive loss, net of tax
|
|
$
|
(2,928
|
)
|
|
$
|
(3,490
|
)
|
|
$
|
(3,354
|
)
|
|
$
|
(385
|
)
|
Foreign currency translation adjustments
|
|
25
|
|
|
625
|
|
|
451
|
|
|
(2,480
|
)
|
||||
Income taxes (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss), net of tax
|
|
25
|
|
|
625
|
|
|
451
|
|
|
(2,480
|
)
|
||||
Ending accumulated other comprehensive loss, net of tax
|
|
$
|
(2,903
|
)
|
|
$
|
(2,865
|
)
|
|
$
|
(2,903
|
)
|
|
$
|
(2,865
|
)
|
(1)
|
A valuation allowance has been recognized against deferred tax assets associated with losses generated by the Company's Canadian operations, thereby resulting in no income taxes on other comprehensive income (loss).
|
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Volumes of crude oil and natural gas produced,
|
•
|
Crude oil and natural gas prices realized, and
|
•
|
Per unit operating and administrative costs.
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Average daily production:
|
|
|
|
|
|
|
|
|
||||||||
Crude oil (Bbl per day)
|
|
133,044
|
|
|
149,897
|
|
|
139,756
|
|
|
146,722
|
|
||||
Natural gas (Mcf per day)
|
|
517,677
|
|
|
459,898
|
|
|
511,837
|
|
|
420,123
|
|
||||
Crude oil equivalents (Boe per day)
|
|
219,323
|
|
|
226,547
|
|
|
225,063
|
|
|
216,742
|
|
||||
Average sales prices:
|
|
|
|
|
|
|
|
|
||||||||
Crude oil ($/Bbl)
|
|
$
|
38.38
|
|
|
$
|
49.84
|
|
|
$
|
31.76
|
|
|
$
|
44.46
|
|
Natural gas ($/Mcf)
|
|
$
|
1.31
|
|
|
$
|
2.31
|
|
|
$
|
1.33
|
|
|
$
|
2.48
|
|
Crude oil equivalents ($/Boe)
|
|
$
|
26.36
|
|
|
$
|
37.82
|
|
|
$
|
22.73
|
|
|
$
|
34.93
|
|
Crude oil sales price discount to NYMEX ($/Bbl)
|
|
$
|
(7.21
|
)
|
|
$
|
(8.18
|
)
|
|
$
|
(7.51
|
)
|
|
$
|
(9.05
|
)
|
Natural gas sales price discount to NYMEX ($/Mcf)
|
|
$
|
(0.65
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.31
|
)
|
Production expenses ($/Boe)
|
|
$
|
3.72
|
|
|
$
|
4.39
|
|
|
$
|
3.74
|
|
|
$
|
4.70
|
|
Production taxes (% of oil and gas revenues)
|
|
7.4
|
%
|
|
7.8
|
%
|
|
7.5
|
%
|
|
8.0
|
%
|
||||
DD&A ($/Boe)
|
|
$
|
22.15
|
|
|
$
|
21.68
|
|
|
$
|
22.16
|
|
|
$
|
21.36
|
|
Total general and administrative expenses ($/Boe) (1)
|
|
$
|
1.82
|
|
|
$
|
2.11
|
|
|
$
|
1.68
|
|
|
$
|
2.28
|
|
Net income (loss) (in thousands)
|
|
$
|
(119,402
|
)
|
|
$
|
403
|
|
|
$
|
(317,727
|
)
|
|
$
|
(131,568
|
)
|
Diluted net income (loss) per share
|
|
$
|
(0.32
|
)
|
|
$
|
—
|
|
|
$
|
(0.86
|
)
|
|
$
|
(0.36
|
)
|
(1)
|
Represents cash general and administrative expenses per Boe and non-cash equity compensation expenses per Boe. See
Operating Costs and Expenses—General and Administrative Expenses
below for the quarter and year to date periods for additional discussion of these components.
|
|
|
Three months ended June 30,
|
||||||
In thousands, except sales price data
|
|
2016
|
|
2015
|
||||
Crude oil and natural gas sales
|
|
$
|
525,711
|
|
|
$
|
790,102
|
|
Loss on crude oil and natural gas derivatives, net
|
|
(82,257
|
)
|
|
(4,737
|
)
|
||
Crude oil and natural gas service operations
|
|
7,757
|
|
|
11,009
|
|
||
Total revenues
|
|
451,211
|
|
|
796,374
|
|
||
Operating costs and expenses (1)
|
|
(561,758
|
)
|
|
(713,927
|
)
|
||
Other expenses, net
|
|
(81,487
|
)
|
|
(77,902
|
)
|
||
Income (loss) before income taxes
|
|
(192,034
|
)
|
|
4,545
|
|
||
(Provision) benefit for income taxes
|
|
72,632
|
|
|
(4,142
|
)
|
||
Net income (loss)
|
|
$
|
(119,402
|
)
|
|
$
|
403
|
|
Production volumes:
|
|
|
|
|
||||
Crude oil (MBbl)
|
|
12,107
|
|
|
13,641
|
|
||
Natural gas (MMcf)
|
|
47,109
|
|
|
41,851
|
|
||
Crude oil equivalents (MBoe)
|
|
19,958
|
|
|
20,616
|
|
||
Sales volumes:
|
|
|
|
|
||||
Crude oil (MBbl)
|
|
12,090
|
|
|
13,917
|
|
||
Natural gas (MMcf)
|
|
47,109
|
|
|
41,851
|
|
||
Crude oil equivalents (MBoe)
|
|
19,941
|
|
|
20,892
|
|
||
Average sales prices:
|
|
|
|
|
||||
Crude oil ($/Bbl)
|
|
$
|
38.38
|
|
|
$
|
49.84
|
|
Natural gas ($/Mcf)
|
|
1.31
|
|
|
2.31
|
|
||
Crude oil equivalents ($/Boe)
|
|
26.36
|
|
|
37.82
|
|
|
|
Three months ended June 30,
|
|
Volume
increase (decrease) |
|
Volume
percent increase (decrease) |
||||||||||||
|
|
2016
|
|
2015
|
|
|
||||||||||||
|
|
Volume
|
|
Percent
|
|
Volume
|
|
Percent
|
|
|||||||||
Crude oil (MBbl)
|
|
12,107
|
|
|
61
|
%
|
|
13,641
|
|
|
66
|
%
|
|
(1,534
|
)
|
|
(11
|
%)
|
Natural gas (MMcf)
|
|
47,109
|
|
|
39
|
%
|
|
41,851
|
|
|
34
|
%
|
|
5,258
|
|
|
13
|
%
|
Total (MBoe)
|
|
19,958
|
|
|
100
|
%
|
|
20,616
|
|
|
100
|
%
|
|
(658
|
)
|
|
(3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three months ended June 30,
|
|
Volume
increase (decrease) |
|
Volume
percent increase (decrease) |
||||||||||||
|
|
2016
|
|
2015
|
|
|
||||||||||||
|
|
MBoe
|
|
Percent
|
|
MBoe
|
|
Percent
|
|
|||||||||
North Region
|
|
12,448
|
|
|
62
|
%
|
|
14,150
|
|
|
69
|
%
|
|
(1,702
|
)
|
|
(12
|
%)
|
South Region
|
|
7,510
|
|
|
38
|
%
|
|
6,466
|
|
|
31
|
%
|
|
1,044
|
|
|
16
|
%
|
Total
|
|
19,958
|
|
|
100
|
%
|
|
20,616
|
|
|
100
|
%
|
|
(658
|
)
|
|
(3
|
%)
|
|
|
Three months ended June 30,
|
||||||
In thousands
|
|
2016
|
|
2015
|
||||
Geological and geophysical costs
|
|
$
|
1,468
|
|
|
$
|
109
|
|
Exploratory dry hole costs
|
|
206
|
|
|
—
|
|
||
Exploration expenses
|
|
$
|
1,674
|
|
|
$
|
109
|
|
|
|
Three months ended June 30,
|
||||||
$/Boe
|
|
2016
|
|
2015
|
||||
Crude oil and natural gas
|
|
$
|
21.69
|
|
|
$
|
21.32
|
|
Other equipment
|
|
0.38
|
|
|
0.31
|
|
||
Asset retirement obligation accretion
|
|
0.08
|
|
|
0.05
|
|
||
Depreciation, depletion, amortization and accretion
|
|
$
|
22.15
|
|
|
$
|
21.68
|
|
|
|
Three months ended June 30,
|
||||||
$/Boe
|
|
2016
|
|
2015
|
||||
General and administrative expenses
|
|
$
|
1.22
|
|
|
$
|
1.34
|
|
Non-cash equity compensation
|
|
0.60
|
|
|
0.77
|
|
||
Total general and administrative expenses
|
|
$
|
1.82
|
|
|
$
|
2.11
|
|
|
|
Six months ended June 30,
|
||||||
In thousands, except sales price data
|
|
2016
|
|
2015
|
||||
Crude oil and natural gas sales
|
|
$
|
929,302
|
|
|
$
|
1,372,694
|
|
Gain (loss) on crude oil and natural gas derivatives, net
|
|
(40,145
|
)
|
|
28,018
|
|
||
Crude oil and natural gas service operations
|
|
15,227
|
|
|
21,306
|
|
||
Total revenues
|
|
904,384
|
|
|
1,422,018
|
|
||
Operating costs and expenses (1)
|
|
(1,254,033
|
)
|
|
(1,450,847
|
)
|
||
Other expenses, net
|
|
(162,056
|
)
|
|
(152,619
|
)
|
||
Loss before income taxes
|
|
(511,705
|
)
|
|
(181,448
|
)
|
||
Benefit for income taxes
|
|
193,978
|
|
|
49,880
|
|
||
Net loss
|
|
$
|
(317,727
|
)
|
|
$
|
(131,568
|
)
|
Production volumes:
|
|
|
|
|
||||
Crude oil (MBbl)
|
|
25,436
|
|
|
26,557
|
|
||
Natural gas (MMcf)
|
|
93,154
|
|
|
76,043
|
|
||
Crude oil equivalents (MBoe)
|
|
40,961
|
|
|
39,231
|
|
||
Sales volumes:
|
|
|
|
|
||||
Crude oil (MBbl)
|
|
25,356
|
|
|
26,628
|
|
||
Natural gas (MMcf)
|
|
93,154
|
|
|
76,043
|
|
||
Crude oil equivalents (MBoe)
|
|
40,882
|
|
|
39,301
|
|
||
Average sales prices:
|
|
|
|
|
||||
Crude oil ($/Bbl)
|
|
$
|
31.76
|
|
|
$
|
44.46
|
|
Natural gas ($/Mcf)
|
|
1.33
|
|
|
2.48
|
|
||
Crude oil equivalents ($/Boe)
|
|
22.73
|
|
|
34.93
|
|
|
|
Six months ended June 30,
|
|
Volume
increase (decrease) |
|
Volume
percent increase (decrease) |
||||||||||||
|
|
2016
|
|
2015
|
|
|
||||||||||||
|
|
Volume
|
|
Percent
|
|
Volume
|
|
Percent
|
|
|||||||||
Crude oil (MBbl)
|
|
25,436
|
|
|
62
|
%
|
|
26,557
|
|
|
68
|
%
|
|
(1,121
|
)
|
|
(4
|
%)
|
Natural gas (MMcf)
|
|
93,154
|
|
|
38
|
%
|
|
76,043
|
|
|
32
|
%
|
|
17,111
|
|
|
23
|
%
|
Total (MBoe)
|
|
40,961
|
|
|
100
|
%
|
|
39,231
|
|
|
100
|
%
|
|
1,730
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Six months ended June 30,
|
|
Volume
increase (decrease) |
|
Volume
percent increase (decrease) |
||||||||||||
|
|
2016
|
|
2015
|
|
|
||||||||||||
|
|
MBoe
|
|
Percent
|
|
MBoe
|
|
Percent
|
|
|||||||||
North Region
|
|
26,240
|
|
|
64
|
%
|
|
27,576
|
|
|
70
|
%
|
|
(1,336
|
)
|
|
(5
|
%)
|
South Region
|
|
14,721
|
|
|
36
|
%
|
|
11,655
|
|
|
30
|
%
|
|
3,066
|
|
|
26
|
%
|
Total
|
|
40,961
|
|
|
100
|
%
|
|
39,231
|
|
|
100
|
%
|
|
1,730
|
|
|
4
|
%
|
|
|
Six months ended June 30,
|
||||||
In thousands
|
|
2016
|
|
2015
|
||||
Geological and geophysical costs
|
|
$
|
4,533
|
|
|
$
|
6,446
|
|
Exploratory dry hole costs
|
|
206
|
|
|
8,003
|
|
||
Exploration expenses
|
|
$
|
4,739
|
|
|
$
|
14,449
|
|
|
|
Six months ended June 30,
|
||||||
$/Boe
|
|
2016
|
|
2015
|
||||
Crude oil and natural gas
|
|
$
|
21.71
|
|
|
$
|
20.98
|
|
Other equipment
|
|
0.37
|
|
|
0.32
|
|
||
Asset retirement obligation accretion
|
|
0.08
|
|
|
0.06
|
|
||
Depreciation, depletion, amortization and accretion
|
|
$
|
22.16
|
|
|
$
|
21.36
|
|
|
|
Six months ended June 30,
|
||||||
$/Boe
|
|
2016
|
|
2015
|
||||
General and administrative expenses
|
|
$
|
1.16
|
|
|
$
|
1.58
|
|
Non-cash equity compensation
|
|
0.52
|
|
|
0.70
|
|
||
Total general and administrative expenses
|
|
$
|
1.68
|
|
|
$
|
2.28
|
|
In millions
|
Amount
|
||
Exploration and development drilling
|
$
|
784
|
|
Land costs
|
78
|
|
|
Capital facilities, workovers and other corporate assets
|
55
|
|
|
Seismic
|
3
|
|
|
Total 2016 capital budget, excluding acquisitions
|
$
|
920
|
|
In millions
|
1Q 2016
|
2Q 2016
|
YTD 2016
|
||||||
Exploration and development drilling
|
$
|
290.0
|
|
$
|
179.6
|
|
$
|
469.6
|
|
Land costs
|
19.9
|
|
18.8
|
|
38.7
|
|
|||
Capital facilities, workovers and other corporate assets
|
9.9
|
|
11.0
|
|
20.9
|
|
|||
Seismic
|
0.1
|
|
—
|
|
0.1
|
|
|||
Capital expenditures, excluding acquisitions
|
319.9
|
|
209.4
|
|
529.3
|
|
|||
Acquisitions of producing properties
|
—
|
|
—
|
|
—
|
|
|||
Acquisitions of non-producing properties
|
4.4
|
|
9.9
|
|
14.3
|
|
|||
Total acquisitions
|
4.4
|
|
9.9
|
|
14.3
|
|
|||
Total capital expenditures
|
$
|
324.3
|
|
$
|
219.3
|
|
$
|
543.6
|
|
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
ITEM 1.
|
Legal Proceedings
|
ITEM 1A.
|
Risk Factors
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(a)
|
Recent Sales of Unregistered Securities – Not applicable.
|
(b)
|
Use of Proceeds – Not applicable.
|
Period
|
|
Total number of shares purchased (1)
|
|
Average price paid per share (2)
|
|
Total number of shares purchased as part of publicly announced plans or programs
|
|
Maximum number of shares that may yet be purchased under the plans or programs
|
|||||
April 1, 2016 to April 30, 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
May 1, 2016 to May 31, 2016
|
|
14,913
|
|
|
$
|
40.16
|
|
|
—
|
|
|
—
|
|
June 1, 2016 to June 30, 2016
|
|
1,102
|
|
|
44.50
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
16,015
|
|
|
$
|
40.46
|
|
|
—
|
|
|
—
|
|
(1)
|
In connection with restricted stock grants under the Company's 2013 Long-Term Incentive Plan, we adopted a policy that enables employees to surrender shares to cover their tax liability. Shares indicated as having been purchased in the table above represent shares surrendered by employees to cover tax liabilities. We paid the associated taxes to the applicable taxing authorities.
|
(2)
|
The price paid per share was the closing price of our common stock on the date the restrictions lapsed on such shares.
|
ITEM 3.
|
Defaults Upon Senior Securities
|
ITEM 4.
|
Mine Safety Disclosures
|
ITEM 6.
|
Exhibits
|
|
|
CONTINENTAL RESOURCES, INC.
|
||
|
|
|
|
|
Date:
|
August 3, 2016
|
By:
|
|
/s/ John D. Hart
|
|
|
|
|
John D. Hart
|
|
|
|
|
Sr. Vice President, Chief Financial Officer and Treasurer
(Duly Authorized Officer and Principal Financial Officer) |
3.1
|
Conformed version of Third Amended and Restated Certificate of Incorporation of Continental Resources, Inc. as amended by amendment filed on June 15, 2015
filed as Exhibit 3.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2015 (Commission File No. 001-32886) filed August 5, 2015 and incorporated herein by reference.
|
|
|
3.2
|
Third Amended and Restated Bylaws of Continental Resources, Inc. filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-32886) filed November 6, 2012 and incorporated herein by reference.
|
|
|
10.1*†
|
Summary of Non-Employee Director Compensation Approved as of May 19, 2016 to be effective July 1, 2016.
|
|
|
31.1*
|
Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. Section 7241).
|
|
|
31.2*
|
Certification of the Company’s Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. Section 7241).
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32**
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Certification of the Company’s Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
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101.INS**
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XBRL Instance Document
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101.SCH**
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XBRL Taxonomy Extension Schema Document
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101.CAL**
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF**
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB**
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE**
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XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Filed herewith
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**
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Furnished herewith
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†
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Management contract or compensatory plan or arrangement filed pursuant to Item 601(b)(10)(iii) of Regulation S-K.
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•
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An annual cash retainer of $60,500 per year (the previous amount was $50,000);
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•
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The Lead Director is paid an additional annual retainer of $12,000 (the previous amount was $10,000);
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The chair of the Audit Committee is paid an additional annual retainer of $25,000 (the previous amount was $20,000) and Audit Committee members other than the chair of the committee are paid an additional annual retainer of $21,875 (the previous amount was $9,000);
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•
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The chair of the Compensation Committee is paid an additional annual retainer of $15,000 (the previous amount was $15,000) and Compensation Committee members other than the chair of the committee are paid an additional annual retainer of $11,765 (the previous amount was $5,500);
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The chair of the Nominating/Corporate Governance Committee is paid an additional annual retainer of $16,000 (the previous amount was $10,000) and Nominating/Corporate Governance Committee members other than the chair of the committee are paid an additional annual retainer of $10,765 (the previous amount was $5,000); and
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The chair of the Finance Committee is currently Harold Hamm, who is the only employee director on the Board. As a result, there is no retainer associated with the chair position. Finance Committee members other than the chair of the committee are paid an additional annual retainer of $10,000 (the previous amount was $5,000).
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1.
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I have reviewed this report on Form 10-Q for the period ended
June 30, 2016
of Continental Resources, Inc. (“Registrant”);
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2.
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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.
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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.
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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 15d-15(f)) for the Registrant and have:
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(a)
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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)
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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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5.
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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:
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(a)
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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)
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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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/s/ Harold G. Hamm
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Harold G. Hamm
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Chairman of the Board and
Chief Executive Officer
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1.
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I have reviewed this report on Form 10-Q for the period ended
June 30, 2016
of Continental Resources, Inc. (“Registrant”);
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2.
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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.
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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.
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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 15d-15(f)) for the Registrant and have:
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(a)
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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)
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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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5.
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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:
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(a)
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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)
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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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/s/ John D. Hart
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John D. Hart
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Sr. Vice President, Chief Financial Officer and Treasurer
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/s/ Harold G. Hamm
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/s/ John D. Hart
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Harold G. Hamm
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John D. Hart
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Chairman of the Board and
Chief Executive Officer
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Sr. Vice President, Chief Financial Officer and
Treasurer
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August 3, 2016
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August 3, 2016
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