|
Delaware
|
|
41-0518430
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
1775 Sherman Street, Suite 1200,
|
Denver,
|
Colorado
|
|
80203
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Title of each class
|
|
Trading symbol(s)
|
|
Name of each exchange on which registered
|
Common stock, $0.01 par value
|
|
SM
|
|
New York Stock Exchange
|
|
|||
Item
|
|
|
Page
|
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|
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|
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|
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|
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|
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|
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|
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|
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|
|||
|
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|
|
|
|||
|
|
|
|
|
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|
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|
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|||
|
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|
|
|
|
|
|
•
|
the impacts of the competition between Russia and Saudi Arabia for crude oil market share and the global COVID-19 pandemic on us, our financial condition, results of operations, future operations, business prospects, capital and financial resources, ability to service our debt, ability to access the capital markets, and our plans to address the foregoing;
|
•
|
the amount and nature of future capital expenditures and the availability of liquidity and capital resources to fund capital expenditures;
|
•
|
the expected total production volumes for the fiscal year 2020;
|
•
|
any changes to the borrowing base or aggregate lender commitments under our Sixth Amended and Restated Credit Agreement, as amended (“Credit Agreement”);
|
•
|
our outlook on future crude oil, natural gas, and natural gas liquids (also respectively referred to as “oil,” “gas,” and “NGLs” throughout this report) prices, well costs, service costs, lease operating costs, and general and administrative costs;
|
•
|
the drilling of wells and other exploration and development activities, the ability to obtain permits and governmental approvals, and plans by us, our joint development partners, and/or other third-party operators;
|
•
|
possible or expected acquisitions and divestitures, including the possible divestiture or farm-down of, or joint venture relating to, certain properties;
|
•
|
oil, gas, and NGL reserve estimates and the estimates of both future net revenues and the present value of future net revenues associated with those reserve estimates;
|
•
|
future oil, gas, and NGL production estimates, identified drilling locations, as well as drilling prospects, inventories, projects and programs;
|
•
|
cash flows, anticipated liquidity, interest and related debt service expenses, changes in our effective tax rate, and the future repayment of debt;
|
•
|
business strategies and other plans and objectives for future operations, including plans for expansion and growth of operations or to defer capital investment, plans with respect to future dividend payments, and our outlook on our future financial condition or results of operations;
|
•
|
plans, objectives, expectations and intentions; and
|
•
|
other similar matters, such as those discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of this report.
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
15
|
|
|
$
|
10
|
|
Accounts receivable
|
143,311
|
|
|
184,732
|
|
||
Derivative assets
|
463,992
|
|
|
55,184
|
|
||
Prepaid expenses and other
|
17,842
|
|
|
12,708
|
|
||
Total current assets
|
625,160
|
|
|
252,634
|
|
||
Property and equipment (successful efforts method):
|
|
|
|
||||
Proved oil and gas properties
|
8,043,156
|
|
|
8,934,020
|
|
||
Accumulated depletion, depreciation, and amortization
|
(4,389,103
|
)
|
|
(4,177,876
|
)
|
||
Unproved oil and gas properties
|
972,844
|
|
|
1,005,887
|
|
||
Wells in progress
|
224,509
|
|
|
118,769
|
|
||
Other property and equipment, net of accumulated depreciation of $64,815 and $64,032, respectively
|
36,932
|
|
|
72,848
|
|
||
Total property and equipment, net
|
4,888,338
|
|
|
5,953,648
|
|
||
Noncurrent assets:
|
|
|
|
||||
Derivative assets
|
44,909
|
|
|
20,624
|
|
||
Other noncurrent assets
|
56,618
|
|
|
65,326
|
|
||
Total noncurrent assets
|
101,527
|
|
|
85,950
|
|
||
Total assets
|
$
|
5,615,025
|
|
|
$
|
6,292,232
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
359,406
|
|
|
$
|
402,008
|
|
Derivative liabilities
|
8,277
|
|
|
50,846
|
|
||
Other current liabilities
|
15,780
|
|
|
19,189
|
|
||
Total current liabilities
|
383,463
|
|
|
472,043
|
|
||
Noncurrent liabilities:
|
|
|
|
||||
Revolving credit facility
|
72,000
|
|
|
122,500
|
|
||
Senior Notes, net of unamortized deferred financing costs
|
2,413,663
|
|
|
2,453,035
|
|
||
Senior Convertible Notes, net of unamortized discount and deferred financing costs
|
159,721
|
|
|
157,263
|
|
||
Asset retirement obligations
|
85,267
|
|
|
84,134
|
|
||
Deferred income taxes
|
93,918
|
|
|
189,386
|
|
||
Derivative liabilities
|
7,202
|
|
|
3,444
|
|
||
Other noncurrent liabilities
|
58,074
|
|
|
61,433
|
|
||
Total noncurrent liabilities
|
2,889,845
|
|
|
3,071,195
|
|
||
|
|
|
|
||||
Commitments and contingencies (note 6)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value - authorized: 200,000,000 shares; issued and outstanding: 112,988,682 and 112,987,952 shares, respectively
|
1,130
|
|
|
1,130
|
|
||
Additional paid-in capital
|
1,797,154
|
|
|
1,791,596
|
|
||
Retained earnings
|
554,562
|
|
|
967,587
|
|
||
Accumulated other comprehensive loss
|
(11,129
|
)
|
|
(11,319
|
)
|
||
Total stockholders’ equity
|
2,341,717
|
|
|
2,748,994
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,615,025
|
|
|
$
|
6,292,232
|
|
|
For the Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating revenues and other income:
|
|
|
|
||||
Oil, gas, and NGL production revenue
|
$
|
354,233
|
|
|
$
|
340,476
|
|
Net gain on divestiture activity
|
—
|
|
|
61
|
|
||
Other operating revenues
|
1,501
|
|
|
393
|
|
||
Total operating revenues and other income
|
355,734
|
|
|
340,930
|
|
||
Operating expenses:
|
|
|
|
|
|
||
Oil, gas, and NGL production expense
|
119,552
|
|
|
121,305
|
|
||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
|
233,489
|
|
|
177,746
|
|
||
Exploration
|
11,349
|
|
|
11,348
|
|
||
Impairment
|
989,763
|
|
|
6,338
|
|
||
General and administrative
|
27,447
|
|
|
32,086
|
|
||
Net derivative (gain) loss
|
(545,340
|
)
|
|
177,081
|
|
||
Other operating expenses, net
|
566
|
|
|
335
|
|
||
Total operating expenses
|
836,826
|
|
|
526,239
|
|
||
Loss from operations
|
(481,092
|
)
|
|
(185,309
|
)
|
||
Interest expense
|
(41,512
|
)
|
|
(37,980
|
)
|
||
Gain on extinguishment of debt
|
12,195
|
|
|
—
|
|
||
Other non-operating expense, net
|
(494
|
)
|
|
(317
|
)
|
||
Loss before income taxes
|
(510,903
|
)
|
|
(223,606
|
)
|
||
Income tax benefit
|
99,008
|
|
|
46,038
|
|
||
Net loss
|
$
|
(411,895
|
)
|
|
$
|
(177,568
|
)
|
|
|
|
|
|
|
||
Basic weighted-average common shares outstanding
|
113,009
|
|
|
112,252
|
|
||
Diluted weighted-average common shares outstanding
|
113,009
|
|
|
112,252
|
|
||
Basic net loss per common share
|
$
|
(3.64
|
)
|
|
$
|
(1.58
|
)
|
Diluted net loss per common share
|
$
|
(3.64
|
)
|
|
$
|
(1.58
|
)
|
Dividends per common share
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
For the Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net loss
|
$
|
(411,895
|
)
|
|
$
|
(177,568
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Pension liability adjustment
|
190
|
|
|
263
|
|
||
Total other comprehensive income, net of tax
|
190
|
|
|
263
|
|
||
Total comprehensive loss
|
$
|
(411,705
|
)
|
|
$
|
(177,305
|
)
|
|
|
|
Additional Paid-in Capital
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Equity
|
|||||||||||||
|
Common Stock
|
|
|
Retained Earnings
|
|
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balances, December 31, 2019
|
112,987,952
|
|
|
$
|
1,130
|
|
|
$
|
1,791,596
|
|
|
$
|
967,587
|
|
|
$
|
(11,319
|
)
|
|
$
|
2,748,994
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(411,895
|
)
|
|
—
|
|
|
(411,895
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
190
|
|
|||||
Cash dividends declared, $0.01 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,130
|
)
|
|
—
|
|
|
(1,130
|
)
|
|||||
Issuance of common stock upon vesting of RSUs, net of shares used for tax withholdings
|
730
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
5,561
|
|
|
—
|
|
|
—
|
|
|
5,561
|
|
|||||
Balances, March 31, 2020
|
112,988,682
|
|
|
$
|
1,130
|
|
|
$
|
1,797,154
|
|
|
$
|
554,562
|
|
|
$
|
(11,129
|
)
|
|
$
|
2,341,717
|
|
|
|
|
Additional Paid-in Capital
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Equity
|
|||||||||||||
|
Common Stock
|
|
|
Retained Earnings
|
|
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balances, December 31, 2018
|
112,241,966
|
|
|
$
|
1,122
|
|
|
$
|
1,765,738
|
|
|
$
|
1,165,842
|
|
|
$
|
(12,380
|
)
|
|
$
|
2,920,322
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(177,568
|
)
|
|
—
|
|
|
(177,568
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
263
|
|
|
263
|
|
|||||
Cash dividends declared, $0.05 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,612
|
)
|
|
—
|
|
|
(5,612
|
)
|
|||||
Issuance of common stock upon vesting of RSUs, net of shares used for tax withholdings
|
2,579
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
5,838
|
|
|
—
|
|
|
—
|
|
|
5,838
|
|
|||||
Balances, March 31, 2019
|
112,244,545
|
|
|
$
|
1,122
|
|
|
$
|
1,771,558
|
|
|
$
|
982,662
|
|
|
$
|
(12,117
|
)
|
|
$
|
2,743,225
|
|
|
For the Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(411,895
|
)
|
|
$
|
(177,568
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities
|
|
|
|
||||
Net gain on divestiture activity
|
—
|
|
|
(61
|
)
|
||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
|
233,489
|
|
|
177,746
|
|
||
Impairment
|
989,763
|
|
|
6,338
|
|
||
Stock-based compensation expense
|
5,561
|
|
|
5,838
|
|
||
Net derivative (gain) loss
|
(545,340
|
)
|
|
177,081
|
|
||
Derivative settlement gain (loss)
|
73,437
|
|
|
(4,969
|
)
|
||
Amortization of debt discount and deferred financing costs
|
3,992
|
|
|
3,789
|
|
||
Gain on extinguishment of debt
|
(12,195
|
)
|
|
—
|
|
||
Deferred income taxes
|
(99,347
|
)
|
|
(47,003
|
)
|
||
Other, net
|
(816
|
)
|
|
(2,530
|
)
|
||
Net change in working capital
|
(18,517
|
)
|
|
(20,159
|
)
|
||
Net cash provided by operating activities
|
218,132
|
|
|
118,502
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Net proceeds from the sale of oil and gas properties
|
—
|
|
|
6,114
|
|
||
Capital expenditures
|
(139,306
|
)
|
|
(249,340
|
)
|
||
Other, net
|
—
|
|
|
291
|
|
||
Net cash used in investing activities
|
(139,306
|
)
|
|
(242,935
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from revolving credit facility
|
425,500
|
|
|
172,000
|
|
||
Repayment of revolving credit facility
|
(476,000
|
)
|
|
(125,500
|
)
|
||
Cash paid to repurchase 6.125% Senior Notes due 2022
|
(28,318
|
)
|
|
—
|
|
||
Other, net
|
(3
|
)
|
|
(18
|
)
|
||
Net cash provided by (used in) financing activities
|
(78,821
|
)
|
|
46,482
|
|
||
|
|
|
|
||||
Net change in cash, cash equivalents, and restricted cash
|
5
|
|
|
(77,951
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
10
|
|
|
77,965
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
15
|
|
|
$
|
14
|
|
|
|
|
|
||||
Supplemental schedule of additional cash flow information and non-cash activities:
|
|
|
|
||||
|
|
|
|
||||
Operating activities:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest
|
$
|
(47,469
|
)
|
|
$
|
(39,957
|
)
|
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Increase in capital expenditure accruals and other
|
$
|
16,802
|
|
|
$
|
62,185
|
|
|
|
|
|
||||
Supplemental non-cash investing activities:
|
|
|
|
||||
Carrying value of properties exchanged
|
$
|
—
|
|
|
$
|
65,788
|
|
|
Midland Basin
|
|
South Texas
|
|
Total
|
||||||||||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Oil production revenue
|
$
|
276,136
|
|
|
$
|
225,247
|
|
|
$
|
15,557
|
|
|
$
|
13,814
|
|
|
$
|
291,693
|
|
|
$
|
239,061
|
|
Gas production revenue
|
11,334
|
|
|
15,592
|
|
|
29,376
|
|
|
49,521
|
|
|
40,710
|
|
|
65,113
|
|
||||||
NGL production revenue
|
58
|
|
|
21
|
|
|
21,772
|
|
|
36,281
|
|
|
21,830
|
|
|
36,302
|
|
||||||
Total
|
$
|
287,528
|
|
|
$
|
240,860
|
|
|
$
|
66,705
|
|
|
$
|
99,616
|
|
|
$
|
354,233
|
|
|
$
|
340,476
|
|
Relative percentage
|
81
|
%
|
|
71
|
%
|
|
19
|
%
|
|
29
|
%
|
|
100
|
%
|
|
100
|
%
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Current portion of income tax (expense) benefit:
|
|
|
|
||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
State
|
(339
|
)
|
|
(965
|
)
|
||
Deferred portion of income tax benefit
|
99,347
|
|
|
47,003
|
|
||
Income tax benefit
|
$
|
99,008
|
|
|
$
|
46,038
|
|
Effective tax rate
|
19.4
|
%
|
|
20.6
|
%
|
Borrowing Base Utilization Percentage
|
<25%
|
|
≥25% <50%
|
|
≥50% <75%
|
|
≥75% <90%
|
|
≥90%
|
|||||
Eurodollar Loans (1)
|
1.750
|
%
|
|
2.000
|
%
|
|
2.500
|
%
|
|
2.750
|
%
|
|
3.000
|
%
|
ABR Loans or Swingline Loans
|
0.750
|
%
|
|
1.000
|
%
|
|
1.500
|
%
|
|
1.750
|
%
|
|
2.000
|
%
|
Commitment Fee Rate
|
0.375
|
%
|
|
0.375
|
%
|
|
0.500
|
%
|
|
0.500
|
%
|
|
0.500
|
%
|
(1)
|
The Credit Agreement specifies that in the event that LIBOR is no longer a widely used benchmark rate, or that it is no longer used for determining interest rates for loans in the United States, a replacement interest rate that fairly reflects the cost to the lenders of funding loans shall be established by the Administrative Agent, as defined in the Credit Agreement, in consultation with the Company. Please refer to Note 1 - Summary of Significant Accounting Policies for discussion of FASB ASU 2020-04, which provides guidance related to reference rate reform.
|
|
As of filing on April 29, 2020
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||
|
(in thousands)
|
||||||||||
Revolving credit facility (1)
|
$
|
93,500
|
|
|
$
|
72,000
|
|
|
$
|
122,500
|
|
Letters of credit
|
—
|
|
|
—
|
|
|
—
|
|
|||
Available borrowing capacity
|
1,006,500
|
|
|
1,128,000
|
|
|
1,077,500
|
|
|||
Total aggregate lender commitment amount
|
$
|
1,100,000
|
|
|
$
|
1,200,000
|
|
|
$
|
1,200,000
|
|
(1)
|
Unamortized deferred financing costs attributable to the revolving credit facility are presented as a component of the other noncurrent assets line item on the accompanying balance sheets and totaled $5.5 million and $5.9 million as of March 31, 2020, and December 31, 2019, respectively. These costs are being amortized over the term of the revolving credit facility on a straight-line basis.
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||||||||||
|
Principal Amount
|
|
Unamortized Deferred Financing Costs
|
|
Principal Amount, Net of Unamortized Deferred Financing Costs
|
|
Principal Amount
|
|
Unamortized Deferred Financing Costs
|
|
Principal Amount, Net of Unamortized Deferred Financing Costs
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
6.125% Senior Notes due 2022
|
$
|
436,047
|
|
|
$
|
2,442
|
|
|
$
|
433,605
|
|
|
$
|
476,796
|
|
|
$
|
2,920
|
|
|
$
|
473,876
|
|
5.0% Senior Notes due 2024
|
500,000
|
|
|
3,535
|
|
|
496,465
|
|
|
500,000
|
|
|
3,766
|
|
|
496,234
|
|
||||||
5.625% Senior Notes due 2025
|
500,000
|
|
|
4,677
|
|
|
495,323
|
|
|
500,000
|
|
|
4,903
|
|
|
495,097
|
|
||||||
6.75% Senior Notes due 2026
|
500,000
|
|
|
5,362
|
|
|
494,638
|
|
|
500,000
|
|
|
5,571
|
|
|
494,429
|
|
||||||
6.625% Senior Notes due 2027
|
500,000
|
|
|
6,368
|
|
|
493,632
|
|
|
500,000
|
|
|
6,601
|
|
|
493,399
|
|
||||||
Total
|
$
|
2,436,047
|
|
|
$
|
22,384
|
|
|
$
|
2,413,663
|
|
|
$
|
2,476,796
|
|
|
$
|
23,761
|
|
|
$
|
2,453,035
|
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||
|
(in thousands)
|
||||||
Principal amount of Senior Convertible Notes
|
$
|
172,500
|
|
|
$
|
172,500
|
|
Unamortized debt discount
|
(11,633
|
)
|
|
(13,861
|
)
|
||
Unamortized deferred financing costs
|
(1,146
|
)
|
|
(1,376
|
)
|
||
Senior Convertible Notes, net of unamortized discount and deferred financing costs
|
$
|
159,721
|
|
|
$
|
157,263
|
|
|
For the Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Components of net periodic benefit cost:
|
|
|
|
||||
Service cost
|
$
|
1,395
|
|
|
$
|
1,683
|
|
Interest cost
|
698
|
|
|
656
|
|
||
Expected return on plan assets that reduces periodic pension benefit cost
|
(393
|
)
|
|
(466
|
)
|
||
Amortization of prior service cost
|
4
|
|
|
4
|
|
||
Amortization of net actuarial loss
|
240
|
|
|
332
|
|
||
Net periodic benefit cost
|
$
|
1,944
|
|
|
$
|
2,209
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands, except per share data)
|
||||||
Net loss
|
$
|
(411,895
|
)
|
|
$
|
(177,568
|
)
|
|
|
|
|
||||
Basic weighted-average common shares outstanding
|
113,009
|
|
|
112,252
|
|
||
Dilutive effect of non-vested RSUs and contingent PSUs
|
—
|
|
|
—
|
|
||
Diluted weighted-average common shares outstanding
|
113,009
|
|
|
112,252
|
|
||
|
|
|
|
||||
Basic net loss per common share
|
$
|
(3.64
|
)
|
|
$
|
(1.58
|
)
|
Diluted net loss per common share
|
$
|
(3.64
|
)
|
|
$
|
(1.58
|
)
|
Contract Period
|
|
NYMEX WTI Volumes
|
|
Weighted-Average
Contract Price
|
|||
|
|
(MBbl)
|
|
(per Bbl)
|
|||
Second quarter 2020
|
|
2,838
|
|
|
$
|
58.81
|
|
Third quarter 2020
|
|
3,361
|
|
|
$
|
56.43
|
|
Fourth quarter 2020
|
|
4,397
|
|
|
$
|
57.03
|
|
2021
|
|
2,085
|
|
|
$
|
45.70
|
|
Total
|
|
12,681
|
|
|
|
Contract Period
|
|
NYMEX WTI Volumes
|
|
Weighted-Average Floor Price
|
|
Weighted-Average Ceiling Price
|
|||||
|
|
(MBbl)
|
|
(per Bbl)
|
|
(per Bbl)
|
|||||
Second quarter 2020
|
|
1,881
|
|
|
$
|
55.00
|
|
|
$
|
62.17
|
|
Third quarter 2020
|
|
1,252
|
|
|
$
|
55.00
|
|
|
$
|
62.90
|
|
Fourth quarter 2020
|
|
610
|
|
|
$
|
55.00
|
|
|
$
|
61.90
|
|
2021
|
|
329
|
|
|
$
|
55.00
|
|
|
$
|
56.70
|
|
Total
|
|
4,072
|
|
|
|
|
|
Contract Period
|
|
WTI Midland-NYMEX WTI Volumes
|
|
Weighted-Average
Contract Price (1)
|
|
NYMEX WTI-ICE Brent Volumes
|
|
Weighted-Average
Contract Price (2) |
||||||
|
|
(MBbl)
|
|
(per Bbl)
|
|
(MBbl)
|
|
(per Bbl)
|
||||||
Second quarter 2020
|
|
3,637
|
|
|
$
|
(0.62
|
)
|
|
910
|
|
|
$
|
(8.06
|
)
|
Third quarter 2020
|
|
3,607
|
|
|
$
|
(0.62
|
)
|
|
920
|
|
|
$
|
(8.01
|
)
|
Fourth quarter 2020
|
|
4,087
|
|
|
$
|
(0.38
|
)
|
|
920
|
|
|
$
|
(8.01
|
)
|
2021
|
|
11,527
|
|
|
$
|
0.87
|
|
|
3,650
|
|
|
$
|
(7.86
|
)
|
2022
|
|
9,500
|
|
|
$
|
1.15
|
|
|
3,650
|
|
|
$
|
(7.78
|
)
|
Total
|
|
32,358
|
|
|
|
|
10,050
|
|
|
|
(1)
|
Represents the price differential between WTI Midland (Midland, Texas) and NYMEX WTI (Cushing, Oklahoma).
|
(2)
|
Represents the price differential between NYMEX WTI (Cushing, Oklahoma) and ICE Brent (North Sea).
|
Contract Period
|
|
IF HSC Volumes
|
|
Weighted-Average
Contract Price
|
|
WAHA Volumes
|
|
Weighted-Average Contract Price
|
||||||
|
|
(BBtu)
|
|
(per MMBtu)
|
|
(BBtu)
|
|
(per MMBtu)
|
||||||
Second quarter 2020
|
|
4,160
|
|
|
$
|
2.20
|
|
|
3,592
|
|
|
$
|
0.63
|
|
Third quarter 2020
|
|
4,493
|
|
|
$
|
2.41
|
|
|
4,294
|
|
|
$
|
1.07
|
|
Fourth quarter 2020
|
|
6,994
|
|
|
$
|
2.32
|
|
|
4,516
|
|
|
$
|
1.20
|
|
2021
|
|
28,621
|
|
|
$
|
2.29
|
|
|
17,533
|
|
|
$
|
1.45
|
|
2022
|
|
6,104
|
|
|
$
|
2.23
|
|
|
—
|
|
|
$
|
—
|
|
Total (1)
|
|
50,372
|
|
|
|
|
29,935
|
|
|
|
(1)
|
The Company has natural gas swaps in place that settle against Inside FERC Houston Ship Channel (“IF HSC”), Inside FERC West Texas (“IF WAHA”), and Platt’s Gas Daily West Texas (“GD WAHA”). As of March 31, 2020, WAHA volumes were comprised of 81 percent IF WAHA and 19 percent GD WAHA.
|
|
|
OPIS Ethane Purity Mont Belvieu
|
|
OPIS Propane Mont Belvieu Non-TET
|
||||||||||
Contract Period
|
|
Volumes
|
|
Weighted-Average
Contract Price
|
|
Volumes
|
|
Weighted-Average
Contract Price |
||||||
|
|
(MBbl)
|
|
(per Bbl)
|
|
(MBbl)
|
|
(per Bbl)
|
||||||
Second quarter 2020
|
|
264
|
|
|
$
|
11.13
|
|
|
382
|
|
|
$
|
22.34
|
|
Third quarter 2020
|
|
—
|
|
|
$
|
—
|
|
|
409
|
|
|
$
|
22.33
|
|
Fourth quarter 2020
|
|
—
|
|
|
$
|
—
|
|
|
466
|
|
|
$
|
22.29
|
|
Total
|
|
264
|
|
|
|
|
1,257
|
|
|
|
•
|
fixed price NYMEX WTI oil swap contracts for 2021 for a total of 5.5 MMBbl of oil production at a weighted-average contract price of $37.57 per Bbl;
|
•
|
fixed price IF HSC gas swap contracts for 2021 for a total of 6,197 BBtu of gas production at a weighted-average contract price of $2.42 per MMBtu;
|
•
|
fixed price IF WAHA gas swap contracts through the fourth quarter of 2021 for a total of 2,437 BBtu of gas production at a weighted-average contract price of $1.57 per MMBtu; and
|
•
|
crude oil swap contracts to fix the differential in pricing between the NYMEX calendar month average and the physical crude oil delivery month (“Roll Differential”) for the second quarter of 2020 through the fourth quarter of 2021 for a total of 6.8 MMBbl of oil production, in which the Company pays the periodic variable Roll Differential and receives a weighted-average fixed price of $(1.24) per Bbl; the weighted average price differential represents the amount of net addition (reduction) to delivery month prices for the notional volumes covered by the swap contracts.
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||
|
(in thousands)
|
||||||
Derivative assets:
|
|
|
|
||||
Current assets
|
$
|
463,992
|
|
|
$
|
55,184
|
|
Noncurrent assets
|
44,909
|
|
|
20,624
|
|
||
Total derivative assets
|
$
|
508,901
|
|
|
$
|
75,808
|
|
Derivative liabilities:
|
|
|
|
||||
Current liabilities
|
$
|
8,277
|
|
|
$
|
50,846
|
|
Noncurrent liabilities
|
7,202
|
|
|
3,444
|
|
||
Total derivative liabilities
|
$
|
15,479
|
|
|
$
|
54,290
|
|
|
Derivative Assets as of
|
|
Derivative Liabilities as of
|
||||||||||||
|
March 31, 2020
|
|
December 31, 2019
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Gross amounts presented in the accompanying balance sheets
|
$
|
508,901
|
|
|
$
|
75,808
|
|
|
$
|
(15,479
|
)
|
|
$
|
(54,290
|
)
|
Amounts not offset in the accompanying balance sheets
|
(15,479
|
)
|
|
(35,075
|
)
|
|
15,479
|
|
|
35,075
|
|
||||
Net amounts
|
$
|
493,422
|
|
|
$
|
40,733
|
|
|
$
|
—
|
|
|
$
|
(19,215
|
)
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Derivative settlement (gain) loss:
|
|
|
|
||||
Oil contracts
|
$
|
(53,582
|
)
|
|
$
|
1,369
|
|
Gas contracts
|
(14,625
|
)
|
|
4,134
|
|
||
NGL contracts
|
(5,230
|
)
|
|
(534
|
)
|
||
Total derivative settlement (gain) loss
|
$
|
(73,437
|
)
|
|
$
|
4,969
|
|
|
|
|
|
||||
Net derivative (gain) loss:
|
|
|
|
||||
Oil contracts
|
$
|
(542,540
|
)
|
|
$
|
185,797
|
|
Gas contracts
|
6,728
|
|
|
(6,113
|
)
|
||
NGL contracts
|
(9,528
|
)
|
|
(2,603
|
)
|
||
Total net derivative (gain) loss
|
$
|
(545,340
|
)
|
|
$
|
177,081
|
|
•
|
Level 1 – quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2 – quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable
|
•
|
Level 3 – significant inputs to the valuation model are unobservable
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Derivatives (1)
|
$
|
—
|
|
|
$
|
508,901
|
|
|
$
|
—
|
|
Total property and equipment, net (2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
380,734
|
|
Liabilities:
|
|
|
|
|
|
||||||
Derivatives (1)
|
$
|
—
|
|
|
$
|
15,479
|
|
|
$
|
—
|
|
(1)
|
This represents a financial asset or liability that is measured at fair value on a recurring basis.
|
(2)
|
This represents a non-financial asset that is measured at fair value on a nonrecurring basis.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Derivatives (1)
|
$
|
—
|
|
|
$
|
75,808
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
||||||
Derivatives (1)
|
$
|
—
|
|
|
$
|
54,290
|
|
|
$
|
—
|
|
(1)
|
This represents a financial asset or liability that is measured at fair value on a recurring basis.
|
|
For the Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Impairment of proved oil and gas properties and related support equipment
|
$
|
956.7
|
|
|
$
|
—
|
|
Abandonment and impairment of unproved properties (1)
|
33.1
|
|
|
6.3
|
|
||
Impairment
|
$
|
989.8
|
|
|
$
|
6.3
|
|
(1)
|
These impairments related to actual and anticipated lease expirations, as well as actual and anticipated losses on acreage due to title defects, changes in development plans, and other inherent acreage risks. The balances in the unproved oil and gas properties line item on the accompanying balance sheets as of March 31, 2020, and December 31, 2019, are recorded at carrying value.
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||
|
Principal Amount
|
|
Fair Value
|
|
Principal Amount
|
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
6.125% Senior Notes due 2022
|
$
|
436,047
|
|
|
$
|
190,771
|
|
|
$
|
476,796
|
|
|
$
|
481,564
|
|
5.0% Senior Notes due 2024
|
$
|
500,000
|
|
|
$
|
148,750
|
|
|
$
|
500,000
|
|
|
$
|
479,815
|
|
5.625% Senior Notes due 2025
|
$
|
500,000
|
|
|
$
|
145,000
|
|
|
$
|
500,000
|
|
|
$
|
475,835
|
|
6.75% Senior Notes due 2026
|
$
|
500,000
|
|
|
$
|
150,000
|
|
|
$
|
500,000
|
|
|
$
|
494,860
|
|
6.625% Senior Notes due 2027
|
$
|
500,000
|
|
|
$
|
149,215
|
|
|
$
|
500,000
|
|
|
$
|
493,750
|
|
1.50% Senior Convertible Notes due 2021
|
$
|
172,500
|
|
|
$
|
69,576
|
|
|
$
|
172,500
|
|
|
$
|
164,430
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Operating lease cost
|
$
|
6,834
|
|
|
$
|
8,979
|
|
Short-term lease cost (1)
|
43,572
|
|
|
134,917
|
|
||
Variable lease cost (2)
|
22,334
|
|
|
31,408
|
|
||
Total lease cost
|
$
|
72,740
|
|
|
$
|
175,304
|
|
(1)
|
Costs associated with short-term lease agreements relate primarily to operational activities where underlying lease terms are less than one year. This amount is significant as it includes drilling and completion activities and field equipment rentals, most of which are contracted for 12 months or less. It is expected that this amount will fluctuate primarily with the number of drilling rigs and completion crews the Company is operating under short-term agreements.
|
(2)
|
Variable lease payments include additional payments made that were not included in the initial measurement of the ROU asset and corresponding liability for lease agreements with terms longer than 12 months. Variable lease payments relate to the actual volumes transported under certain midstream agreements, actual usage associated with drilling rigs, completion crews, and vehicles, and variable utility costs associated with the Company’s leased office space. Fluctuations in variable lease payments are driven by actual volumes delivered and the number of drilling rigs and completion crews operating under long-term agreements.
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
3,046
|
|
|
$
|
2,952
|
|
Investing cash flows from operating leases
|
$
|
3,980
|
|
|
$
|
6,182
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
—
|
|
|
$
|
12,191
|
|
|
As of March 31, 2020
|
||
|
(in thousands)
|
||
2020 (remaining after March 31, 2020)
|
$
|
13,997
|
|
2021
|
12,541
|
|
|
2022
|
5,745
|
|
|
2023
|
3,602
|
|
|
2024
|
2,081
|
|
|
Thereafter
|
1,640
|
|
|
Total Lease payments
|
$
|
39,606
|
|
Less: Imputed interest (1)
|
(3,816
|
)
|
|
Total
|
$
|
35,790
|
|
(1)
|
The weighted-average discount rate used to determine the operating lease liability as of March 31, 2020, was 6.7 percent.
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||
|
(in thousands)
|
||||||
Other noncurrent assets
|
$
|
33,365
|
|
|
$
|
39,717
|
|
|
|
|
|
||||
Other current liabilities
|
$
|
15,780
|
|
|
$
|
19,189
|
|
Other noncurrent liabilities
|
$
|
20,010
|
|
|
$
|
23,137
|
|
•
|
net cash provided by operating activities of $218.1 million for the three months ended March 31, 2020, compared with $118.5 million for the same period in 2019. Please refer to Analysis of Cash Flow Changes Between the Three Months Ended March 31, 2020, and 2019 below for additional discussion;
|
•
|
net loss of $411.9 million, or $3.64 per diluted share, for the three months ended March 31, 2020, compared with a net loss of $177.6 million, or $1.58 per diluted share, for the same period in 2019. The net loss for the three months ended March 31, 2020, was primarily driven by impairment expense of $989.8 million, partially offset by a net derivative gain of $545.3 million. Please refer to Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2020, and 2019 below for additional discussion regarding the components of net loss for each period presented; and
|
•
|
adjusted EBITDAX, a non-GAAP financial measure, for the three months ended March 31, 2020, was $286.0 million, compared with $186.5 million for the same period in 2019. Please refer to the caption Non-GAAP Financial Measures below for additional discussion and our definition of adjusted EBITDAX and reconciliations of net income (loss) and net cash provided by operating activities.
|
|
Midland Basin
|
|
South Texas
|
|
Total
|
||||||||||||
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
Wells drilled but not completed at December 31, 2019
|
51
|
|
|
48
|
|
|
21
|
|
|
21
|
|
|
72
|
|
|
69
|
|
Wells drilled
|
25
|
|
|
22
|
|
|
3
|
|
|
3
|
|
|
28
|
|
|
25
|
|
Wells completed
|
(19
|
)
|
|
(19
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(20
|
)
|
|
(20
|
)
|
Other (1)
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Wells drilled but not completed at March 31, 2020
|
57
|
|
|
52
|
|
|
23
|
|
|
23
|
|
|
80
|
|
|
75
|
|
(1)
|
Includes adjustments related to normal business activities, including working interest changes for existing drilled but not completed wells.
|
|
Midland Basin
|
|
South Texas
|
|
Total
|
||||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||
Production:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil (MMBbl)
|
5.9
|
|
|
4.5
|
|
|
0.4
|
|
|
0.3
|
|
|
6.3
|
|
|
4.8
|
|
Gas (Bcf)
|
9.9
|
|
|
6.9
|
|
|
16.6
|
|
|
17.0
|
|
|
26.5
|
|
|
23.9
|
|
NGLs (MMBbl)
|
—
|
|
|
—
|
|
|
1.6
|
|
|
1.9
|
|
|
1.6
|
|
|
1.9
|
|
Equivalent (MMBOE)
|
7.6
|
|
|
5.7
|
|
|
4.8
|
|
|
5.0
|
|
|
12.4
|
|
|
10.7
|
|
Avg. daily equivalents (MBOE/d)
|
83.4
|
|
|
63.3
|
|
|
52.5
|
|
|
55.5
|
|
|
135.9
|
|
|
118.7
|
|
Relative percentage
|
61
|
%
|
|
53
|
%
|
|
39
|
%
|
|
47
|
%
|
|
100
|
%
|
|
100
|
%
|
|
For the Three Months Ended
|
||||||||||
|
March 31, 2020
|
|
December 31, 2019
|
|
March 31, 2019
|
||||||
Oil (per Bbl):
|
|
|
|
|
|
||||||
Average NYMEX contract monthly price
|
$
|
46.17
|
|
|
$
|
56.96
|
|
|
$
|
54.90
|
|
Realized price, before the effect of derivative settlements
|
$
|
45.96
|
|
|
$
|
56.09
|
|
|
$
|
49.47
|
|
Effect of oil derivative settlements
|
$
|
8.44
|
|
|
$
|
(0.87
|
)
|
|
$
|
(0.28
|
)
|
Gas:
|
|
|
|
|
|
||||||
Average NYMEX monthly settle price (per MMBtu)
|
$
|
1.95
|
|
|
$
|
2.50
|
|
|
$
|
3.15
|
|
Realized price, before the effect of derivative settlements (per Mcf)
|
$
|
1.54
|
|
|
$
|
2.42
|
|
|
$
|
2.73
|
|
Effect of gas derivative settlements (per Mcf)
|
$
|
0.55
|
|
|
$
|
0.33
|
|
|
$
|
(0.18
|
)
|
NGLs (per Bbl):
|
|
|
|
|
|
||||||
Average OPIS price (1)
|
$
|
17.02
|
|
|
$
|
21.96
|
|
|
$
|
26.28
|
|
Realized price, before the effect of derivative settlements
|
$
|
13.62
|
|
|
$
|
17.84
|
|
|
$
|
19.39
|
|
Effect of NGL derivative settlements
|
$
|
3.27
|
|
|
$
|
6.09
|
|
|
$
|
0.28
|
|
(1)
|
Average OPIS price per barrel of NGL, historical or strip, assumes a composite barrel product mix of 37% Ethane, 32% Propane, 6% Isobutane, 11% Normal Butane, and 14% Natural Gasoline for all periods presented. This product mix represents the industry standard composite barrel and does not necessarily represent our product mix for NGL production. Realized prices reflect our actual product mix.
|
|
As of April 22, 2020
|
|
As of March 31, 2020
|
||||
NYMEX WTI oil (per Bbl)
|
$
|
25.58
|
|
|
$
|
29.82
|
|
NYMEX Henry Hub gas (per MMBtu)
|
$
|
2.55
|
|
|
$
|
2.16
|
|
OPIS NGLs (per Bbl)
|
$
|
13.27
|
|
|
$
|
12.30
|
|
|
For the Three Months Ended
|
||||||||||||||
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||
|
2020
|
|
2019
|
|
2019
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Production (MMBOE)
|
12.4
|
|
|
12.8
|
|
|
12.4
|
|
|
12.4
|
|
||||
Oil, gas, and NGL production revenue
|
$
|
354.2
|
|
|
$
|
449.0
|
|
|
$
|
389.4
|
|
|
$
|
406.9
|
|
Oil, gas, and NGL production expense
|
$
|
119.6
|
|
|
$
|
127.3
|
|
|
$
|
129.0
|
|
|
$
|
123.1
|
|
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
|
$
|
233.5
|
|
|
$
|
228.7
|
|
|
$
|
211.1
|
|
|
$
|
206.3
|
|
Exploration
|
$
|
11.3
|
|
|
$
|
17.7
|
|
|
$
|
11.6
|
|
|
$
|
10.9
|
|
General and administrative
|
$
|
27.4
|
|
|
$
|
37.2
|
|
|
$
|
32.6
|
|
|
$
|
30.9
|
|
Net income (loss)
|
$
|
(411.9
|
)
|
|
$
|
(102.1
|
)
|
|
$
|
42.2
|
|
|
$
|
50.4
|
|
|
For the Three Months Ended
|
||||||||||||||
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||
|
2020
|
|
2019
|
|
2019
|
|
2019
|
||||||||
Average net daily production equivalent (MBOE per day)
|
135.9
|
|
|
138.8
|
|
|
134.9
|
|
|
136.5
|
|
||||
Lease operating expense (per BOE)
|
$
|
4.75
|
|
|
$
|
4.67
|
|
|
$
|
4.73
|
|
|
$
|
4.16
|
|
Transportation costs (per BOE)
|
$
|
3.11
|
|
|
$
|
3.46
|
|
|
$
|
4.00
|
|
|
$
|
4.00
|
|
Production taxes as a percent of oil, gas, and NGL production revenue
|
4.2
|
%
|
|
4.2
|
%
|
|
4.1
|
%
|
|
4.0
|
%
|
||||
Ad valorem tax expense (per BOE)
|
$
|
0.60
|
|
|
$
|
0.37
|
|
|
$
|
0.39
|
|
|
$
|
0.44
|
|
Depletion, depreciation, amortization, and asset retirement obligation liability accretion (per BOE)
|
$
|
18.88
|
|
|
$
|
17.91
|
|
|
$
|
17.02
|
|
|
$
|
16.61
|
|
General and administrative (per BOE)
|
$
|
2.22
|
|
|
$
|
2.92
|
|
|
$
|
2.63
|
|
|
$
|
2.49
|
|
|
For the Three Months Ended March 31,
|
|
Amount Change Between Periods
|
|
Percent Change Between Periods
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
Net production volumes: (1)
|
|
|
|
|
|
|
|
|||||||
Oil (MMBbl)
|
6.3
|
|
|
4.8
|
|
|
1.5
|
|
|
31
|
%
|
|||
Gas (Bcf)
|
26.5
|
|
|
23.9
|
|
|
2.6
|
|
|
11
|
%
|
|||
NGLs (MMBbl)
|
1.6
|
|
|
1.9
|
|
|
(0.3
|
)
|
|
(14
|
)%
|
|||
Equivalent (MMBOE)
|
12.4
|
|
|
10.7
|
|
|
1.7
|
|
|
16
|
%
|
|||
Average net daily production: (1)
|
|
|
|
|
|
|
|
|||||||
Oil (MBbl per day)
|
69.8
|
|
|
53.7
|
|
|
16.1
|
|
|
30
|
%
|
|||
Gas (MMcf per day)
|
291.2
|
|
|
265.5
|
|
|
25.7
|
|
|
10
|
%
|
|||
NGLs (MBbl per day)
|
17.6
|
|
|
20.8
|
|
|
(3.2
|
)
|
|
(15
|
)%
|
|||
Equivalent (MBOE per day)
|
135.9
|
|
|
118.7
|
|
|
17.2
|
|
|
14
|
%
|
|||
Oil, gas, and NGL production revenue (in millions): (1)
|
|
|
|
|
|
|
|
|||||||
Oil production revenue
|
$
|
291.7
|
|
|
$
|
239.1
|
|
|
$
|
52.6
|
|
|
22
|
%
|
Gas production revenue
|
40.7
|
|
|
65.1
|
|
|
(24.4
|
)
|
|
(37
|
)%
|
|||
NGL production revenue
|
21.8
|
|
|
36.3
|
|
|
(14.5
|
)
|
|
(40
|
)%
|
|||
Total oil, gas, and NGL production revenue
|
$
|
354.2
|
|
|
$
|
340.5
|
|
|
$
|
13.8
|
|
|
4
|
%
|
Oil, gas, and NGL production expense (in millions): (1)
|
|
|
|
|
|
|
|
|||||||
Lease operating expense
|
$
|
58.8
|
|
|
$
|
55.6
|
|
|
$
|
3.2
|
|
|
6
|
%
|
Transportation costs
|
38.4
|
|
|
43.6
|
|
|
(5.1
|
)
|
|
(12
|
)%
|
|||
Production taxes
|
14.9
|
|
|
14.0
|
|
|
0.8
|
|
|
6
|
%
|
|||
Ad valorem tax expense
|
7.4
|
|
|
8.1
|
|
|
(0.7
|
)
|
|
(8
|
)%
|
|||
Total oil, gas, and NGL production expense
|
$
|
119.6
|
|
|
$
|
121.3
|
|
|
$
|
(1.8
|
)
|
|
(1
|
)%
|
Realized price, before the effect of derivative settlements:
|
|
|
|
|
|
|
|
|||||||
Oil (per Bbl)
|
$
|
45.96
|
|
|
$
|
49.47
|
|
|
$
|
(3.51
|
)
|
|
(7
|
)%
|
Gas (per Mcf)
|
$
|
1.54
|
|
|
$
|
2.73
|
|
|
$
|
(1.19
|
)
|
|
(44
|
)%
|
NGLs (per Bbl)
|
$
|
13.62
|
|
|
$
|
19.39
|
|
|
$
|
(5.77
|
)
|
|
(30
|
)%
|
Per BOE
|
$
|
28.64
|
|
|
$
|
31.86
|
|
|
$
|
(3.22
|
)
|
|
(10
|
)%
|
Per BOE data:
|
|
|
|
|
|
|
|
|||||||
Production costs:
|
|
|
|
|
|
|
|
|||||||
Lease operating expense
|
$
|
4.75
|
|
|
$
|
5.20
|
|
|
$
|
(0.45
|
)
|
|
(9
|
)%
|
Transportation costs
|
$
|
3.11
|
|
|
$
|
4.08
|
|
|
$
|
(0.97
|
)
|
|
(24
|
)%
|
Production taxes
|
$
|
1.20
|
|
|
$
|
1.31
|
|
|
$
|
(0.11
|
)
|
|
(8
|
)%
|
Ad valorem tax expense
|
$
|
0.60
|
|
|
$
|
0.76
|
|
|
$
|
(0.16
|
)
|
|
(21
|
)%
|
Total production costs (1)
|
$
|
9.67
|
|
|
$
|
11.35
|
|
|
$
|
(1.68
|
)
|
|
(15
|
)%
|
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
|
$
|
18.88
|
|
|
$
|
16.63
|
|
|
$
|
2.25
|
|
|
14
|
%
|
General and administrative
|
$
|
2.22
|
|
|
$
|
3.00
|
|
|
$
|
(0.78
|
)
|
|
(26
|
)%
|
Derivative settlement gain (loss) (2)
|
$
|
5.94
|
|
|
$
|
(0.47
|
)
|
|
$
|
6.41
|
|
|
1,364
|
%
|
Earnings per share information:
|
|
|
|
|
|
|
|
|||||||
Basic weighted-average common shares outstanding (in thousands)
|
113,009
|
|
|
112,252
|
|
|
757
|
|
|
1
|
%
|
|||
Diluted weighted-average common shares outstanding (in thousands)
|
113,009
|
|
|
112,252
|
|
|
757
|
|
|
1
|
%
|
|||
Basic net loss per common share
|
$
|
(3.64
|
)
|
|
$
|
(1.58
|
)
|
|
$
|
(2.06
|
)
|
|
130
|
%
|
Diluted net loss per common share
|
$
|
(3.64
|
)
|
|
$
|
(1.58
|
)
|
|
$
|
(2.06
|
)
|
|
130
|
%
|
(1)
|
Amount and percentage changes may not calculate due to rounding.
|
(2)
|
Derivative settlements for the three months ended March 31, 2020, and 2019, are included within the net derivative (gain) loss line item in the accompanying statements of operations.
|
|
Net Equivalent Production
Increase (Decrease) |
|
Production Revenue
Increase (Decrease) |
|
Production Expense
Increase (Decrease) |
|||||
|
(MBOE per day)
|
|
(in millions)
|
|
(in millions)
|
|||||
Midland Basin
|
20.1
|
|
|
$
|
46.7
|
|
|
$
|
7.5
|
|
South Texas
|
(3.0
|
)
|
|
(32.9
|
)
|
|
(9.3
|
)
|
||
Total
|
17.2
|
|
|
$
|
13.8
|
|
|
$
|
(1.8
|
)
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
|
$
|
233.5
|
|
|
$
|
177.7
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Geological and geophysical expenses
|
$
|
1.2
|
|
|
$
|
0.4
|
|
Overhead and other expenses
|
10.1
|
|
|
10.9
|
|
||
Total
|
$
|
11.3
|
|
|
$
|
11.3
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Impairment of proved oil and gas properties and related support equipment
|
$
|
956.7
|
|
|
$
|
—
|
|
Abandonment and impairment of unproved properties
|
33.1
|
|
|
6.3
|
|
||
Total
|
$
|
989.8
|
|
|
$
|
6.3
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
General and administrative
|
$
|
27.4
|
|
|
$
|
32.1
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Net derivative (gain) loss
|
$
|
(545.3
|
)
|
|
$
|
177.1
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Interest expense
|
$
|
41.5
|
|
|
$
|
38.0
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Gain on extinguishment of debt
|
$
|
12.2
|
|
|
$
|
—
|
|
|
For the Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Weighted-average interest rate
|
6.5
|
%
|
|
6.5
|
%
|
Weighted-average borrowing rate
|
5.7
|
%
|
|
5.8
|
%
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Net loss (GAAP)
|
$
|
(411,895
|
)
|
|
$
|
(177,568
|
)
|
Interest expense
|
41,512
|
|
|
37,980
|
|
||
Income tax benefit
|
(99,008
|
)
|
|
(46,038
|
)
|
||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
|
233,489
|
|
|
177,746
|
|
||
Exploration (1)
|
10,392
|
|
|
10,143
|
|
||
Impairment
|
989,763
|
|
|
6,338
|
|
||
Stock-based compensation expense
|
5,561
|
|
|
5,838
|
|
||
Net derivative (gain) loss
|
(545,340
|
)
|
|
177,081
|
|
||
Derivative settlement gain (loss)
|
73,437
|
|
|
(4,969
|
)
|
||
Net gain on divestiture activity
|
—
|
|
|
(61
|
)
|
||
Gain on extinguishment of debt
|
(12,195
|
)
|
|
—
|
|
||
Other, net
|
333
|
|
|
4
|
|
||
Adjusted EBITDAX (non-GAAP)
|
286,049
|
|
|
186,494
|
|
||
Interest expense
|
(41,512
|
)
|
|
(37,980
|
)
|
||
Income tax benefit
|
99,008
|
|
|
46,038
|
|
||
Exploration (1)
|
(10,392
|
)
|
|
(10,143
|
)
|
||
Amortization of debt discount and deferred financing costs
|
3,992
|
|
|
3,789
|
|
||
Deferred income taxes
|
(99,347
|
)
|
|
(47,003
|
)
|
||
Other, net
|
(1,149
|
)
|
|
(2,534
|
)
|
||
Net change in working capital
|
(18,517
|
)
|
|
(20,159
|
)
|
||
Net cash provided by operating activities (GAAP)
|
$
|
218,132
|
|
|
$
|
118,502
|
|
(1)
|
Stock-based compensation expense is a component of the exploration expense and general and administrative expense line items on the accompanying statements of operations. Therefore, the exploration line items shown in the reconciliation above will vary from the amount shown on the accompanying statements of operations for the component of stock-based compensation expense recorded to exploration expense.
|
•
|
significantly reduced prices for our oil production, resulting from a world-wide decrease in demand for hydrocarbons and a resulting oversupply of existing production;
|
•
|
further decreases in the demand for our oil production, resulting from significantly decreased levels of global, regional and local travel as a result of federal, state and local government-imposed quarantines, including shelter-in-place mandates, enacted to slow the spread of the virus;
|
•
|
increased likelihood that we will, either voluntarily or as a result of third-party and regulatory mandates, curtail or shut-in production, resulting from depressed oil prices, lack of storage, and other market or political forces;
|
•
|
increased costs associated with, or actual unavailability of, facilities for the storage of oil, gas and NGL production, in the markets in which we operate;
|
•
|
increased operational difficulties associated with, or an inability to, deliver oil and NGLs to end-markets, resulting from pipeline and storage constraints;
|
•
|
the potential for forced curtailment of oil and NGL production by state governmental agencies, resulting in a need to significantly curtail or shut-in our production;
|
•
|
the potential for loss of leasehold or asset value for failure to produce oil and gas in paying quantities as a result of significantly lower commodity prices, voluntary or forced curtailments or failures or difficulties in bringing shut-in wells back online at their prior production levels, or other factors related to the misalignment of supply and demand, and the potential to incur significant costs associated with litigation related to the foregoing;
|
•
|
increased third-party credit risk, including the risk that counterparties may not accept the delivery of our oil and NGL production, resulting from adverse market conditions, a lack of access to capital and storage, and the failure of certain of our counterparties to continue as going concerns;
|
•
|
increased likelihood that counterparties to our existing agreements may seek to invoke force majeure provisions to avoid the performance of contractual obligations, resulting from significantly adverse market conditions;
|
•
|
decreased ability to access the capital markets or other sources of capital;
|
•
|
increased costs and staffing requirements related to facility modifications, social distancing measures or other best practices implemented in connection with federal, state or local government, and voluntarily imposed quarantines or other regulations or guidelines concerning physical gatherings; and
|
•
|
increased legal and operational costs related to compliance with significant changes in federal, state, and local laws and regulations.
|
PURCHASES OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS
|
|||||||||
Period
|
Total Number of Shares Purchased (1)
|
Weighted Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
Maximum Number of Shares that May Yet Be Purchased Under the Program (2)
|
|||||
01/01/2020 - 01/31/2020
|
175
|
|
$
|
11.83
|
|
—
|
|
3,072,184
|
|
02/01/2020 - 02/29/2020
|
—
|
|
$
|
—
|
|
—
|
|
3,072,184
|
|
03/01/2020 - 03/31/2020
|
166
|
|
$
|
6.17
|
|
—
|
|
3,072,184
|
|
Total:
|
341
|
|
$
|
9.07
|
|
—
|
|
3,072,184
|
|
(1)
|
All shares purchased by us in the first quarter of 2020 were to offset tax withholding obligations that occurred upon the delivery of outstanding shares underlying RSUs issued under the terms of award agreements granted under the Equity Plan.
|
(2)
|
In July 2006, our Board of Directors approved an increase in the number of shares that may be repurchased under the original August 1998 authorization to 6,000,000 as of the effective date of the resolution. Accordingly, as of the filing of this report, subject to the approval of our Board of Directors, we may repurchase up to 3,072,184 shares of common stock on a prospective basis. The shares may be repurchased from time to time in open market transactions or privately negotiated transactions, subject to market conditions and other factors, including certain provisions of our Credit Agreement, the indentures governing our Senior Notes and Senior Convertible Notes, and compliance with securities laws. Stock repurchases may be funded with existing cash balances, internal cash flows, or borrowings under our Credit Agreement. The stock repurchase program may be suspended or discontinued at any time. During the three months ended March 31, 2020, we did not repurchase any shares of our common stock, and we currently do not plan to repurchase any outstanding shares of our common stock during the remainder of 2020.
|
*
|
Filed with this report.
|
**
|
Furnished with this report.
|
|
SM ENERGY COMPANY
|
||
|
|
|
|
April 29, 2020
|
By:
|
/s/ JAVAN D. OTTOSON
|
|
|
|
Javan D. Ottoson
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
April 29, 2020
|
By:
|
/s/ A. WADE PURSELL
|
|
|
|
A. Wade Pursell
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
April 29, 2020
|
By:
|
/s/ PATRICK A. LYTLE
|
|
|
|
Patrick A. Lytle
|
|
|
|
Controller and Assistant Secretary
|
|
|
|
(Principal Accounting Officer)
|
BORROWER:
|
SM ENERGY COMPANY
|
1.
|
I have reviewed this quarterly report on Form 10-Q of SM Energy Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer 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.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of SM Energy Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ JAVAN D. OTTOSON
|
|
Javan D. Ottoson
|
|
President and Chief Executive Officer
|
|
April 29, 2020
|
|
|
|
|
|
/s/ A. WADE PURSELL
|
|
A. Wade Pursell
|
|
Executive Vice President and Chief Financial Officer
|
|
April 29, 2020
|
|