|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
72-1235413
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
625 E. Kaliste Saloom Road
|
|
Lafayette, Louisiana
|
70508
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
ý
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
|
|
Page
|
|
||
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 6.
|
||
|
|
Successor
|
|
|
Predecessor
|
||||
|
September 30,
2017 |
|
|
December 31,
2016 |
||||
Assets
|
(Unaudited)
|
|
|
(Note 1)
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
245,714
|
|
|
|
$
|
190,581
|
|
Restricted cash
|
37,684
|
|
|
|
—
|
|
||
Accounts receivable
|
35,670
|
|
|
|
48,464
|
|
||
Fair value of derivative contracts
|
2,565
|
|
|
|
—
|
|
||
Current income tax receivable
|
27,672
|
|
|
|
26,086
|
|
||
Other current assets
|
9,295
|
|
|
|
10,151
|
|
||
Total current assets
|
358,600
|
|
|
|
275,282
|
|
||
Oil and gas properties, full cost method of accounting:
|
|
|
|
|
||||
Proved
|
714,515
|
|
|
|
9,616,236
|
|
||
Less: accumulated depreciation, depletion and amortization
|
(330,921
|
)
|
|
|
(9,178,442
|
)
|
||
Net proved oil and gas properties
|
383,594
|
|
|
|
437,794
|
|
||
Unevaluated
|
102,283
|
|
|
|
373,720
|
|
||
Other property and equipment, net
|
18,433
|
|
|
|
26,213
|
|
||
Fair value of derivative contracts
|
1,040
|
|
|
|
—
|
|
||
Other assets, net
|
18,252
|
|
|
|
26,474
|
|
||
Total assets
|
$
|
882,202
|
|
|
|
$
|
1,139,483
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable to vendors
|
$
|
33,120
|
|
|
|
$
|
19,981
|
|
Undistributed oil and gas proceeds
|
5,439
|
|
|
|
15,073
|
|
||
Accrued interest
|
10,244
|
|
|
|
809
|
|
||
Fair value of derivative contracts
|
368
|
|
|
|
—
|
|
||
Asset retirement obligations
|
84,654
|
|
|
|
88,000
|
|
||
Current portion of long-term debt
|
421
|
|
|
|
408
|
|
||
Other current liabilities
|
28,503
|
|
|
|
18,602
|
|
||
Total current liabilities
|
162,749
|
|
|
|
142,873
|
|
||
Long-term debt
|
235,567
|
|
|
|
352,376
|
|
||
Asset retirement obligations
|
182,956
|
|
|
|
154,019
|
|
||
Fair value of derivative contracts
|
74
|
|
|
|
—
|
|
||
Other long-term liabilities
|
10,110
|
|
|
|
17,315
|
|
||
Total liabilities not subject to compromise
|
591,456
|
|
|
|
666,583
|
|
||
Liabilities subject to compromise
|
—
|
|
|
|
1,110,182
|
|
||
Total liabilities
|
591,456
|
|
|
|
1,776,765
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Predecessor common stock ($.01 par value; authorized 30,000,000 shares; issued 5,610,020 shares)
|
—
|
|
|
|
56
|
|
||
Predecessor treasury stock (1,658 shares, at cost)
|
—
|
|
|
|
(860
|
)
|
||
Predecessor additional paid-in capital
|
—
|
|
|
|
1,659,731
|
|
||
Successor common stock ($.01 par value; authorized 60,000,000 shares; issued 19,998,019 shares)
|
200
|
|
|
|
—
|
|
||
Successor additional paid-in capital
|
555,323
|
|
|
|
—
|
|
||
Accumulated deficit
|
(264,777
|
)
|
|
|
(2,296,209
|
)
|
||
Total stockholders’ equity
|
290,746
|
|
|
|
(637,282
|
)
|
||
Total liabilities and stockholders’ equity
|
$
|
882,202
|
|
|
|
$
|
1,139,483
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
Three Months Ended
September 30, 2017 |
|
|
Three Months Ended
September 30, 2016 |
||||
Operating revenue:
|
|
|
|
|
||||
Oil production
|
$
|
61,841
|
|
|
|
$
|
71,116
|
|
Natural gas production
|
5,451
|
|
|
|
15,601
|
|
||
Natural gas liquids production
|
2,473
|
|
|
|
6,666
|
|
||
Other operational income
|
9,760
|
|
|
|
1,044
|
|
||
Total operating revenue
|
79,525
|
|
|
|
94,427
|
|
||
Operating expenses:
|
|
|
|
|
||||
Lease operating expenses
|
11,778
|
|
|
|
16,976
|
|
||
Transportation, processing and gathering expenses
|
1,076
|
|
|
|
10,633
|
|
||
Production taxes
|
188
|
|
|
|
835
|
|
||
Depreciation, depletion and amortization
|
27,553
|
|
|
|
58,918
|
|
||
Write-down of oil and gas properties
|
—
|
|
|
|
36,484
|
|
||
Accretion expense
|
8,095
|
|
|
|
10,082
|
|
||
Salaries, general and administrative expenses
|
15,887
|
|
|
|
15,425
|
|
||
Incentive compensation expense
|
4,646
|
|
|
|
2,160
|
|
||
Restructuring fees
|
129
|
|
|
|
5,784
|
|
||
Other operational expenses
|
703
|
|
|
|
9,059
|
|
||
Derivative expense, net
|
6,685
|
|
|
|
199
|
|
||
Total operating expenses
|
76,740
|
|
|
|
166,555
|
|
||
|
|
|
|
|
||||
Gain (loss) on Appalachia Properties divestiture
|
(132
|
)
|
|
|
—
|
|
||
|
|
|
|
|
||||
Income (loss) from operations
|
2,653
|
|
|
|
(72,128
|
)
|
||
Other (income) expense:
|
|
|
|
|
||||
Interest expense
|
3,529
|
|
|
|
16,924
|
|
||
Interest income
|
(366
|
)
|
|
|
(58
|
)
|
||
Other income
|
(276
|
)
|
|
|
(272
|
)
|
||
Other expense
|
47
|
|
|
|
16
|
|
||
Total other expense
|
2,934
|
|
|
|
16,610
|
|
||
Loss before income taxes
|
(281
|
)
|
|
|
(88,738
|
)
|
||
Provision (benefit) for income taxes:
|
|
|
|
|
||||
Current
|
(1,578
|
)
|
|
|
(991
|
)
|
||
Deferred
|
—
|
|
|
|
1,888
|
|
||
Total income taxes
|
(1,578
|
)
|
|
|
897
|
|
||
Net income (loss)
|
$
|
1,297
|
|
|
|
$
|
(89,635
|
)
|
Basic income (loss) per share
|
$
|
0.06
|
|
|
|
$
|
(16.01
|
)
|
Diluted income (loss) per share
|
$
|
0.06
|
|
|
|
$
|
(16.01
|
)
|
Average shares outstanding
|
19,997
|
|
|
|
5,600
|
|
||
Average shares outstanding assuming dilution
|
19,997
|
|
|
|
5,600
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Period from
March 1, 2017 through September 30, 2017 |
|
|
Period from
January 1, 2017 through February 28, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||
Operating revenue:
|
|
|
|
|
|
|
||||||
Oil production
|
$
|
143,556
|
|
|
|
$
|
45,837
|
|
|
$
|
204,102
|
|
Natural gas production
|
14,201
|
|
|
|
13,476
|
|
|
43,327
|
|
|||
Natural gas liquids production
|
6,264
|
|
|
|
8,706
|
|
|
15,119
|
|
|||
Other operational income
|
9,936
|
|
|
|
903
|
|
|
1,737
|
|
|||
Derivative income, net
|
1,414
|
|
|
|
—
|
|
|
—
|
|
|||
Total operating revenue
|
175,371
|
|
|
|
68,922
|
|
|
264,285
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
33,154
|
|
|
|
8,820
|
|
|
55,349
|
|
|||
Transportation, processing and gathering expenses
|
3,045
|
|
|
|
6,933
|
|
|
18,657
|
|
|||
Production taxes
|
446
|
|
|
|
682
|
|
|
1,894
|
|
|||
Depreciation, depletion and amortization
|
76,553
|
|
|
|
37,429
|
|
|
166,707
|
|
|||
Write-down of oil and gas properties
|
256,435
|
|
|
|
—
|
|
|
284,337
|
|
|||
Accretion expense
|
19,698
|
|
|
|
5,447
|
|
|
30,147
|
|
|||
Salaries, general and administrative expenses
|
37,718
|
|
|
|
9,629
|
|
|
48,193
|
|
|||
Incentive compensation expense
|
4,646
|
|
|
|
2,008
|
|
|
11,809
|
|
|||
Restructuring fees
|
739
|
|
|
|
—
|
|
|
16,173
|
|
|||
Other operational expenses
|
3,292
|
|
|
|
530
|
|
|
49,266
|
|
|||
Derivative expense, net
|
—
|
|
|
|
1,778
|
|
|
687
|
|
|||
Total operating expenses
|
435,726
|
|
|
|
73,256
|
|
|
683,219
|
|
|||
|
|
|
|
|
|
|
||||||
Gain (loss) on Appalachia Properties divestiture
|
(105
|
)
|
|
|
213,453
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Income (loss) from operations
|
(260,460
|
)
|
|
|
209,119
|
|
|
(418,934
|
)
|
|||
Other (income) expense:
|
|
|
|
|
|
|
||||||
Interest expense
|
8,320
|
|
|
|
—
|
|
|
49,764
|
|
|||
Interest income
|
(575
|
)
|
|
|
(45
|
)
|
|
(474
|
)
|
|||
Other income
|
(719
|
)
|
|
|
(315
|
)
|
|
(840
|
)
|
|||
Other expense
|
861
|
|
|
|
13,336
|
|
|
27
|
|
|||
Reorganization items, net
|
—
|
|
|
|
(437,744
|
)
|
|
—
|
|
|||
Total other (income) expense
|
7,887
|
|
|
|
(424,768
|
)
|
|
48,477
|
|
|||
Income (loss) before income taxes
|
(268,347
|
)
|
|
|
633,887
|
|
|
(467,411
|
)
|
|||
Provision (benefit) for income taxes:
|
|
|
|
|
|
|
||||||
Current
|
(3,570
|
)
|
|
|
3,570
|
|
|
(4,178
|
)
|
|||
Deferred
|
—
|
|
|
|
—
|
|
|
10,947
|
|
|||
Total income taxes
|
(3,570
|
)
|
|
|
3,570
|
|
|
6,769
|
|
|||
Net income (loss)
|
$
|
(264,777
|
)
|
|
|
$
|
630,317
|
|
|
$
|
(474,180
|
)
|
Basic income (loss) per share
|
$
|
(13.24
|
)
|
|
|
$
|
110.99
|
|
|
$
|
(84.90
|
)
|
Diluted income (loss) per share
|
$
|
(13.24
|
)
|
|
|
$
|
110.99
|
|
|
$
|
(84.90
|
)
|
Average shares outstanding
|
19,997
|
|
|
|
5,634
|
|
|
5,585
|
|
|||
Average shares outstanding assuming dilution
|
19,997
|
|
|
|
5,634
|
|
|
5,585
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
Three Months Ended
September 30, 2017 |
|
|
Three Months Ended
September 30, 2016 |
||||
Net income (loss)
|
$
|
1,297
|
|
|
|
$
|
(89,635
|
)
|
Other comprehensive loss, net of tax effect:
|
|
|
|
|
||||
Derivatives
|
—
|
|
|
|
(3,467
|
)
|
||
Comprehensive income (loss)
|
$
|
1,297
|
|
|
|
$
|
(93,102
|
)
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Period from
March 1, 2017 through September 30, 2017 |
|
|
Period from
January 1, 2017 through February 28, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||
Net income (loss)
|
|
$
|
(264,777
|
)
|
|
|
$
|
630,317
|
|
|
$
|
(474,180
|
)
|
Other comprehensive income (loss), net of tax effect:
|
|
|
|
|
|
|
|
||||||
Derivatives
|
|
—
|
|
|
|
—
|
|
|
(20,107
|
)
|
|||
Foreign currency translation
|
|
—
|
|
|
|
—
|
|
|
6,073
|
|
|||
Comprehensive income (loss)
|
|
$
|
(264,777
|
)
|
|
|
$
|
630,317
|
|
|
$
|
(488,214
|
)
|
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Stockholders’
Equity
|
||||||||||||
Balance, December 31, 2015 (Predecessor)
|
$
|
55
|
|
|
$
|
(860
|
)
|
|
$
|
1,648,687
|
|
|
$
|
(1,705,623
|
)
|
|
$
|
17,952
|
|
|
$
|
(39,789
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(590,586
|
)
|
|
—
|
|
|
(590,586
|
)
|
||||||
Adjustment for fair value accounting of derivatives, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,025
|
)
|
|
(24,025
|
)
|
||||||
Adjustment for foreign currency translation, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,073
|
|
|
6,073
|
|
||||||
Exercise of stock options, vesting of restricted stock and granting of stock awards
|
1
|
|
|
—
|
|
|
(732
|
)
|
|
—
|
|
|
—
|
|
|
(731
|
)
|
||||||
Amortization of stock compensation expense
|
—
|
|
|
—
|
|
|
11,776
|
|
|
—
|
|
|
—
|
|
|
11,776
|
|
||||||
Balance, December 31, 2016 (Predecessor)
|
56
|
|
|
(860
|
)
|
|
1,659,731
|
|
|
(2,296,209
|
)
|
|
—
|
|
|
(637,282
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
630,317
|
|
|
—
|
|
|
630,317
|
|
||||||
Exercise of stock options, vesting of restricted stock and granting of stock awards
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
||||||
Amortization of stock compensation expense
|
—
|
|
|
—
|
|
|
3,527
|
|
|
—
|
|
|
—
|
|
|
3,527
|
|
||||||
Balance, February 28, 2017 (Predecessor)
|
56
|
|
|
(860
|
)
|
|
1,663,086
|
|
|
(1,665,892
|
)
|
|
—
|
|
|
(3,610
|
)
|
||||||
Cancellation of Predecessor equity
|
(56
|
)
|
|
860
|
|
|
(1,663,086
|
)
|
|
1,665,892
|
|
|
—
|
|
|
3,610
|
|
||||||
Balance, February 28, 2017 (Predecessor)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of Successor common stock and warrants
|
200
|
|
|
—
|
|
|
554,428
|
|
|
—
|
|
|
—
|
|
|
554,628
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, February 28, 2017 (Successor)
|
200
|
|
|
—
|
|
|
554,428
|
|
|
—
|
|
|
—
|
|
|
554,628
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(264,777
|
)
|
|
—
|
|
|
(264,777
|
)
|
||||||
Exercise of stock options, vesting of restricted stock and granting of stock awards
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
||||||
Amortization of stock compensation expense
|
—
|
|
|
—
|
|
|
914
|
|
|
—
|
|
|
—
|
|
|
914
|
|
||||||
Balance, September 30, 2017 (Successor)
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
555,323
|
|
|
$
|
(264,777
|
)
|
|
$
|
—
|
|
|
$
|
290,746
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Period from
March 1, 2017 through September 30, 2017 |
|
|
Period from
January 1, 2017 through February 28, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(264,777
|
)
|
|
|
$
|
630,317
|
|
|
$
|
(474,180
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization
|
76,553
|
|
|
|
37,429
|
|
|
166,707
|
|
|||
Write-down of oil and gas properties
|
256,435
|
|
|
|
—
|
|
|
284,337
|
|
|||
Accretion expense
|
19,698
|
|
|
|
5,447
|
|
|
30,147
|
|
|||
Deferred income tax provision
|
—
|
|
|
|
—
|
|
|
10,947
|
|
|||
(Gain) loss on sale of oil and gas properties
|
105
|
|
|
|
(213,453
|
)
|
|
—
|
|
|||
Settlement of asset retirement obligations
|
(53,129
|
)
|
|
|
(3,641
|
)
|
|
(15,106
|
)
|
|||
Non-cash stock compensation expense
|
893
|
|
|
|
2,645
|
|
|
6,407
|
|
|||
Non-cash derivative expense
|
1,210
|
|
|
|
1,778
|
|
|
1,261
|
|
|||
Non-cash interest expense
|
3
|
|
|
|
—
|
|
|
14,278
|
|
|||
Non-cash reorganization items
|
—
|
|
|
|
(458,677
|
)
|
|
—
|
|
|||
Other non-cash expense
|
877
|
|
|
|
172
|
|
|
6,081
|
|
|||
Change in current income taxes
|
(5,156
|
)
|
|
|
3,570
|
|
|
21,584
|
|
|||
Decrease in accounts receivable
|
6,059
|
|
|
|
6,354
|
|
|
3,968
|
|
|||
(Increase) decrease in other current assets
|
2,382
|
|
|
|
(2,274
|
)
|
|
(4,426
|
)
|
|||
Increase (decrease) in accounts payable
|
10,662
|
|
|
|
(4,652
|
)
|
|
3,217
|
|
|||
Increase (decrease) in other current liabilities
|
17,944
|
|
|
|
(9,653
|
)
|
|
(14,222
|
)
|
|||
Investment in derivative contracts
|
(2,416
|
)
|
|
|
(3,736
|
)
|
|
—
|
|
|||
Other
|
3,054
|
|
|
|
2,490
|
|
|
(8,107
|
)
|
|||
Net cash provided by (used in) operating activities
|
70,397
|
|
|
|
(5,884
|
)
|
|
32,893
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Investment in oil and gas properties
|
(42,837
|
)
|
|
|
(8,754
|
)
|
|
(200,622
|
)
|
|||
Proceeds from sale of oil and gas properties, net of expenses
|
17,777
|
|
|
|
505,383
|
|
|
—
|
|
|||
Investment in fixed and other assets
|
(158
|
)
|
|
|
(61
|
)
|
|
(1,231
|
)
|
|||
Change in restricted funds
|
37,863
|
|
|
|
(75,547
|
)
|
|
1,046
|
|
|||
Net cash provided by (used in) investing activities
|
12,645
|
|
|
|
421,021
|
|
|
(200,807
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from bank borrowings
|
—
|
|
|
|
—
|
|
|
477,000
|
|
|||
Repayments of bank borrowings
|
—
|
|
|
|
(341,500
|
)
|
|
(135,500
|
)
|
|||
Repayments of building loan
|
(275
|
)
|
|
|
(24
|
)
|
|
(285
|
)
|
|||
Cash payment to noteholders
|
—
|
|
|
|
(100,000
|
)
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
|
(1,055
|
)
|
|
(900
|
)
|
|||
Net payments for share-based compensation
|
(19
|
)
|
|
|
(173
|
)
|
|
(752
|
)
|
|||
Net cash provided by (used in) financing activities
|
(294
|
)
|
|
|
(442,752
|
)
|
|
339,563
|
|
|||
Effect of exchange rate changes on cash
|
—
|
|
|
|
—
|
|
|
(9
|
)
|
|||
Net change in cash and cash equivalents
|
82,748
|
|
|
|
(27,615
|
)
|
|
171,640
|
|
|||
Cash and cash equivalents, beginning of period
|
162,966
|
|
|
|
190,581
|
|
|
10,759
|
|
|||
Cash and cash equivalents, end of period
|
$
|
245,714
|
|
|
|
$
|
162,966
|
|
|
$
|
182,399
|
|
•
|
Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were cancelled, and on the Effective Date, reorganized Stone issued an aggregate of
20.0 million
shares of new common stock (the “New Common Stock”).
|
•
|
The Predecessor Company’s 2022 Notes and 2017 Convertible Notes were cancelled and the holders of such notes received their pro rata share of (a)
$100 million
of cash, (b)
19.0 million
shares of the New Common Stock, representing
95%
of the New Common Stock and (c)
$225 million
of
7.5%
Senior Second Lien Notes due 2022 (the “2022 Second Lien Notes”).
|
•
|
The Predecessor Company’s common stockholders received their pro rata share of
1.0 million
shares of the New Common Stock, representing
5%
of the New Common Stock, and warrants to purchase approximately
3.5 million
shares of New Common Stock. The warrants have an exercise price of
$42.04
per share and a term of
four years
, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company.
|
•
|
The Predecessor Company’s Pre-Emergence Credit Agreement was amended and restated as the Amended Credit Agreement (as defined in
Note 10 – Debt
). The obligations owed to the lenders under the Pre-Emergence Credit Agreement were converted to obligations under the Amended Credit Agreement.
|
•
|
All claims of creditors with unsecured claims, other than the claims by the holders of the 2022 Notes and 2017 Convertible Notes, including vendors, were unaltered and paid in full in the ordinary course of business to the extent the claims were undisputed.
|
|
|
February 28, 2017
|
||
Enterprise value
|
|
$
|
419,720
|
|
Plus: Cash and other assets
|
|
371,169
|
|
|
Less: Fair value of debt
|
|
(236,261
|
)
|
|
Less: Fair value of warrants
|
|
(15,648
|
)
|
|
Fair value of Successor common stock
|
|
$
|
538,980
|
|
|
|
|
||
Shares issued upon emergence
|
|
20,000
|
|
|
Per share value
|
|
$
|
26.95
|
|
|
|
February 28, 2017
|
||
Enterprise value
|
|
$
|
419,720
|
|
Plus: Cash and other assets
|
|
371,169
|
|
|
Plus: Asset retirement obligations (current and long-term)
|
|
290,067
|
|
|
Plus: Working capital and other liabilities
|
|
58,055
|
|
|
Reorganization value of Successor assets
|
|
$
|
1,139,011
|
|
|
Predecessor Company
|
|
Reorganization Adjustments
|
|
Fresh Start Adjustments
|
|
Successor Company
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
198,571
|
|
|
$
|
(35,605
|
)
|
(1)
|
$
|
—
|
|
|
$
|
162,966
|
|
Restricted cash
|
—
|
|
|
75,547
|
|
(1)
|
—
|
|
|
75,547
|
|
||||
Accounts receivable
|
42,808
|
|
|
9,301
|
|
(2)
|
—
|
|
|
52,109
|
|
||||
Fair value of derivative contracts
|
1,267
|
|
|
—
|
|
|
—
|
|
|
1,267
|
|
||||
Current income tax receivable
|
22,516
|
|
|
—
|
|
|
—
|
|
|
22,516
|
|
||||
Other current assets
|
10,924
|
|
|
875
|
|
(3)
|
(124
|
)
|
(12)
|
11,675
|
|
||||
Total current assets
|
276,086
|
|
|
50,118
|
|
|
(124
|
)
|
|
326,080
|
|
||||
Oil and gas properties, full cost method of accounting:
|
|
|
|
|
|
|
|
||||||||
Proved
|
9,633,907
|
|
|
(188,933
|
)
|
(1)
|
(8,774,122
|
)
|
(12)
|
670,852
|
|
||||
Less: accumulated DD&A
|
(9,215,679
|
)
|
|
—
|
|
|
9,215,679
|
|
(12)
|
—
|
|
||||
Net proved oil and gas properties
|
418,228
|
|
|
(188,933
|
)
|
|
441,557
|
|
|
670,852
|
|
||||
Unevaluated
|
371,140
|
|
|
(127,838
|
)
|
(1)
|
(146,292
|
)
|
(12)
|
97,010
|
|
||||
Other property and equipment, net
|
25,586
|
|
|
(101
|
)
|
(4)
|
(4,423
|
)
|
(13)
|
21,062
|
|
||||
Fair value of derivative contracts
|
1,819
|
|
|
—
|
|
|
—
|
|
|
1,819
|
|
||||
Other assets, net
|
26,516
|
|
|
(4,328
|
)
|
(5)
|
—
|
|
|
22,188
|
|
||||
Total assets
|
$
|
1,119,375
|
|
|
$
|
(271,082
|
)
|
|
$
|
290,718
|
|
|
$
|
1,139,011
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable to vendors
|
$
|
20,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,512
|
|
Undistributed oil and gas proceeds
|
5,917
|
|
|
(4,139
|
)
|
(1)
|
—
|
|
|
1,778
|
|
||||
Accrued interest
|
266
|
|
|
—
|
|
|
—
|
|
|
266
|
|
||||
Asset retirement obligations
|
92,597
|
|
|
—
|
|
|
—
|
|
|
92,597
|
|
||||
Fair value of derivative contracts
|
476
|
|
|
—
|
|
|
—
|
|
|
476
|
|
||||
Current portion of long-term debt
|
411
|
|
|
—
|
|
|
—
|
|
|
411
|
|
||||
Other current liabilities
|
17,032
|
|
|
(195
|
)
|
(6)
|
—
|
|
|
16,837
|
|
||||
Total current liabilities
|
137,211
|
|
|
(4,334
|
)
|
|
—
|
|
|
132,877
|
|
||||
Long-term debt
|
352,350
|
|
|
(116,500
|
)
|
(7)
|
—
|
|
|
235,850
|
|
||||
Asset retirement obligations
|
151,228
|
|
|
(8,672
|
)
|
(1)
|
54,914
|
|
(14)
|
197,470
|
|
||||
Fair value of derivative contracts
|
653
|
|
|
—
|
|
|
—
|
|
|
653
|
|
||||
Other long-term liabilities
|
17,533
|
|
|
—
|
|
|
—
|
|
|
17,533
|
|
||||
Total liabilities not subject to compromise
|
658,975
|
|
|
(129,506
|
)
|
|
54,914
|
|
|
584,383
|
|
||||
Liabilities subject to compromise
|
1,110,182
|
|
|
(1,110,182
|
)
|
(8)
|
—
|
|
|
—
|
|
||||
Total liabilities
|
1,769,157
|
|
|
(1,239,688
|
)
|
|
54,914
|
|
|
584,383
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
|
||||||||
Stockholders’ equity:
|
|
|
|
|
|
|
|
||||||||
Common stock (Predecessor)
|
56
|
|
|
(56
|
)
|
(9)
|
—
|
|
|
—
|
|
||||
Treasury stock (Predecessor)
|
(860
|
)
|
|
860
|
|
(9)
|
—
|
|
|
—
|
|
||||
Additional paid-in capital (Predecessor)
|
1,660,810
|
|
|
(1,660,810
|
)
|
(9)
|
—
|
|
|
—
|
|
||||
Common stock (Successor)
|
—
|
|
|
200
|
|
(10)
|
—
|
|
|
200
|
|
||||
Additional paid-in capital (Successor)
|
—
|
|
|
554,428
|
|
(10)
|
—
|
|
|
554,428
|
|
||||
Accumulated deficit
|
(2,309,788
|
)
|
|
2,073,984
|
|
(11)
|
235,804
|
|
(15)
|
—
|
|
||||
Total stockholders’ equity
|
(649,782
|
)
|
|
968,606
|
|
|
235,804
|
|
|
554,628
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
1,119,375
|
|
|
$
|
(271,082
|
)
|
|
$
|
290,718
|
|
|
$
|
1,139,011
|
|
1.
|
Reflects the net cash proceeds received from the sale of the Appalachia Properties in connection with the Plan and net cash payments made as of the Effective Date from implementation of the Plan:
|
Sources:
|
|
|
||
Net cash proceeds from sale of Appalachia Properties (a)
|
|
$
|
512,472
|
|
Total sources
|
|
512,472
|
|
|
Uses:
|
|
|
||
Cash transferred to restricted account (b)
|
|
75,547
|
|
|
Break-up fee to Tug Hill
|
|
10,800
|
|
|
Repayment of outstanding borrowings under Pre-Emergence Credit Agreement
|
|
341,500
|
|
|
Repayment of 2017 Convertible Notes and 2022 Notes
|
|
100,000
|
|
|
Other fees and expenses (c)
|
|
20,230
|
|
|
Total uses
|
|
548,077
|
|
|
Net uses
|
|
$
|
(35,605
|
)
|
(c)
|
Other fees and expenses include approximately
$15,180
of emergence and success fees,
$2,600
of professional fees and
$2,395
of payments made to seismic providers in settlement of their bankruptcy claims.
|
2.
|
Reflects a receivable for a
$10,000
indemnity escrow with release delayed until emergence from bankruptcy, net of a
$699
reimbursement to Tug Hill in connection with the sale of the Appalachia Properties (see
Note 7 – Divestiture
).
|
3.
|
Reflects the payment of a claim to a seismic provider as a prepayment/deposit.
|
4.
|
Reflects the sale of vehicles in connection with the sale of the Appalachia Properties.
|
5.
|
Reflects the write-off of
$2,577
of unamortized debt issuance costs related to the Pre-Emergence Credit Agreement and the reversal of a
$1,750
prepayment made to Tug Hill in October 2016.
|
6.
|
Reflects the accrual of
$2,008
in expected bonus payments under the KEIP (as defined in
Note 5 –
Share–Based Compensation and Employee Benefit Plans
) and a
$395
termination fee in connection with the early termination of an office lease, less the settlement of a property tax accrual of
$2,598
in connection with the sale of the Appalachia Properties.
|
7.
|
Reflects the repayment of
$341,500
of outstanding borrowings under the Pre-Emergence Credit Agreement and the issuance of
$225,000
of 2022 Second Lien Notes as part of the settlement of the Predecessor Company 2017 Convertible Notes and 2022 Notes.
|
8.
|
Liabilities subject to compromise were settled as follows in accordance with the Plan:
|
1 ¾% Senior Convertible Notes due 2017
|
|
$
|
300,000
|
|
7 ½% Senior Notes due 2022
|
|
775,000
|
|
|
Accrued interest
|
|
35,182
|
|
|
Liabilities subject to compromise of the Predecessor Company
|
|
1,110,182
|
|
|
Cash payment to senior noteholders
|
|
(100,000
|
)
|
|
Issuance of 2022 Second Lien Notes to former holders of the senior notes
|
|
(225,000
|
)
|
|
Fair value of equity issued to unsecured creditors
|
|
(538,980
|
)
|
|
Fair value of warrants issued to unsecured creditors
|
|
(15,648
|
)
|
|
Gain on settlement of liabilities subject to compromise
|
|
$
|
230,554
|
|
9.
|
Reflects the cancellation of the Predecessor Company’s common stock, treasury stock and additional paid-in capital.
|
10.
|
Reflects the issuance of Successor Company equity. In accordance with the Plan, the Successor Company issued
19.0 million
shares of New Common Stock to the former holders of the 2017 Convertible Notes and the 2022 Notes and
1.0 million
shares of New Common Stock to the Predecessor Company’s common stockholders. These amounts are subject to dilution by warrants issued to the Predecessor Company common stockholders, totaling approximately
3.5 million
shares, with an exercise price of
$42.04
per share and a term of
four years
. The fair value of the warrants was estimated at
$4.43
per share using a Black-Scholes-Merton valuation model.
|
Gain on settlement of liabilities subject to compromise
|
|
$
|
230,554
|
|
Professional and other fees paid at emergence
|
|
(10,648
|
)
|
|
Write-off of unamortized deferred financing costs
|
|
(2,577
|
)
|
|
Other reorganization adjustments
|
|
(1,915
|
)
|
|
Net impact to reorganization items
|
|
215,414
|
|
|
Gain on sale of Appalachia Properties
|
|
213,453
|
|
|
Cancellation of Predecessor Company equity
|
|
1,662,282
|
|
|
Other adjustments to accumulated deficit
|
|
(17,165
|
)
|
|
Net impact to accumulated deficit
|
|
$
|
2,073,984
|
|
12.
|
Fair value adjustments to oil and gas properties, associated inventory and unproved acreage. See above for a detailed discussion of the fair value methodology.
|
13.
|
Fair value adjustment for an office building owned by the Company. The income and sales comparison approaches were used in determining the fair value, using anticipated future earnings and an appropriate expected rate of return, as well as relying upon recent sales or offerings of similar assets.
|
14.
|
Fair value adjustments to the Company’s asset retirement obligations using estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate.
|
15.
|
Reflects the cumulative effect of the fresh start accounting adjustments discussed above.
|
|
|
|
|
Predecessor
|
||
|
|
|
|
Period from
January 1, 2017 through February 28, 2017 |
||
Gain on settlement of liabilities subject to compromise
|
|
|
|
$
|
230,554
|
|
Fresh start valuation adjustments
|
|
|
|
235,804
|
|
|
Reorganization professional fees and other expenses
|
|
|
|
(20,512
|
)
|
|
Write-off of deferred financing costs
|
|
|
|
(2,577
|
)
|
|
Other reorganization items
|
|
|
|
(5,525
|
)
|
|
Gain on reorganization items, net
|
|
|
|
$
|
437,744
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
Three Months Ended
September 30, 2017 |
|
|
Three Months Ended
September 30, 2016 |
||||
Income (numerator):
|
|
|
|
|
||||
Basic:
|
|
|
|
|
||||
Net income (loss)
|
$
|
1,297
|
|
|
|
$
|
(89,635
|
)
|
Net income attributable to participating securities
|
(4
|
)
|
|
|
—
|
|
||
Net income (loss) attributable to common stock - basic
|
$
|
1,293
|
|
|
|
$
|
(89,635
|
)
|
Diluted:
|
|
|
|
|
||||
Net income (loss)
|
$
|
1,297
|
|
|
|
$
|
(89,635
|
)
|
Net income attributable to participating securities
|
(4
|
)
|
|
|
—
|
|
||
Net income (loss) attributable to common stock - diluted
|
$
|
1,293
|
|
|
|
$
|
(89,635
|
)
|
Weighted average shares (denominator):
|
|
|
|
|
||||
Weighted average shares - basic
|
19,997
|
|
|
|
5,600
|
|
||
Dilutive effect of stock options
|
—
|
|
|
|
—
|
|
||
Dilutive effect of warrants
|
—
|
|
|
|
—
|
|
||
Dilutive effect of convertible notes
|
—
|
|
|
|
—
|
|
||
Weighted average shares - diluted
|
19,997
|
|
|
|
5,600
|
|
||
Basic income (loss) per share
|
$
|
0.06
|
|
|
|
$
|
(16.01
|
)
|
Diluted income (loss) per share
|
$
|
0.06
|
|
|
|
$
|
(16.01
|
)
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Period from
March 1, 2017 through September 30, 2017 |
|
|
Period from
January 1, 2017 through February 28, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||
Income (numerator):
|
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(264,777
|
)
|
|
|
$
|
630,317
|
|
|
$
|
(474,180
|
)
|
Net income attributable to participating securities
|
—
|
|
|
|
(4,995
|
)
|
|
—
|
|
|||
Net income (loss) attributable to common stock - basic
|
$
|
(264,777
|
)
|
|
|
$
|
625,322
|
|
|
$
|
(474,180
|
)
|
Diluted:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(264,777
|
)
|
|
|
$
|
630,317
|
|
|
$
|
(474,180
|
)
|
Net income attributable to participating securities
|
—
|
|
|
|
(4,995
|
)
|
|
—
|
|
|||
Net income (loss) attributable to common stock - diluted
|
$
|
(264,777
|
)
|
|
|
$
|
625,322
|
|
|
$
|
(474,180
|
)
|
Weighted average shares (denominator):
|
|
|
|
|
|
|
||||||
Weighted average shares - basic
|
19,997
|
|
|
|
5,634
|
|
|
5,585
|
|
|||
Dilutive effect of stock options
|
—
|
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of warrants
|
—
|
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of convertible notes
|
—
|
|
|
|
—
|
|
|
—
|
|
|||
Weighted average shares - diluted
|
19,997
|
|
|
|
5,634
|
|
|
5,585
|
|
|||
Basic income (loss) per share
|
$
|
(13.24
|
)
|
|
|
$
|
110.99
|
|
|
$
|
(84.90
|
)
|
Diluted income (loss) per share
|
$
|
(13.24
|
)
|
|
|
$
|
110.99
|
|
|
$
|
(84.90
|
)
|
|
|
Put Contracts (NYMEX)
|
|||||
|
|
Oil
|
|||||
|
|
Daily Volume
(Bbls/d) |
|
Price
($ per Bbl) |
|||
2017
|
February - December
|
2,000
|
|
|
$
|
50.00
|
|
2017
|
July - December
|
1,000
|
|
|
41.10
|
|
|
2018
|
January - December
|
1,000
|
|
|
54.00
|
|
|
2018
|
January - December
|
1,000
|
|
|
45.00
|
|
|
|
Fixed-Price Swaps (NYMEX)
|
||||||||||||
|
|
Natural Gas
|
|
Oil
|
||||||||||
|
|
Daily Volume
(MMBtus/d)
|
|
Swap Price
($ per MMBtu)
|
|
Daily Volume
(Bbls/d)
|
|
Swap Price
($ per Bbl)
|
||||||
2017
|
March - December
|
|
|
|
|
|
|
1,000
|
|
|
$
|
53.90
|
|
|
2017
|
July - December
|
11,000
|
|
|
$
|
3.00
|
|
|
|
|
|
|||
2017
|
October - December
|
|
|
|
|
1,000
|
|
|
52.10
|
|
||||
2018
|
January - December
|
|
|
|
|
|
|
1,000
|
|
|
52.50
|
|
||
2018
|
January - December
|
|
|
|
|
1,000
|
|
|
51.98
|
|
||||
2018
|
January - December
|
|
|
|
|
1,000
|
|
|
53.67
|
|
||||
2019
|
January - December
|
|
|
|
|
1,000
|
|
|
51.00
|
|
||||
2019
|
January - December
|
|
|
|
|
1,000
|
|
|
51.57
|
|
|
|
Collar Contracts (NYMEX)
|
||||||||||||||||||||
|
|
Natural Gas
|
|
Oil
|
||||||||||||||||||
|
|
Daily Volume
(MMBtus/d) |
|
Floor Price
($ per MMBtu) |
|
Ceiling Price
($ per MMBtu) |
|
Daily Volume
(Bbls/d)
|
|
Floor Price
($ per Bbl) |
|
Ceiling Price
($ per Bbl) |
||||||||||
2017
|
March - December
|
|
|
|
|
|
|
1,000
|
|
|
$
|
50.00
|
|
|
$
|
56.45
|
|
|||||
2017
|
April - December
|
|
|
|
|
|
|
1,000
|
|
|
50.00
|
|
|
56.75
|
|
|||||||
2018
|
January - December
|
6,000
|
|
|
$
|
2.75
|
|
|
$
|
3.24
|
|
|
1,000
|
|
|
45.00
|
|
|
55.35
|
|
Gain (Loss) Recognized in Derivative Income (Expense)
|
||||||||||||
|
Successor
|
|
Successor
|
|
|
Predecessor
|
||||||
|
Three Months Ended
September 30, 2017 |
|
Period from
March 1, 2017 through September 30, 2017 |
|
|
Period from
January 1, 2017 through February 28, 2017 |
||||||
Description
|
|
|
|
|
|
|
||||||
Commodity contracts:
|
|
|
|
|
|
|
||||||
Cash settlements
|
$
|
1.2
|
|
|
$
|
2.6
|
|
|
|
$
|
—
|
|
Change in fair value
|
(7.9
|
)
|
|
(1.2
|
)
|
|
|
(1.8
|
)
|
|||
Total gains (losses) on derivatives not designated or not qualifying as hedging instruments
|
$
|
(6.7
|
)
|
|
$
|
1.4
|
|
|
|
$
|
(1.8
|
)
|
|
|
As Presented Without Netting
|
|
Effects of Netting
|
|
With Effects of Netting
|
||||||
|
|
|
|
|
|
|
||||||
Current assets: Fair value of derivative contracts
|
|
$
|
2.6
|
|
|
$
|
(0.4
|
)
|
|
$
|
2.2
|
|
Long-term assets: Fair value of derivative contracts
|
|
1.0
|
|
|
(0.1
|
)
|
|
0.9
|
|
|||
Current liabilities: Fair value of derivative contracts
|
|
(0.4
|
)
|
|
0.4
|
|
|
—
|
|
|||
Long-term liabilities: Fair value of derivative contracts
|
|
(0.1
|
)
|
|
0.1
|
|
|
—
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
September 30,
2017 |
|
|
December 31,
2016 |
||||
7 ½% Senior Second Lien Notes due 2022
|
$
|
225.0
|
|
|
|
$
|
—
|
|
1 ¾% Senior Convertible Notes due 2017
|
—
|
|
|
|
300.0
|
|
||
7 ½% Senior Notes due 2022
|
—
|
|
|
|
775.0
|
|
||
Predecessor revolving credit facility
|
—
|
|
|
|
341.5
|
|
||
4.20% Building Loan
|
11.0
|
|
|
|
11.3
|
|
||
Total debt
|
236.0
|
|
|
|
1,427.8
|
|
||
Less: current portion of long-term debt
|
(0.4
|
)
|
|
|
(0.4
|
)
|
||
Less: liabilities subject to compromise
|
—
|
|
|
|
(1,075.0
|
)
|
||
Long-term debt
|
$
|
235.6
|
|
|
|
$
|
352.4
|
|
|
|
||
Asset retirement obligations as of January 1, 2017 (Predecessor)
|
$
|
242.0
|
|
Liabilities settled
|
(3.6
|
)
|
|
Divestment of properties
|
(8.7
|
)
|
|
Accretion expense
|
5.4
|
|
|
Asset retirement obligations as of February 28, 2017 (Predecessor)
|
235.2
|
|
|
Fair value fresh start adjustment
|
54.9
|
|
|
Asset retirement obligations as of February 28, 2017 (Successor)
|
290.1
|
|
|
Liabilities settled
|
(53.1
|
)
|
|
Accretion expense
|
19.7
|
|
|
Revision of estimates
|
11.0
|
|
|
Asset retirement obligations as of September 30, 2017 (Successor)
|
$
|
267.6
|
|
|
Fair Value Measurements
|
||||||||||||||
|
Successor as of
|
||||||||||||||
|
September 30, 2017
|
||||||||||||||
Assets
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Marketable securities (Other assets)
|
$
|
9.3
|
|
|
$
|
9.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative contracts
|
3.6
|
|
|
—
|
|
|
0.5
|
|
|
3.1
|
|
||||
Total
|
$
|
12.9
|
|
|
$
|
9.3
|
|
|
$
|
0.5
|
|
|
$
|
3.1
|
|
|
Fair Value Measurements at
|
||||||||||||||
|
Successor as of
|
||||||||||||||
|
September 30, 2017
|
||||||||||||||
Liabilities
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical
Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Derivative contracts
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.4
|
|
Total
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.4
|
|
|
Fair Value Measurements
|
||||||||||||||
|
Predecessor as of
|
||||||||||||||
|
December 31, 2016
|
||||||||||||||
Assets
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Marketable securities (Other assets)
|
$
|
8.7
|
|
|
$
|
8.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
8.7
|
|
|
$
|
8.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Hedging Contracts, net
|
||
Balance as of January 1, 2017 (Predecessor)
|
|
$
|
—
|
|
Total gains/(losses) (realized or unrealized):
|
|
|
||
Included in earnings
|
|
(0.6
|
)
|
|
Included in other comprehensive income
|
|
—
|
|
|
Purchases, sales, issuances and settlements
|
|
3.7
|
|
|
Transfers in and out of Level 3
|
|
—
|
|
|
Balance as of February 28, 2017 (Successor)
|
|
3.1
|
|
|
Total gains/(losses) (realized or unrealized):
|
|
|
||
Included in earnings
|
|
(1.3
|
)
|
|
Included in other comprehensive income
|
|
—
|
|
|
Purchases, sales, issuances and settlements
|
|
1.0
|
|
|
Transfers in and out of Level 3
|
|
—
|
|
|
Balance as of September 30, 2017 (Successor)
|
|
$
|
2.8
|
|
The amount of total gains/(losses) for the period included in earnings (derivative income) attributable to the change in unrealized gain/(losses) relating to derivatives still held at September 30, 2017
|
|
$
|
(1.7
|
)
|
|
|
Cash Flow
Hedges
|
|
||
Three Months Ended September 30, 2016 (Predecessor)
|
|
|
|
||
Beginning balance, net of tax
|
|
$
|
7.4
|
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|||
Change in fair value of derivatives
|
|
2.3
|
|
|
|
Income tax effect
|
|
(0.8
|
)
|
|
|
Net of tax
|
|
1.5
|
|
|
|
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|||
Operating revenue: oil/natural gas production
|
7.7
|
|
|
||
Income tax effect
|
|
(2.7
|
)
|
|
|
Net of tax
|
|
5.0
|
|
|
|
Other comprehensive loss, net of tax
|
|
(3.5
|
)
|
|
|
Ending balance, net of tax
|
|
$
|
3.9
|
|
|
|
|
|
|
|
|
||||||
|
Cash Flow
Hedges |
|
Foreign
Currency Items |
|
Total
|
||||||
Nine Months Ended September 30, 2016 (Predecessor)
|
|
|
|
|
|
||||||
Beginning balance, net of tax
|
$
|
24.0
|
|
|
$
|
(6.0
|
)
|
|
$
|
18.0
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
||||||
Change in fair value of derivatives
|
(1.7
|
)
|
|
—
|
|
|
(1.7
|
)
|
|||
Income tax effect
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|||
Net of tax
|
(1.1
|
)
|
|
—
|
|
|
(1.1
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|
|
|
||||||
Operating revenue: oil/natural gas production
|
29.4
|
|
|
—
|
|
|
29.4
|
|
|||
Other operational expenses
|
—
|
|
|
(6.0
|
)
|
|
(6.0
|
)
|
|||
Income tax effect
|
(10.4
|
)
|
|
—
|
|
|
(10.4
|
)
|
|||
Net of tax
|
19.0
|
|
|
(6.0
|
)
|
|
13.0
|
|
|||
Other comprehensive income (loss), net of tax
|
(20.1
|
)
|
|
6.0
|
|
|
(14.1
|
)
|
|||
Ending balance, net of tax
|
$
|
3.9
|
|
|
$
|
—
|
|
|
$
|
3.9
|
|
•
|
expected results from risk-weighted drilling success;
|
•
|
estimates of our future oil and natural gas production, including estimates of any increases in oil and natural gas production;
|
•
|
planned capital expenditures and the availability of capital resources to fund capital expenditures;
|
•
|
our outlook on oil and natural gas prices;
|
•
|
estimates of our oil and natural gas reserves;
|
•
|
any estimates of future earnings growth;
|
•
|
the impact of political and regulatory developments;
|
•
|
our outlook on the resolution of pending litigation and government inquiry;
|
•
|
estimates of the impact of new accounting pronouncements on earnings in future periods;
|
•
|
our future financial condition or results of operations and our future revenues and expenses;
|
•
|
the outcome of restructuring efforts and asset sales;
|
•
|
the amount, nature and timing of any potential acquisition or divestiture transactions;
|
•
|
any expected results or benefits associated with our acquisitions;
|
•
|
our access to capital and our anticipated liquidity;
|
•
|
estimates of future income taxes; and
|
•
|
our business strategy and other plans and objectives for future operations, including the Board’s assessment of the Company’s strategic direction.
|
•
|
commodity price volatility, including further or sustained declines in the prices we receive for our oil and natural gas production;
|
•
|
domestic and worldwide economic conditions, which may adversely affect the demand for and supply of oil and natural gas;
|
•
|
the availability of capital on economic terms to fund our operations, capital expenditures, acquisitions and other obligations;
|
•
|
our future level of indebtedness, liquidity and compliance with debt covenants;
|
•
|
our future financial condition, results of operations, revenues, cash flows and expenses;
|
•
|
the potential need to sell certain assets or raise additional capital;
|
•
|
our ability to post additional collateral for current bonds or comply with new supplemental bonding requirements imposed by BOEM;
|
•
|
declines in the value of our oil and gas properties resulting in a decrease in our borrowing base under our bank credit facility and impairments;
|
•
|
our ability to develop, explore for, acquire and replace oil and natural gas reserves and sustain production;
|
•
|
the impact of a financial crisis on our business operations, financial condition and ability to raise capital;
|
•
|
the ability of financial counterparties to perform or fulfill their obligations under existing agreements;
|
•
|
third-party interruption of sales to market;
|
•
|
inflation;
|
•
|
lack of availability and cost of goods and services;
|
•
|
market conditions relating to potential acquisition and divestiture transactions;
|
•
|
regulatory and environmental risks associated with drilling and production activities;
|
•
|
our ability to establish operations or production on our acreage prior to the expiration of related leaseholds;
|
•
|
availability of drilling and production equipment, facilities, field service providers, gathering, processing and transportation;
|
•
|
competition in the oil and gas industry;
|
•
|
our inability to retain and attract key personnel;
|
•
|
drilling and other operating risks, including the consequences of a catastrophic event;
|
•
|
unsuccessful exploration and development drilling activities;
|
•
|
hurricanes and other weather conditions;
|
•
|
availability, cost and adequacy of insurance coverage;
|
•
|
adverse effects of changes in applicable tax, environmental, derivatives, permitting, bonding and other regulatory requirements and legislation, as well as agency interpretation and enforcement and judicial decisions regarding the foregoing;
|
•
|
uncertainty inherent in estimating proved oil and natural gas reserves and in projecting future rates of production and timing of development expenditures; and
|
•
|
other risks described in this Form 10-Q and our 2016 Annual Report on Form 10-K.
|
•
|
remaining proved oil and natural gas reserve volumes and the timing of their production;
|
•
|
estimated costs to develop and produce proved oil and natural gas reserves;
|
•
|
accruals of exploration costs, development costs, operating costs and production revenue;
|
•
|
timing and future costs to abandon our oil and gas properties;
|
•
|
estimated fair value of derivative positions;
|
•
|
classification of unevaluated property costs;
|
•
|
capitalized general and administrative costs and interest;
|
•
|
estimates of fair value in business combinations;
|
•
|
estimates of reorganization value and enterprise value;
|
•
|
fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting;
|
•
|
current and deferred income taxes; and
|
•
|
contingencies.
|
•
|
Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were cancelled, and on the Effective Date, reorganized Stone issued an aggregate of 20.0 million shares of New Common Stock.
|
•
|
The Predecessor Company’s 2022 Notes and 2017 Convertible Notes were cancelled and the holders of such notes received their pro rata share of (a) $100 million of cash, (b) 19.0 million shares of the New Common Stock, representing 95% of the New Common Stock and (c) $225 million of 2022 Second Lien Notes.
|
•
|
The Predecessor Company’s common stockholders received their pro rata share of 1.0 million shares of the New Common Stock, representing 5% of the New Common Stock, and warrants to purchase approximately 3.5 million shares of New Common Stock.
|
•
|
The Predecessor Company’s Pre-Emergence Credit Agreement was amended and restated as the Amended Credit Agreement. The obligations owed to the lenders under the Pre-Emergence Credit Agreement were converted to obligations under the Amended Credit Agreement.
|
•
|
All claims of creditors with unsecured claims, other than the claims by the holders of the 2022 Notes and 2017 Convertible Notes, including vendors, were unaltered and paid in full in the ordinary course of business to the extent the claims were undisputed.
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Remaining Period in 2017
|
|
Years
2018 - 2019
|
|
Years
2020 - 2021
|
|
Years 2022 and
Beyond
|
||||||||||
Contractual Obligations and Commitments:
|
|
|
|
|
|
|
|
|
|
||||||||||
7.50% Second Lien Notes due 2022
|
$
|
225,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
225,000
|
|
4.20% Building Loan
|
11,075
|
|
|
104
|
|
|
868
|
|
|
944
|
|
|
9,159
|
|
|||||
Interest and commitment fees (1)
|
85,505
|
|
|
4,515
|
|
|
36,063
|
|
|
35,391
|
|
|
9,536
|
|
|||||
Asset retirement obligations including accretion
|
618,877
|
|
|
70,490
|
|
|
81,322
|
|
|
36,176
|
|
|
430,889
|
|
|||||
Rig commitments (2)
|
800
|
|
|
800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Seismic data commitments
|
16,255
|
|
|
7,690
|
|
|
8,565
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
256
|
|
|
96
|
|
|
160
|
|
|
—
|
|
|
—
|
|
|||||
Total Contractual Obligations and Commitments
|
$
|
957,768
|
|
|
$
|
83,695
|
|
|
$
|
126,978
|
|
|
$
|
72,511
|
|
|
$
|
674,584
|
|
(1)
|
Includes interest payable on the 2022 Second Lien Notes and Building Loan. Assumes 0.375% fee on unused commitments under the Amended Credit Agreement.
|
(2)
|
Represents minimum committed future expenditures for rig services.
|
|
Successor
|
|
|
Predecessor
|
||||
|
Three Months Ended
September 30, 2017 |
|
|
Three Months Ended
September 30, 2016 |
||||
Production:
|
|
|
|
|
||||
Oil (MBbls)
|
1,285
|
|
|
|
1,563
|
|
||
Natural gas (MMcf)
|
2,220
|
|
|
|
8,096
|
|
||
NGLs (MBbls)
|
114
|
|
|
|
686
|
|
||
Oil, natural gas and NGLs (MBoe)
|
1,769
|
|
|
|
3,598
|
|
||
Revenue data (in thousands):
(1)
|
|
|
|
|
||||
Oil revenue
|
$
|
61,841
|
|
|
|
$
|
71,116
|
|
Natural gas revenue
|
5,451
|
|
|
|
15,601
|
|
||
NGL revenue
|
2,473
|
|
|
|
6,666
|
|
||
Total oil, natural gas and NGL revenue
|
$
|
69,765
|
|
|
|
$
|
93,383
|
|
Average prices:
(2)
|
|
|
|
|
||||
Oil (per Bbl)
|
$
|
48.13
|
|
|
|
$
|
45.50
|
|
Natural gas (per Mcf)
|
2.46
|
|
|
|
1.93
|
|
||
NGLs (per Bbl)
|
21.69
|
|
|
|
9.72
|
|
||
Oil, natural gas and NGLs (per Boe)
|
39.44
|
|
|
|
25.95
|
|
||
Expenses (per MBoe):
|
|
|
|
|
||||
Lease operating expenses
|
$
|
6.66
|
|
|
|
$
|
4.72
|
|
Transportation, processing and gathering expenses
|
0.61
|
|
|
|
2.96
|
|
||
SG&A expenses (3)
|
8.98
|
|
|
|
4.29
|
|
||
DD&A expense on oil and gas properties
|
15.10
|
|
|
|
16.08
|
|
(1)
|
Includes the cash settlement of effective hedging contracts for the three months ended September 30, 2016. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges, and accordingly, cash settlements on our derivative contracts for periods subsequent to January 1, 2017 are reflected in derivative income (expense).
|
(2)
|
Prices for the three months ended September 30, 2016 include the realized impact of derivative instrument settlements, which increased the price of oil by $3.40 per Bbl and increased the price of natural gas by $0.30 per Mcf.
|
(3)
|
Excludes incentive compensation expense.
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Period from
March 1, 2017 through September 30, 2017 |
|
|
Period from
January 1, 2017 through February 28, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||
Production:
|
|
|
|
|
|
|
||||||
Oil (MBbls)
|
2,994
|
|
|
|
908
|
|
|
4,746
|
|
|||
Natural gas (MMcf)
|
5,593
|
|
|
|
5,037
|
|
|
20,042
|
|
|||
NGLs (MBbls)
|
293
|
|
|
|
408
|
|
|
1,294
|
|
|||
Oil, natural gas and NGLs (MBoe)
|
4,219
|
|
|
|
2,156
|
|
|
9,380
|
|
|||
Revenue data (in thousands):
(1)
|
|
|
|
|
|
|
||||||
Oil revenue
|
$
|
143,556
|
|
|
|
$
|
45,837
|
|
|
$
|
204,102
|
|
Natural gas revenue
|
14,201
|
|
|
|
13,476
|
|
|
43,327
|
|
|||
NGLs revenue
|
6,264
|
|
|
|
8,706
|
|
|
15,119
|
|
|||
Total oil, natural gas and NGL revenue
|
$
|
164,021
|
|
|
|
$
|
68,019
|
|
|
$
|
262,548
|
|
Average prices:
(2)
|
|
|
|
|
|
|
||||||
Oil (per Bbl)
|
$
|
47.95
|
|
|
|
$
|
50.48
|
|
|
$
|
43.01
|
|
Natural gas (per Mcf)
|
2.54
|
|
|
|
2.68
|
|
|
2.16
|
|
|||
NGLs (per Bbl)
|
21.38
|
|
|
|
21.34
|
|
|
11.68
|
|
|||
Oil, natural gas and NGLs (per Boe)
|
38.88
|
|
|
|
31.55
|
|
|
27.99
|
|
|||
Expenses (per MBoe):
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
$
|
7.86
|
|
|
|
$
|
4.09
|
|
|
$
|
5.90
|
|
Transportation, processing and gathering expenses
|
0.72
|
|
|
|
3.22
|
|
|
1.99
|
|
|||
SG&A expenses (3)
|
8.94
|
|
|
|
4.47
|
|
|
5.14
|
|
|||
DD&A expense on oil and gas properties
|
17.65
|
|
|
|
17.05
|
|
|
17.42
|
|
(1)
|
Includes the cash settlement of effective hedging contracts for the nine months ended September 30, 2016. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges, and accordingly, cash settlements on our derivative contracts for periods subsequent to January 1, 2017 are reflected in derivative income (expense).
|
(2)
|
Prices for the nine months ended September 30, 2016 include the realized impact of derivative instrument settlements, which increased the price of oil by $4.15 per Bbl and increased the price of natural gas by $0.48 per Mcf.
|
(3)
|
Excludes incentive compensation expense.
|
*
|
|
Filed or furnished herewith.
|
#
|
|
Not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.
|
†
|
|
Identifies management contracts and compensatory plans or arrangements.
|
|
|
STONE ENERGY CORPORATION
|
|
|
|
|
|
Date:
|
November 1, 2017
|
By:
|
/s/ Kenneth H. Beer
|
|
|
|
Kenneth H. Beer
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(On behalf of the Registrant and as
|
|
|
|
Principal Financial Officer)
|
|
|
Page
|
|
|
|
Purpose
|
|
3
|
Definitions
|
|
3
|
Administration
|
|
4
|
Participation
|
|
4
|
Incentive Pool Calculation
|
|
4
|
Index Group
|
|
5
|
Awards
|
|
5
|
Timing of Award Payments
|
|
5
|
Duration of Revised Annual Incentive Compensation Plan
|
|
5
|
Miscellaneous Plan Provisions
|
|
6
|
Effectiveness
|
|
6
|
|
|
|
Exhibit A
|
|
7
|
(1)
|
Designation of employees to be included in the Plan for the Plan Year;
|
(2)
|
Reviewing and proposing changes in the composition of an index group if the Compensation Committee determines such group is needed; and
|
(3)
|
Determining the Annual Incentive Pool for the Plan Year based on current economic and financial conditions prevailing at the time and pursuant to the Plan.
|
|
Threshold
|
Target
|
Stretch
|
Weighting
|
|
|
|
|
|
Production
|
16.7 mboed
|
18.5 mboed
|
20.4 mboed
|
15%
|
|
|
|
|
|
LOE
|
$77 million
|
$70 million
|
$63 million
|
15%
|
|
|
|
|
|
EBITDA
|
$152 million
|
$169 million
|
$186 million
|
20%
|
|
|
|
|
|
SG&A (4Q)
|
$12.6 million
|
$11.5 million
|
$10.4 million
|
15%
|
|
|
|
|
|
Reserves Enhancement
|
1 Event
|
2 Events
|
3 Events
|
15%
|
|
|
|
|
|
Safety / Environmental
|
Matrix Blue
|
Matrix Green
|
Matrix Brown
|
20%
|
|
|
|
|
|
|
|
|
Total
|
100%
|
|
|
|
|
|
•
|
Targets as presented to Board March 2017
|
•
|
6/15/17 Plan at strip pricing and Bank definition for EBITDA
|
•
|
4Q Results – Excludes non-recurring items and stock compensation
|
•
|
Rampart commercial success
|
•
|
JV drilling transaction(s)
|
•
|
Acquisition transaction(s)
|
•
|
Threshold: Better than lowest historical point
|
•
|
Stretch: Perform better than historical bests
|
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
0.35
|
|
|
|
|
|
|
|
|
|
|
Safety &
|
0.30
|
|
|
|
|
|
|
|
|
|
|
Environment
|
0.25
|
|
|
|
|
|
|
|
|
|
|
Score
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
0.05
|
|
20 Points
|
|
15 - 10 Points
|
10 - 5 Points
|
5 - 0 Points
|
||||
|
0.00
|
0.000
|
0.200
|
0.400
|
0.600
|
0.800
|
1.000
|
1.200
|
1.400
|
1.600
|
1.800
|
EMPLOYEE
|
SEVERANCE
|
Kenneth H. Beer
|
1.5x Annual Pay
|
Lisa S. Jaubert
|
1.5x Annual Pay
|
Keith A. Seilhan
|
1.5x Annual Pay
|
Thomas L. Messonier
|
1.0x Annual Pay
|
Florence M. Ziegler
|
1.0x Annual Pay
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Stone Energy Corporation (“registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ James M. Trimble
|
November 1, 2017
|
James M. Trimble
|
|
Interim Chief Executive Officer and President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Stone Energy Corporation (“registrant”);
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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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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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/ Kenneth H. Beer
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November 1, 2017
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Kenneth H. Beer
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Executive Vice President and Chief Financial Officer
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i.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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ii.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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November 1, 2017
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/s/ James M. Trimble
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James M. Trimble
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Interim Chief Executive Officer and President
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/s/ Kenneth H. Beer
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Kenneth H. Beer
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Executive Vice President and Chief Financial Officer
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