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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of incorporation or organization)
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81-5366183
(I.R.S. Employer
Identification No.)
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600 Travis
Houston, Texas
(Address of principal executive offices)
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77002
(Zip Code)
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(281) 840-4000
(Registrant’s telephone number, including area code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Emerging growth company
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¨
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Page
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Item 1.
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Financial Statements
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31,
2017 |
|
|
December 31,
2016 |
||||
(in thousands, except share and unit amounts)
|
|
|
|
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,072
|
|
|
|
$
|
694,857
|
|
Accounts receivable – trade, net
|
181,034
|
|
|
|
198,064
|
|
||
Derivative instruments
|
2,406
|
|
|
|
—
|
|
||
Restricted cash
|
81,766
|
|
|
|
1,602
|
|
||
Other current assets
|
91,005
|
|
|
|
106,011
|
|
||
Total current assets
|
357,283
|
|
|
|
1,000,534
|
|
||
|
|
|
|
|
||||
Noncurrent assets:
|
|
|
|
|
||||
Oil and natural gas properties (successful efforts method)
|
2,203,893
|
|
|
|
13,232,959
|
|
||
Less accumulated depletion and amortization
|
(15,351
|
)
|
|
|
(9,999,560
|
)
|
||
|
2,188,542
|
|
|
|
3,233,399
|
|
||
|
|
|
|
|
||||
Other property and equipment
|
445,951
|
|
|
|
636,487
|
|
||
Less accumulated depreciation
|
(4,197
|
)
|
|
|
(224,547
|
)
|
||
|
441,754
|
|
|
|
411,940
|
|
||
|
|
|
|
|
||||
Derivative instruments
|
8,960
|
|
|
|
—
|
|
||
Deferred income taxes
|
624,704
|
|
|
|
—
|
|
||
Other noncurrent assets
|
23,352
|
|
|
|
14,718
|
|
||
|
657,016
|
|
|
|
14,718
|
|
||
Total noncurrent assets
|
3,287,312
|
|
|
|
3,660,057
|
|
||
Total assets
|
$
|
3,644,595
|
|
|
|
$
|
4,660,591
|
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY (DEFICIT)
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
334,160
|
|
|
|
$
|
295,077
|
|
Derivative instruments
|
18,701
|
|
|
|
82,508
|
|
||
Current portion of long-term debt, net
|
28,125
|
|
|
|
1,937,729
|
|
||
Other accrued liabilities
|
48,829
|
|
|
|
26,304
|
|
||
Total current liabilities
|
429,815
|
|
|
|
2,341,618
|
|
||
|
|
|
|
|
||||
Derivative instruments
|
—
|
|
|
|
11,349
|
|
||
Long-term debt
|
805,625
|
|
|
|
—
|
|
||
Other noncurrent liabilities
|
350,981
|
|
|
|
399,607
|
|
||
Liabilities subject to compromise
|
—
|
|
|
|
4,305,005
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
||
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31,
2017 |
|
|
December 31,
2016 |
||||
(in thousands, except share and unit amounts)
|
|
|
|
|
||||
Temporary equity:
|
|
|
|
|
||||
Redeemable noncontrolling interests
|
29,350
|
|
|
|
—
|
|
||
Stockholders’/unitholders’ equity (deficit):
|
|
|
|
|
||||
Predecessor units issued and outstanding (no units issued or outstanding at March 31, 2017; 352,792,474 units issued and outstanding at December 31, 2016)
|
—
|
|
|
|
5,386,885
|
|
||
Predecessor accumulated deficit
|
—
|
|
|
|
(7,783,873
|
)
|
||
Successor preferred stock ($0.001 par value, 30,000,000 shares authorized and no shares issued at March 31, 2017; no shares authorized or issued at December 31, 2016)
|
—
|
|
|
|
—
|
|
||
Successor Class A common stock ($0.001 par value, 270,000,000 shares authorized and 89,233,922 shares issued at March 31, 2017; no shares authorized or issued at December 31, 2016)
|
89
|
|
|
|
—
|
|
||
Successor additional paid-in capital
|
2,035,991
|
|
|
|
—
|
|
||
Successor accumulated deficit
|
(7,256
|
)
|
|
|
—
|
|
||
Total stockholders’/unitholders’ equity (deficit)
|
2,028,824
|
|
|
|
(2,396,988
|
)
|
||
Total liabilities and equity (deficit)
|
$
|
3,644,595
|
|
|
|
$
|
4,660,591
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands, except per share and per unit amounts)
|
|
|
|
|
|
|
||||||
Revenues and other:
|
|
|
|
|
|
|
||||||
Oil, natural gas and natural gas liquids sales
|
$
|
87,445
|
|
|
|
$
|
203,766
|
|
|
$
|
199,849
|
|
Gains (losses) on oil and natural gas derivatives
|
(11,959
|
)
|
|
|
92,691
|
|
|
109,453
|
|
|||
Marketing revenues
|
2,914
|
|
|
|
6,636
|
|
|
9,061
|
|
|||
Other revenues
|
2,033
|
|
|
|
9,925
|
|
|
28,336
|
|
|||
|
80,433
|
|
|
|
313,018
|
|
|
346,699
|
|
|||
Expenses:
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
27,166
|
|
|
|
53,224
|
|
|
88,387
|
|
|||
Transportation expenses
|
13,723
|
|
|
|
25,972
|
|
|
41,994
|
|
|||
Marketing expenses
|
2,539
|
|
|
|
4,820
|
|
|
7,833
|
|
|||
General and administrative expenses
|
10,411
|
|
|
|
71,745
|
|
|
83,720
|
|
|||
Exploration costs
|
55
|
|
|
|
93
|
|
|
2,693
|
|
|||
Depreciation, depletion and amortization
|
21,362
|
|
|
|
56,484
|
|
|
105,215
|
|
|||
Impairment of long-lived assets
|
—
|
|
|
|
—
|
|
|
123,316
|
|
|||
Taxes, other than income taxes
|
7,502
|
|
|
|
15,747
|
|
|
19,754
|
|
|||
Losses on sale of assets and other, net
|
445
|
|
|
|
672
|
|
|
1,269
|
|
|||
|
83,203
|
|
|
|
228,757
|
|
|
474,181
|
|
|||
Other income and (expenses):
|
|
|
|
|
|
|
||||||
Interest expense, net of amounts capitalized
|
(4,917
|
)
|
|
|
(18,406
|
)
|
|
(85,267
|
)
|
|||
Other, net
|
(388
|
)
|
|
|
(149
|
)
|
|
68
|
|
|||
|
(5,305
|
)
|
|
|
(18,555
|
)
|
|
(85,199
|
)
|
|||
Reorganization items, net
|
(2,565
|
)
|
|
|
2,331,189
|
|
|
—
|
|
|||
Income (loss) from continuing operations before income taxes
|
(10,640
|
)
|
|
|
2,396,895
|
|
|
(212,681
|
)
|
|||
Income tax expense (benefit)
|
(3,384
|
)
|
|
|
(166
|
)
|
|
10,246
|
|
|||
Income (loss) from continuing operations
|
(7,256
|
)
|
|
|
2,397,061
|
|
|
(222,927
|
)
|
|||
Loss from discontinued operations, net of income taxes
|
—
|
|
|
|
—
|
|
|
(1,124,819
|
)
|
|||
Net income (loss)
|
$
|
(7,256
|
)
|
|
|
$
|
2,397,061
|
|
|
$
|
(1,347,746
|
)
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Basic and diluted income (loss) per share/unit – continuing operations
|
$
|
(0.08
|
)
|
|
|
$
|
6.79
|
|
|
$
|
(0.64
|
)
|
Basic and diluted loss per share/unit – discontinued operations
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
(3.19
|
)
|
Basic and diluted net income (loss) per share/unit
|
$
|
(0.08
|
)
|
|
|
$
|
6.79
|
|
|
$
|
(3.83
|
)
|
Basic and diluted weighted average shares/units outstanding
|
89,848
|
|
|
|
352,792
|
|
|
352,234
|
|
|
Units
|
|
Unitholders’ Capital
|
|
Accumulated Deficit
|
|
Total Unitholders’ Capital (Deficit)
|
|||||||
|
(in thousands)
|
|||||||||||||
|
|
|
|
|
|
|
|
|||||||
December 31, 2016
(Predecessor)
|
352,792
|
|
|
$
|
5,386,885
|
|
|
$
|
(7,783,873
|
)
|
|
$
|
(2,396,988
|
)
|
Net income
|
|
|
—
|
|
|
2,397,061
|
|
|
2,397,061
|
|
||||
Other
|
|
|
(73
|
)
|
|
—
|
|
|
(73
|
)
|
||||
February 28, 2017
(Predecessor)
|
352,792
|
|
|
5,386,812
|
|
|
(5,386,812
|
)
|
|
—
|
|
|||
Cancellation of predecessor equity
|
(352,792
|
)
|
|
(5,386,812
|
)
|
|
5,386,812
|
|
|
—
|
|
|||
February 28, 2017
(Predecessor)
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Class A Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Total Stockholders’ Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
|
|
||||||||||||
|
(in thousands)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Issuances of successor Class A common stock
|
89,230
|
|
|
$
|
89
|
|
|
$
|
2,021,142
|
|
|
$
|
—
|
|
|
$
|
2,021,231
|
|
Share-based compensation expenses
|
|
|
—
|
|
|
13,750
|
|
|
—
|
|
|
13,750
|
|
|||||
February 28, 2017
(Successor)
|
89,230
|
|
|
89
|
|
|
2,034,892
|
|
|
—
|
|
|
2,034,981
|
|
||||
Net loss
|
|
|
—
|
|
|
—
|
|
|
(7,256
|
)
|
|
(7,256
|
)
|
|||||
Issuances of successor Class A common stock
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Share-based compensation expenses
|
|
|
—
|
|
|
1,135
|
|
|
—
|
|
|
1,135
|
|
|||||
Other
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
(36
|
)
|
|||||
March 31, 2017
(Successor)
|
89,234
|
|
|
$
|
89
|
|
|
$
|
2,035,991
|
|
|
$
|
(7,256
|
)
|
|
$
|
2,028,824
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(7,256
|
)
|
|
|
$
|
2,397,061
|
|
|
$
|
(1,347,746
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Loss from discontinued operations
|
—
|
|
|
|
—
|
|
|
1,124,819
|
|
|||
Depreciation, depletion and amortization
|
21,362
|
|
|
|
56,484
|
|
|
105,215
|
|
|||
Impairment of long-lived assets
|
—
|
|
|
|
—
|
|
|
123,316
|
|
|||
Deferred income taxes
|
(3,384
|
)
|
|
|
(166
|
)
|
|
9,422
|
|
|||
Noncash (gains) losses on oil and natural gas derivatives
|
17,741
|
|
|
|
(104,263
|
)
|
|
225,258
|
|
|||
Share-based compensation expenses
|
4,177
|
|
|
|
50,255
|
|
|
12,425
|
|
|||
Amortization and write-off of deferred financing fees
|
3
|
|
|
|
1,338
|
|
|
4,676
|
|
|||
Losses on sale of assets and other, net
|
345
|
|
|
|
1,069
|
|
|
2,226
|
|
|||
Reorganization items, net
|
—
|
|
|
|
(2,359,364
|
)
|
|
—
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
(Increase) decrease in accounts receivable – trade, net
|
26,614
|
|
|
|
(7,216
|
)
|
|
(16,082
|
)
|
|||
(Increase) decrease in other assets
|
(2,620
|
)
|
|
|
402
|
|
|
(8,225
|
)
|
|||
Increase in restricted cash
|
—
|
|
|
|
(80,164
|
)
|
|
—
|
|
|||
Increase (decrease) in accounts payable and accrued expenses
|
(43,476
|
)
|
|
|
20,949
|
|
|
(630
|
)
|
|||
Increase in other liabilities
|
4,187
|
|
|
|
2,801
|
|
|
35,713
|
|
|||
Net cash provided by (used in) operating activities – continuing operations
|
17,693
|
|
|
|
(20,814
|
)
|
|
270,387
|
|
|||
Net cash provided by operating activities – discontinued operations
|
—
|
|
|
|
—
|
|
|
20,641
|
|
|||
Net cash provided by (used in) operating activities
|
17,693
|
|
|
|
(20,814
|
)
|
|
291,028
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Development of oil and natural gas properties
|
(20,244
|
)
|
|
|
(50,739
|
)
|
|
(70,407
|
)
|
|||
Purchases of other property and equipment
|
(2,466
|
)
|
|
|
(7,851
|
)
|
|
(6,404
|
)
|
|||
Proceeds from sale of properties and equipment and other
|
326
|
|
|
|
(166
|
)
|
|
(280
|
)
|
|||
Net cash used in investing activities – continuing operations
|
(22,384
|
)
|
|
|
(58,756
|
)
|
|
(77,091
|
)
|
|||
Net cash used in investing activities – discontinued operations
|
—
|
|
|
|
—
|
|
|
(14,330
|
)
|
|||
Net cash used in investing activities
|
(22,384
|
)
|
|
|
(58,756
|
)
|
|
(91,421
|
)
|
|||
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Cash flow from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from rights offering, net
|
—
|
|
|
|
514,069
|
|
|
—
|
|
|||
Proceeds from borrowings
|
30,000
|
|
|
|
—
|
|
|
978,500
|
|
|||
Repayments of debt
|
(96,250
|
)
|
|
|
(1,038,986
|
)
|
|
(100,000
|
)
|
|||
Payment to holders of claims under the second lien notes
|
—
|
|
|
|
(30,000
|
)
|
|
—
|
|
|||
Other
|
17,658
|
|
|
|
(6,015
|
)
|
|
(20,719
|
)
|
|||
Net cash provided by (used in) financing activities – continuing operations
|
(48,592
|
)
|
|
|
(560,932
|
)
|
|
857,781
|
|
|||
Net cash from financing activities – discontinued operations
|
—
|
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
(48,592
|
)
|
|
|
(560,932
|
)
|
|
857,781
|
|
|||
|
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
(53,283
|
)
|
|
|
(640,502
|
)
|
|
1,057,388
|
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||||
Beginning
|
54,355
|
|
|
|
694,857
|
|
|
2,168
|
|
|||
Ending
|
1,072
|
|
|
|
54,355
|
|
|
1,059,556
|
|
|||
Less cash and cash equivalents of discontinued operations at end of period
|
—
|
|
|
|
—
|
|
|
(7,334
|
)
|
|||
Ending – continuing operations
|
$
|
1,072
|
|
|
|
$
|
54,355
|
|
|
$
|
1,052,222
|
|
•
|
The Predecessor transferred all of its assets, including equity interests in its subsidiaries, other than LAC and Berry, to Linn Energy Holdco II LLC (“Holdco II”), a newly formed subsidiary of the Predecessor and the borrower under the Credit Agreement (“Successor Credit Facility”) entered into in connection with the reorganization, in exchange for
|
•
|
The holders of claims under the Predecessor’s Sixth Amended and Restated Credit Agreement (“Predecessor Credit Facility”) received a full recovery, consisting of a cash paydown and their pro rata share of the
$1.7 billion
Successor Credit Facility. As a result, all outstanding obligations under the Predecessor Credit Facility were canceled.
|
•
|
Holdco II, as borrower, entered into the Successor Credit Facility with the holders of claims under the Predecessor Credit Facility, as lenders, and Wells Fargo Bank, National Association, as administrative agent, providing for a new reserve-based revolving loan with up to
$1.4 billion
in borrowing commitments and a new term loan in an original principal amount of
$300 million
. For additional information about the Successor Credit Facility, see Note 6.
|
•
|
The holders of the Company’s
12.00%
senior secured second lien notes due December 2020 (the “Second Lien Notes”) received their pro rata share of (i)
17,678,889
shares of Class A common stock; (ii) certain rights to purchase shares of Class A common stock in the rights offering, as described below; and (iii)
$30 million
in cash. The holders of the Company’s
6.50%
senior notes due May 2019,
6.25%
senior notes due November 2019,
8.625%
senior notes due 2020,
7.75%
senior notes due February 2021 and
6.50%
senior notes due September 2021 (collectively, the “Unsecured Notes”) received their pro rata share of (i)
26,724,396
shares of Class A common stock; and (ii) certain rights to purchase shares of Class A common stock in the rights offering (as described below). As a result, all outstanding obligations under the Second Lien Notes and the Unsecured Notes and the indentures governing such obligations were canceled.
|
•
|
The holders of general unsecured claims (other than claims relating to the Second Lien Notes and the Unsecured Notes) against the LINN Debtors (the “LINN Unsecured Claims”) received their pro rata share of cash from two cash distribution pools totaling
$40 million
, as divided between a
$2.3 million
cash distribution pool for the payment in full of allowed LINN Unsecured Claims in an amount equal to
$2,500
or less (and larger claims for which the holders irrevocably agreed to reduce such claims to
$2,500
), and a
$37.7 million
cash distribution pool for pro rata distributions to all remaining allowed general LINN Unsecured Claims. As a result, all outstanding LINN Unsecured Claims were fully satisfied, settled, released and discharged as of the Effective Date.
|
•
|
All units of the Predecessor that were issued and outstanding immediately prior to the Effective Date were extinguished without recovery. On the Effective Date, the Successor issued in the aggregate
89,229,892
shares of Class A common stock. No cash was raised from the issuance of the Class A common stock on account of claims held by the Predecessor’s creditors.
|
•
|
The Successor entered into a registration rights agreement with certain parties, pursuant to which the Company agreed to, among other things, file a registration statement with the Securities and Exchange Commission within 60 days of the Effective Date covering the offer and resale of “Registrable Securities” (as defined therein).
|
•
|
By operation of the Plan and the Confirmation Order, the terms of the Predecessor’s board of directors expired as of the Effective Date. The Successor formed a new board of directors, consisting of the Chief Executive Officer of the Predecessor, one director selected by the Successor and five directors selected by a six-person selection committee.
|
|
Predecessor
|
||
|
December 31, 2016
|
||
|
(in thousands)
|
||
|
|
||
Accounts payable and accrued expenses
|
$
|
137,692
|
|
Accrued interest payable
|
144,184
|
|
|
Debt
|
4,023,129
|
|
|
Liabilities subject to compromise
|
$
|
4,305,005
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
||||
(in thousands)
|
|
|
|
|
||||
Gain on settlement of liabilities subject to compromise
|
$
|
—
|
|
|
|
$
|
3,724,750
|
|
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement
|
—
|
|
|
|
(1,000,000
|
)
|
||
Fresh start valuation adjustments
|
—
|
|
|
|
(591,525
|
)
|
||
Income tax benefit related to implementation of the Plan
|
—
|
|
|
|
264,889
|
|
||
Legal and other professional advisory fees
|
(2,570
|
)
|
|
|
(46,961
|
)
|
||
Terminated contracts
|
—
|
|
|
|
(6,915
|
)
|
||
Other
|
5
|
|
|
|
(13,049
|
)
|
||
Reorganization items, net
|
$
|
(2,565
|
)
|
|
|
$
|
2,331,189
|
|
Plan confirmed enterprise value
|
$
|
2,350,000
|
|
Fair value of debt
|
(900,000
|
)
|
|
Fair value of subsequently determined tax attributes
|
621,486
|
|
|
Fair value of vested Class B units
|
(36,505
|
)
|
|
Value of Successor’s stockholders’ equity
|
$
|
2,034,981
|
|
|
As of February 28, 2017
|
||||||||||||||||
|
Predecessor
|
|
Reorganization Adjustments
(1)
|
|
|
Fresh Start Adjustments
|
|
|
Successor
|
||||||||
|
(in thousands)
|
||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
734,166
|
|
|
$
|
(679,811
|
)
|
(2)
|
|
$
|
—
|
|
|
|
$
|
54,355
|
|
Accounts receivable – trade, net
|
212,099
|
|
|
—
|
|
|
|
(7,808
|
)
|
(16)
|
|
204,291
|
|
||||
Derivative instruments
|
15,391
|
|
|
—
|
|
|
|
—
|
|
|
|
15,391
|
|
||||
Restricted cash
|
1,602
|
|
|
80,164
|
|
(3)
|
|
—
|
|
|
|
81,766
|
|
||||
Other current assets
|
106,426
|
|
|
(15,983
|
)
|
(4)
|
|
1,780
|
|
(17)
|
|
92,223
|
|
||||
Total current assets
|
1,069,684
|
|
|
(615,630
|
)
|
|
|
(6,028
|
)
|
|
|
448,026
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Noncurrent assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Oil and natural gas properties (successful efforts method)
|
13,269,035
|
|
|
—
|
|
|
|
(11,082,258
|
)
|
(18)
|
|
2,186,777
|
|
||||
Less accumulated depletion and amortization
|
(10,044,240
|
)
|
|
—
|
|
|
|
10,044,240
|
|
(18)
|
|
—
|
|
||||
|
3,224,795
|
|
|
—
|
|
|
|
(1,038,018
|
)
|
|
|
2,186,777
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Other property and equipment
|
641,586
|
|
|
—
|
|
|
|
(197,653
|
)
|
(19)
|
|
443,933
|
|
||||
Less accumulated depreciation
|
(230,952
|
)
|
|
—
|
|
|
|
230,952
|
|
(19)
|
|
—
|
|
||||
|
410,634
|
|
|
—
|
|
|
|
33,299
|
|
|
|
443,933
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
4,492
|
|
|
—
|
|
|
|
—
|
|
|
|
4,492
|
|
||||
Deferred income taxes
|
—
|
|
|
264,889
|
|
(5)
|
|
356,597
|
|
(5)
|
|
621,486
|
|
||||
Other noncurrent assets
|
15,003
|
|
|
151
|
|
(6)
|
|
8,139
|
|
(20)
|
|
23,293
|
|
||||
|
19,495
|
|
|
265,040
|
|
|
|
364,736
|
|
|
|
649,271
|
|
||||
Total noncurrent assets
|
3,654,924
|
|
|
265,040
|
|
|
|
(639,983
|
)
|
|
|
3,279,981
|
|
||||
Total assets
|
$
|
4,724,608
|
|
|
$
|
(350,590
|
)
|
|
|
$
|
(646,011
|
)
|
|
|
$
|
3,728,007
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES AND EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses
|
$
|
324,585
|
|
|
$
|
41,266
|
|
(7)
|
|
$
|
(2,351
|
)
|
(21)
|
|
$
|
363,500
|
|
Derivative instruments
|
7,361
|
|
|
—
|
|
|
|
—
|
|
|
|
7,361
|
|
||||
Current portion of long-term debt, net
|
1,937,822
|
|
|
(1,912,822
|
)
|
(8)
|
|
—
|
|
|
|
25,000
|
|
||||
Other accrued liabilities
|
41,251
|
|
|
(1,026
|
)
|
(9)
|
|
1,104
|
|
(22)
|
|
41,329
|
|
||||
Total current liabilities
|
2,311,019
|
|
|
(1,872,582
|
)
|
|
|
(1,247
|
)
|
|
|
437,190
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
2,116
|
|
|
—
|
|
|
|
—
|
|
|
|
2,116
|
|
||||
Long-term debt
|
—
|
|
|
875,000
|
|
(10)
|
|
—
|
|
|
|
875,000
|
|
||||
Other noncurrent liabilities
|
402,776
|
|
|
(167
|
)
|
(11)
|
|
(53,239
|
)
|
(23)
|
|
349,370
|
|
||||
Liabilities subject to compromise
|
4,301,912
|
|
|
(4,301,912
|
)
|
(12)
|
|
—
|
|
|
|
—
|
|
|
As of February 28, 2017
|
||||||||||||||||
|
Predecessor
|
|
Reorganization Adjustments
(1)
|
|
|
Fresh Start Adjustments
|
|
|
Successor
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Temporary equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
—
|
|
|
29,350
|
|
(13)
|
|
—
|
|
|
|
29,350
|
|
||||
Stockholders’/unitholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
|
||||||||
Predecessor units issued and outstanding
|
5,386,812
|
|
|
(5,386,812
|
)
|
(14)
|
|
—
|
|
|
|
—
|
|
||||
Predecessor accumulated deficit
|
(7,680,027
|
)
|
|
2,884,740
|
|
(15)
|
|
4,795,287
|
|
(24)
|
|
—
|
|
||||
Successor Class A common stock
|
—
|
|
|
89
|
|
(14)
|
|
—
|
|
|
|
89
|
|
||||
Successor additional paid-in capital
|
—
|
|
|
7,421,704
|
|
(14)
|
|
(5,386,812
|
)
|
(24)
|
|
2,034,892
|
|
||||
Successor retained earnings
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||
Total stockholders’/unitholders’ equity (deficit)
|
(2,293,215
|
)
|
|
4,919,721
|
|
|
|
(591,525
|
)
|
|
|
2,034,981
|
|
||||
Total liabilities and equity (deficit)
|
$
|
4,724,608
|
|
|
$
|
(350,590
|
)
|
|
|
$
|
(646,011
|
)
|
|
|
$
|
3,728,007
|
|
1)
|
Represent amounts recorded as of the Effective Date for the implementation of the Plan, including, among other items, settlement of the Predecessor’s liabilities subject to compromise, repayment of certain of the Predecessor’s debt, cancellation of the Predecessor’s equity, issuances of the Successor’s Class A common stock, proceeds received from the Successor’s rights offering and issuance of the Successor’s debt.
|
2)
|
Changes in cash and cash equivalents included the following:
|
(in thousands)
|
|
||
Borrowings under the Successor’s revolving loan
|
$
|
600,000
|
|
Borrowings under the Successor’s term loan
|
300,000
|
|
|
Proceeds from rights offering
|
530,019
|
|
|
Removal of restriction on cash balance
|
1,602
|
|
|
Payment to holders of claims under the Predecessor Credit Facility
|
(1,947,357
|
)
|
|
Payment to holders of claims under the Second Lien Notes
|
(30,000
|
)
|
|
Payment of Berry’s ad valorem taxes
|
(23,366
|
)
|
|
Payment of the rights offering backstop commitment premium
|
(15,900
|
)
|
|
Payment of professional fees
|
(13,043
|
)
|
|
Funding of the professional fees escrow account
|
(41,766
|
)
|
|
Funding of the general unsecured claims cash distribution pool
|
(40,000
|
)
|
|
Changes in cash and cash equivalents
|
$
|
(679,811
|
)
|
3)
|
Primarily reflects the transfer to restricted cash to fund the Predecessor’s professional fees escrow account and general unsecured claims cash distribution pool.
|
4)
|
Primarily reflects the write-off of the Predecessor’s deferred financing fees.
|
5)
|
Reflects deferred tax assets recorded as of the Effective Date as determined in accordance with ASC 740. The deferred tax assets were primarily the result of the conversion from a limited liability company to a C corporation and differences in the accounting basis and tax basis of the Company’s oil and natural gas properties as of the Effective Date.
|
6)
|
Reflects the capitalization of deferred financing fees related to the Successor’s revolving loan.
|
7)
|
Net increase in accounts payable and accrued expenses reflects:
|
(in thousands)
|
|
||
Recognition of payables for the professional fees escrow account
|
$
|
41,766
|
|
Recognition of payables for the general unsecured claims cash distribution pool
|
40,000
|
|
|
Payment of professional fees
|
(17,130
|
)
|
|
Payment of Berry’s ad valorem taxes
|
(23,366
|
)
|
|
Other
|
(4
|
)
|
|
Net increase in accounts payable and accrued expenses
|
$
|
41,266
|
|
8)
|
Reflects the settlement of the Predecessor Credit Facility through repayment of approximately
$1.9 billion
, net of the write-off of deferred financing fees and an increase of
$25 million
for the current portion of the Successor’s term loan.
|
9)
|
Reflects a decrease of approximately
$8 million
for the payment of accrued interest on the Predecessor Credit Facility partially offset by an increase of approximately
$7 million
related to noncash share-based compensation classified as a liability related to the incentive interest awards issued by Holdco to certain members of its management (see Note 12).
|
10)
|
Reflects borrowings of
$900 million
under the Successor Credit Facility, which includes a
$600 million
revolving loan and a
$300 million
term loan, net of
$25 million
for the current portion of the Successor’s term loan.
|
11)
|
Reflects a reduction in deferred tax liabilities as determined in accordance with ASC 740.
|
12)
|
Settlement of liabilities subject to compromise and the resulting net gain were determined as follows:
|
(in thousands)
|
|
||
Accounts payable and accrued expenses
|
$
|
134,599
|
|
Accrued interest payable
|
144,184
|
|
|
Debt
|
4,023,129
|
|
|
Total liabilities subject to compromise
|
4,301,912
|
|
|
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement
|
1,000,000
|
|
|
Funding of the general unsecured claims cash distribution pool
|
(40,000
|
)
|
|
Payment to holders of claims under the Second Lien Notes
|
(30,000
|
)
|
|
Issuance of Class A common stock to creditors
|
(1,507,162
|
)
|
|
Gain on settlement of liabilities subject to compromise
|
$
|
3,724,750
|
|
13)
|
Reflects redeemable noncontrolling interests classified as temporary equity related to the incentive interest awards issued by Holdco to certain members of its management. See Note 12 and Note 17 for additional information.
|
14)
|
Net increase in capital accounts reflects:
|
(in thousands)
|
|
||
Issuance of Class A common stock to creditors
|
$
|
1,507,162
|
|
Issuance of Class A common stock pursuant to the rights offering
|
530,019
|
|
|
Payment of the rights offering backstop commitment premium
|
(15,900
|
)
|
|
Payment of issuance costs
|
(50
|
)
|
|
Share-based compensation expenses
|
13,750
|
|
|
Cancellation of the Predecessor’s units issued and outstanding
|
5,386,812
|
|
|
Par value of Class A common stock
|
(89
|
)
|
|
Change in additional paid-in capital
|
7,421,704
|
|
|
Par value of Class A common stock
|
89
|
|
|
Predecessor’s units issued and outstanding
|
(5,386,812
|
)
|
|
Net increase in capital accounts
|
$
|
2,034,981
|
|
15)
|
Net decrease in accumulated deficit reflects:
|
16)
|
Reflects a change in accounting policy from the entitlements method to the sales method for natural gas production imbalances.
|
17)
|
Reflects the recognition of intangible assets for the current portion of favorable leases, partially offset by decreases for well equipment inventory and the write-off of historical intangible assets.
|
18)
|
Reflects a decrease of oil and natural gas properties, based on the methodology discussed above, and the elimination of accumulated depletion and amortization. The following table summarizes the components of oil and natural gas properties as of the Effective Date:
|
|
Successor
|
|
|
Predecessor
|
||||
|
Fair Value
|
|
|
Historical Book Value
|
||||
(in thousands)
|
|
|
|
|
||||
Proved properties
|
$
|
2,186,777
|
|
|
|
$
|
12,258,835
|
|
Unproved properties
|
—
|
|
|
|
1,010,200
|
|
||
|
2,186,777
|
|
|
|
13,269,035
|
|
||
Less accumulated depletion and amortization
|
—
|
|
|
|
(10,044,240
|
)
|
||
|
$
|
2,186,777
|
|
|
|
$
|
3,224,795
|
|
19)
|
Reflects a decrease of other property and equipment and the elimination of accumulated depreciation. The following table summarizes the components of other property and equipment as of the Effective Date:
|
|
Successor
|
|
|
Predecessor
|
||||
|
Fair Value
|
|
|
Historical Book Value
|
||||
(in thousands)
|
|
|
|
|
||||
Natural gas plants and pipelines
|
$
|
342,924
|
|
|
|
$
|
426,914
|
|
Office equipment and furniture
|
39,211
|
|
|
|
106,059
|
|
||
Buildings and leasehold improvements
|
32,817
|
|
|
|
66,023
|
|
||
Vehicles
|
16,980
|
|
|
|
30,760
|
|
||
Land
|
7,747
|
|
|
|
3,727
|
|
||
Drilling and other equipment
|
4,254
|
|
|
|
8,103
|
|
||
|
443,933
|
|
|
|
641,586
|
|
||
Less accumulated depreciation
|
—
|
|
|
|
(230,952
|
)
|
||
|
$
|
443,933
|
|
|
|
$
|
410,634
|
|
20)
|
Reflects the recognition of intangible assets for the noncurrent portion of favorable leases, as well as increases in equity method investments and carbon credit allowances. Assets and liabilities for out-of-market contracts were valued based on market terms as of February 28, 2017, and will be amortized over the remaining life of the respective lease. The Company’s equity method investments were valued based on a market approach using a market EBITDA multiple. Carbon credit allowances were valued using a market approach based on trading prices for carbon credits on February 28, 2017.
|
21)
|
Primarily reflects the write-off of deferred rent partially offset by an increase in carbon emissions liabilities.
|
22)
|
Reflects an increase of the current portion of asset retirement obligations.
|
23)
|
Primarily reflects a decrease of approximately
$49 million
for asset retirement obligations and approximately
$5 million
for deferred rent, partially offset by an increase of approximately
$1 million
for carbon emissions liabilities. The fair value of asset retirement obligations were estimated using valuation techniques that convert future cash flows to a single
|
24)
|
Reflects the cumulative impact of the fresh start accounting adjustments discussed above and the elimination of the Predecessor’s accumulated deficit.
|
|
Predecessor
|
||
|
Three Months Ended March 31, 2016
|
||
|
(in thousands)
|
||
|
|
||
Revenues and other
|
$
|
91,266
|
|
Expenses
|
1,196,201
|
|
|
Other income and (expenses)
|
(19,886
|
)
|
|
Loss from discontinued operations before income taxes
|
(1,124,821
|
)
|
|
Income tax benefit
|
(2
|
)
|
|
Loss from discontinued operations, net of income taxes
|
$
|
(1,124,819
|
)
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31, 2017
|
|
|
December 31, 2016
|
||||
(in thousands)
|
|
|
|
|
||||
Proved properties
|
$
|
2,203,022
|
|
|
|
$
|
12,234,099
|
|
Unproved properties
|
871
|
|
|
|
998,860
|
|
||
|
2,203,893
|
|
|
|
13,232,959
|
|
||
Less accumulated depletion and amortization
|
(15,351
|
)
|
|
|
(9,999,560
|
)
|
||
|
$
|
2,188,542
|
|
|
|
$
|
3,233,399
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31, 2017
|
|
|
December 31, 2016
|
||||
(in thousands, except percentages)
|
|
|
|
|
||||
Successor revolving loan
(1)
|
$
|
540,000
|
|
|
|
$
|
—
|
|
Successor term loan
(2)
|
293,750
|
|
|
|
—
|
|
||
Predecessor credit facility
(3)
|
—
|
|
|
|
1,654,745
|
|
||
Predecessor term loan
(3)
|
—
|
|
|
|
284,241
|
|
||
6.50% senior notes due May 2019
|
—
|
|
|
|
562,234
|
|
||
6.25% senior notes due November 2019
|
—
|
|
|
|
581,402
|
|
||
8.625% senior notes due April 2020
|
—
|
|
|
|
718,596
|
|
||
12.00% senior secured second lien notes due December 2020
|
—
|
|
|
|
1,000,000
|
|
||
7.75% senior notes due February 2021
|
—
|
|
|
|
779,474
|
|
||
6.50% senior notes due September 2021
|
—
|
|
|
|
381,423
|
|
||
Net unamortized deferred financing fees
|
—
|
|
|
|
(1,257
|
)
|
||
Total debt, net
|
833,750
|
|
|
|
5,960,858
|
|
||
Less current portion, net
(4)
|
(28,125
|
)
|
|
|
(1,937,729
|
)
|
||
Less liabilities subject to compromise
(5)
|
—
|
|
|
|
(4,023,129
|
)
|
||
Long-term debt
|
$
|
805,625
|
|
|
|
$
|
—
|
|
(1)
|
Variable interest rate of
4.33%
at
March 31, 2017
.
|
(2)
|
Variable interest rate of
8.33%
at
March 31, 2017
.
|
(3)
|
Variable interest rate of
5.50%
at
December 31, 2016
.
|
(4)
|
At
March 31, 2017
, the current portion of long-term debt reflects required payments on the Successor’s term loan in the next twelve months. Due to covenant violations, the Predecessor’s credit facility and term loan were classified as current at
December 31, 2016
.
|
(5)
|
The Predecessor’s senior notes and Second Lien Notes were classified as liabilities subject to compromise at
December 31, 2016
. On the Effective Date, pursuant to the terms of the Plan, all outstanding amounts under these debt instruments were canceled.
|
|
Predecessor
|
||||||
|
December 31, 2016
|
||||||
|
Carrying Value
|
|
Fair Value
|
||||
|
(in thousands)
|
||||||
|
|
|
|
||||
Senior secured second lien notes
|
$
|
1,000,000
|
|
|
$
|
863,750
|
|
Senior notes, net
|
3,023,129
|
|
|
1,179,224
|
|
|
April 1
–
December 31, 2017
|
|
2018
|
|
2019
|
||||||
Natural gas positions:
|
|
|
|
|
|
||||||
Fixed price swaps (NYMEX Henry Hub):
|
|
|
|
|
|
||||||
Hedged volume (MMMBtu)
|
101,750
|
|
|
47,815
|
|
|
11,315
|
|
|||
Average price ($/MMBtu)
|
$
|
3.17
|
|
|
$
|
3.01
|
|
|
$
|
2.97
|
|
Oil positions:
|
|
|
|
|
|
||||||
Fixed price swaps (NYMEX WTI):
|
|
|
|
|
|
||||||
Hedged volume (MBbls)
|
3,300
|
|
|
—
|
|
|
—
|
|
|||
Average price ($/Bbl)
|
$
|
52.13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collars (NYMEX WTI):
|
|
|
|
|
|
||||||
Hedged volume (MBbls)
|
—
|
|
|
1,825
|
|
|
1,825
|
|
|||
Average floor price ($/Bbl)
|
$
|
—
|
|
|
$
|
50.00
|
|
|
$
|
50.00
|
|
Average ceiling price ($/Bbl)
|
$
|
—
|
|
|
$
|
55.50
|
|
|
$
|
55.50
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31, 2017
|
|
|
December 31, 2016
|
||||
(in thousands)
|
|
|
|
|
||||
Assets:
|
|
|
|
|
||||
Commodity derivatives
|
$
|
32,949
|
|
|
|
$
|
19,369
|
|
Liabilities:
|
|
|
|
|
||||
Commodity derivatives
|
$
|
40,284
|
|
|
|
$
|
113,226
|
|
|
Successor
|
||||||||||
|
March 31, 2017
|
||||||||||
|
Level 2
|
|
Netting
(1)
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Commodity derivatives
|
$
|
32,949
|
|
|
$
|
(21,583
|
)
|
|
$
|
11,366
|
|
Liabilities:
|
|
|
|
|
|
||||||
Commodity derivatives
|
$
|
40,284
|
|
|
$
|
(21,583
|
)
|
|
$
|
18,701
|
|
|
Predecessor
|
||||||||||
|
December 31, 2016
|
||||||||||
|
Level 2
|
|
Netting
(1)
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Commodity derivatives
|
$
|
19,369
|
|
|
$
|
(19,369
|
)
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
||||||
Commodity derivatives
|
$
|
113,226
|
|
|
$
|
(19,369
|
)
|
|
$
|
93,857
|
|
(1)
|
Represents counterparty netting under agreements governing such derivatives.
|
Asset retirement obligations at December 31, 2016 (Predecessor)
|
$
|
402,162
|
|
Liabilities added from drilling
|
146
|
|
|
Accretion expense
|
4,024
|
|
|
Settlements
|
(618
|
)
|
|
Asset retirement obligations at February 28, 2017 (Predecessor)
|
$
|
405,714
|
|
Fresh start adjustment
(1)
|
(48,317
|
)
|
|
Asset retirement obligations at February 28, 2017 (Successor)
|
$
|
357,397
|
|
Liabilities added from drilling
|
33
|
|
|
Accretion expense
|
1,814
|
|
|
Settlements
|
(907
|
)
|
|
Asset retirement obligations at March 31, 2017 (Successor)
|
$
|
358,337
|
|
(1)
|
As a result of the application of fresh start accounting, the Successor recorded its asset retirement obligations at fair value as of the Effective Date.
|
•
|
All units in the Predecessor that were issued and outstanding immediately prior to the Effective Date were extinguished without recovery;
|
•
|
17,678,889
shares of Class A common stock were issued pro rata to holders of the Second Lien Notes with claims allowed under the Plan;
|
•
|
26,724,396
shares of Class A common stock were issued pro rata to holders of Unsecured Notes with claims allowed under the Plan;
|
•
|
471,110
shares of Class A common stock were issued to commitment parties under the Backstop Commitment Agreement in respect of premium due thereunder;
|
•
|
2,995,691
shares of Class A common stock were issued to commitment parties under the Backstop Commitment Agreement in connection with their backstop obligation thereunder; and
|
•
|
41,359,806
shares of Class A common stock were issued to participants in the rights offerings extended by the Company to certain holders of claims arising under the Second Lien Notes and the Unsecured Notes (including, in each case, certain of the commitment parties party to the Backstop Commitment Agreement).
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
$
|
4,177
|
|
|
|
$
|
50,255
|
|
|
$
|
9,460
|
|
Lease operating expenses
|
—
|
|
|
|
—
|
|
|
2,965
|
|
|||
Total share-based compensation expenses
|
$
|
4,177
|
|
|
|
$
|
50,255
|
|
|
$
|
12,425
|
|
Income tax benefit
|
$
|
427
|
|
|
|
$
|
5,170
|
|
|
$
|
4,591
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31, 2017
|
|
|
December 31, 2016
|
||||
(in thousands)
|
|
|
|
|
||||
Prepaid expenses
|
$
|
67,897
|
|
|
|
$
|
70,116
|
|
Inventories
|
15,053
|
|
|
|
15,798
|
|
||
Deferred financing fees
|
—
|
|
|
|
16,809
|
|
||
Other
|
8,055
|
|
|
|
3,288
|
|
||
Other current assets
|
$
|
91,005
|
|
|
|
$
|
106,011
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31, 2017
|
|
|
December 31, 2016
|
||||
(in thousands)
|
|
|
|
|
||||
Accrued compensation
|
$
|
20,862
|
|
|
|
$
|
16,443
|
|
Share-based payment liability
|
10,197
|
|
|
|
—
|
|
||
Asset retirement obligations (current portion)
|
10,168
|
|
|
|
9,686
|
|
||
Other
|
7,602
|
|
|
|
175
|
|
||
Other accrued liabilities
|
$
|
48,829
|
|
|
|
$
|
26,304
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Cash payments for interest, net of amounts capitalized
|
$
|
1,458
|
|
|
|
$
|
17,651
|
|
|
$
|
23,731
|
|
Cash payments for income taxes
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
1,228
|
|
Cash payments for reorganization items, net
|
$
|
1,286
|
|
|
|
$
|
21,571
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Noncash investing activities:
|
|
|
|
|
|
|
||||||
Accrued capital expenditures
|
$
|
18,670
|
|
|
|
$
|
22,191
|
|
|
$
|
25,818
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Rockies, which includes properties located in Wyoming (Green River, Washakie and Powder River basins), Utah (Uinta Basin) and North Dakota (Williston Basin);
|
•
|
Hugoton Basin, which includes properties located in Kansas, the Oklahoma Panhandle and the Shallow Texas Panhandle;
|
•
|
Mid-Continent, which includes Oklahoma properties located in the Anadarko and Arkoma basins, as well as waterfloods in the Central Oklahoma Platform;
|
•
|
TexLa, which includes properties located in east Texas and north Louisiana;
|
•
|
Permian Basin, which includes properties located in west Texas and southeast New Mexico;
|
•
|
California, which includes properties located in the San Joaquin Valley and Los Angeles basins;
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
•
|
Michigan/Illinois, which includes properties located in the Antrim Shale formation in north Michigan and oil properties in south Illinois; and
|
•
|
South Texas.
|
•
|
oil, natural gas and NGL sales of approximately $87 million and $204 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $200 million for the three months ended March 31, 2016;
|
•
|
average daily production of approximately 788 MMcfe/d and 775 MMcfe/d for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to 858 MMcfe/d for the three months ended March 31, 2016;
|
•
|
net loss of approximately $7 million and net income of approximately $2.4 billion for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to net loss of approximately $1.3 billion for the three months ended March 31, 2016;
|
•
|
net cash provided by operating activities from continuing operations of approximately $18 million and net cash used in operating activities of approximately $21 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to net cash provided by operating activities of approximately $270 million for the three months ended March 31, 2016;
|
•
|
capital expenditures of approximately $19 million and $46 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $28 million for the three months ended March 31, 2016; and
|
•
|
27 wells drilled (all successful) compared to 59 wells drilled (58 successful) for the three months ended March 31, 2016.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
•
|
The Predecessor transferred all of its assets, including equity interests in its subsidiaries, other than LAC and Berry, to Linn Energy Holdco II LLC (“Holdco II”), a newly formed subsidiary of the Predecessor and the borrower under the Credit Agreement (“Successor Credit Facility”) entered into in connection with the reorganization, in exchange for 100% of the equity of Holdco II and the issuance of interests in the Successor Credit Facility to certain of the Predecessor’s creditors in partial satisfaction of their claims (the “Contribution”). Immediately following the Contribution, the Predecessor transferred 100% of the equity interests in Holdco II to the Successor in exchange for approximately $530 million in cash and an amount of equity securities in the Successor not to exceed 49.90% of the outstanding equity interests of the Successor (the “Disposition”), which the Predecessor distributed to certain of its creditors in satisfaction of their claims. Contemporaneously with the reorganization transactions and pursuant to the Plan, (i) LAC assigned all of its rights, title and interest in the membership interests of Berry to Berry Petroleum Corporation, (ii) all of the equity interests in LAC and the Predecessor were canceled and (iii) LAC and the Predecessor commenced liquidation, which is expected to be completed following the resolution of the respective companies’ outstanding claims.
|
•
|
The holders of claims under the Predecessor’s Sixth Amended and Restated Credit Agreement (“Predecessor Credit Facility”) received a full recovery, consisting of a cash paydown and their pro rata share of the $1.7 billion Successor Credit Facility. As a result, all outstanding obligations under the Predecessor Credit Facility were canceled.
|
•
|
Holdco II, as borrower, entered into the Successor Credit Facility with the holders of claims under the Predecessor Credit Facility, as lenders, and Wells Fargo Bank, National Association, as administrative agent, providing for a new reserve-based revolving loan with up to $1.4 billion in borrowing commitments and a new term loan in an original principal amount of $300 million. For additional information, see “Financing Activities” below.
|
•
|
The holders of the Company’s 12.00% senior secured second lien notes due December 2020 (the “Second Lien Notes”) received their pro rata share of (i) 17,678,889 shares of Class A common stock; (ii) certain rights to purchase shares of Class A common stock in the rights offering, as described below; and (iii) $30 million in cash. The holders of the Company’s 6.50% senior notes due May 2019, 6.25% senior notes due November 2019, 8.625% senior notes due 2020, 7.75% senior notes due February 2021 and 6.50% senior notes due September 2021 (collectively, the “Unsecured Notes”) received their pro rata share of (i) 26,724,396 shares of Class A common stock; and (ii) certain rights to purchase shares of Class A common stock in the rights offering (as described below). As a result, all outstanding obligations under the Second Lien Notes and the Unsecured Notes and the indentures governing such obligations were canceled.
|
•
|
The holders of general unsecured claims (other than claims relating to the Second Lien Notes and the Unsecured Notes) against the LINN Debtors (the “LINN Unsecured Claims”) received their pro rata share of cash from two cash distribution pools totaling $40 million, as divided between a $2.3 million cash distribution pool for the payment in full of allowed LINN Unsecured Claims in an amount equal to $2,500 or less (and larger claims for which the holders irrevocably agreed to reduce such claims to $2,500), and a $37.7 million cash distribution pool for pro rata distributions to all remaining allowed general LINN Unsecured Claims. As a result, all outstanding LINN Unsecured Claims were fully satisfied, settled, released and discharged as of the Effective Date.
|
•
|
All units of the Predecessor that were issued and outstanding immediately prior to the Effective Date were extinguished without recovery. On the Effective Date, the Successor issued in the aggregate 89,229,892 shares of Class A common stock. No cash was raised from the issuance of the Class A common stock on account of claims held by the Predecessor’s creditors.
|
•
|
The Successor entered into a registration rights agreement with certain parties, pursuant to which the Company agreed to, among other things, file a registration statement with the Securities and Exchange Commission within 60 days of the Effective Date covering the offer and resale of “Registrable Securities” (as defined therein).
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
•
|
By operation of the Plan and the Confirmation Order, the terms of the Predecessor’s board of directors expired as of the Effective Date. The Successor formed a new board of directors, consisting of the Chief Executive Officer of the Predecessor, one director selected by the Successor and five directors selected by a six-person selection committee.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Revenues and other:
|
|
|
|
|
|
|
||||||
Natural gas sales
|
$
|
38,070
|
|
|
|
$
|
99,561
|
|
|
$
|
96,025
|
|
Oil sales
|
37,290
|
|
|
|
73,323
|
|
|
80,316
|
|
|||
NGL sales
|
12,085
|
|
|
|
30,882
|
|
|
23,508
|
|
|||
Total oil, natural gas and NGL sales
|
87,445
|
|
|
|
203,766
|
|
|
199,849
|
|
|||
Gains (losses) on oil and natural gas derivatives
|
(11,959
|
)
|
|
|
92,691
|
|
|
109,453
|
|
|||
Marketing and other revenues
(1)
|
4,947
|
|
|
|
16,561
|
|
|
37,397
|
|
|||
|
80,433
|
|
|
|
313,018
|
|
|
346,699
|
|
|||
Expenses:
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
27,166
|
|
|
|
53,224
|
|
|
88,387
|
|
|||
Transportation expenses
|
13,723
|
|
|
|
25,972
|
|
|
41,994
|
|
|||
Marketing expenses
|
2,539
|
|
|
|
4,820
|
|
|
7,833
|
|
|||
General and administrative expenses
(2)
|
10,411
|
|
|
|
71,745
|
|
|
83,720
|
|
|||
Exploration costs
|
55
|
|
|
|
93
|
|
|
2,693
|
|
|||
Depreciation, depletion and amortization
|
21,362
|
|
|
|
56,484
|
|
|
105,215
|
|
|||
Impairment of long-lived assets
|
—
|
|
|
|
—
|
|
|
123,316
|
|
|||
Taxes, other than income taxes
|
7,502
|
|
|
|
15,747
|
|
|
19,754
|
|
|||
Losses on sale of assets and other, net
|
445
|
|
|
|
672
|
|
|
1,269
|
|
|||
|
83,203
|
|
|
|
228,757
|
|
|
474,181
|
|
|||
Other income and (expenses)
|
(5,305
|
)
|
|
|
(18,555
|
)
|
|
(85,199
|
)
|
|||
Reorganization items, net
|
(2,565
|
)
|
|
|
2,331,189
|
|
|
—
|
|
|||
Income (loss) from continuing operations before income tax
|
(10,640
|
)
|
|
|
2,396,895
|
|
|
(212,681
|
)
|
|||
Income tax expense (benefit)
|
(3,384
|
)
|
|
|
(166
|
)
|
|
10,246
|
|
|||
Income (loss) from continuing operations
|
(7,256
|
)
|
|
|
2,397,061
|
|
|
(222,927
|
)
|
|||
Loss from discontinued operations, net of income taxes
|
—
|
|
|
|
—
|
|
|
(1,124,819
|
)
|
|||
Net income (loss)
|
$
|
(7,256
|
)
|
|
|
$
|
2,397,061
|
|
|
$
|
(1,347,746
|
)
|
(1)
|
Marketing and other revenues for the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $6 million and $23 million, respectively, of management fee revenues recognized by the Company from Berry. Management fee revenues are included in “other revenues” on the condensed consolidated statements of operations.
|
(2)
|
General and administrative expenses for the one month ended March 31, 2017, the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $4 million, $50 million and $9 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the three months ended March 31, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
Average daily production:
|
|
|
|
|
|
|
||||||
Natural gas (MMcf/d)
|
496
|
|
|
|
495
|
|
|
535
|
|
|||
Oil (MBbls/d)
|
25.6
|
|
|
|
25.1
|
|
|
29.5
|
|
|||
NGL (MBbls/d)
|
23.2
|
|
|
|
21.4
|
|
|
24.3
|
|
|||
Total (MMcfe/d)
|
788
|
|
|
|
775
|
|
|
858
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average prices:
(1)
|
|
|
|
|
|
|
||||||
Natural gas (Mcf)
|
$
|
2.48
|
|
|
|
$
|
3.41
|
|
|
$
|
1.97
|
|
Oil (Bbl)
|
$
|
47.07
|
|
|
|
$
|
49.50
|
|
|
$
|
29.91
|
|
NGL (Bbl)
|
$
|
16.82
|
|
|
|
$
|
24.41
|
|
|
$
|
10.61
|
|
|
|
|
|
|
|
|
||||||
Average NYMEX prices:
|
|
|
|
|
|
|
||||||
Natural gas (MMBtu)
|
$
|
2.63
|
|
|
|
$
|
3.66
|
|
|
$
|
2.09
|
|
Oil (Bbl)
|
$
|
49.67
|
|
|
|
$
|
53.04
|
|
|
$
|
33.45
|
|
|
|
|
|
|
|
|
||||||
Costs per Mcfe of production:
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
$
|
1.11
|
|
|
|
$
|
1.16
|
|
|
$
|
1.13
|
|
Transportation expenses
|
$
|
0.56
|
|
|
|
$
|
0.57
|
|
|
$
|
0.54
|
|
General and administrative expenses
(2)
|
$
|
0.43
|
|
|
|
$
|
1.57
|
|
|
$
|
1.07
|
|
Depreciation, depletion and amortization
|
$
|
0.87
|
|
|
|
$
|
1.24
|
|
|
$
|
1.35
|
|
Taxes, other than income taxes
|
$
|
0.31
|
|
|
|
$
|
0.34
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
||||||
Average daily production – discontinued operations:
|
|
|
|
|
|
|
||||||
Total (MMcfe/d)
|
—
|
|
|
|
—
|
|
|
255
|
|
(1)
|
Does not include the effect of gains (losses) on derivatives.
|
(2)
|
General and administrative expenses for the one month ended March 31, 2017, the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $4 million, $50 million and $9 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the three months ended March 31, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
|||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
|||
Average daily production (MMcfe/d):
|
|
|
|
|
|
|
|||
Rockies
|
287
|
|
|
|
294
|
|
|
347
|
|
Hugoton Basin
|
169
|
|
|
|
159
|
|
|
188
|
|
Mid-Continent
|
127
|
|
|
|
109
|
|
|
97
|
|
TexLa
|
77
|
|
|
|
80
|
|
|
72
|
|
Permian Basin
|
46
|
|
|
|
49
|
|
|
62
|
|
California
|
29
|
|
|
|
30
|
|
|
34
|
|
Michigan/Illinois
|
29
|
|
|
|
29
|
|
|
30
|
|
South Texas
|
24
|
|
|
|
25
|
|
|
28
|
|
|
788
|
|
|
|
775
|
|
|
858
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Severance taxes
|
$
|
3,921
|
|
|
|
$
|
9,223
|
|
|
$
|
7,103
|
|
Ad valorem taxes
|
3,482
|
|
|
|
6,359
|
|
|
12,340
|
|
|||
Other
|
99
|
|
|
|
165
|
|
|
311
|
|
|||
|
$
|
7,502
|
|
|
|
$
|
15,747
|
|
|
$
|
19,754
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Interest expense, net of amounts capitalized
|
$
|
(4,917
|
)
|
|
|
$
|
(18,406
|
)
|
|
$
|
(85,267
|
)
|
Other, net
|
(388
|
)
|
|
|
(149
|
)
|
|
68
|
|
|||
|
$
|
(5,305
|
)
|
|
|
$
|
(18,555
|
)
|
|
$
|
(85,199
|
)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
||||
(in thousands)
|
|
|
|
|
||||
Gain on settlement of liabilities subject to compromise
|
$
|
—
|
|
|
|
$
|
3,724,750
|
|
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement
|
—
|
|
|
|
(1,000,000
|
)
|
||
Fresh start valuation adjustments
|
—
|
|
|
|
(591,525
|
)
|
||
Income tax benefit related to implementation of the Plan
|
—
|
|
|
|
264,889
|
|
||
Legal and other professional advisory fees
|
(2,570
|
)
|
|
|
(46,961
|
)
|
||
Terminated contracts
|
—
|
|
|
|
(6,915
|
)
|
||
Other
|
5
|
|
|
|
(13,049
|
)
|
||
Reorganization items, net
|
$
|
(2,565
|
)
|
|
|
$
|
2,331,189
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Oil and natural gas
|
$
|
17,147
|
|
|
|
$
|
39,659
|
|
|
$
|
23,717
|
|
Plant and pipeline
|
2,096
|
|
|
|
5,176
|
|
|
1,542
|
|
|||
Other
|
167
|
|
|
|
1,243
|
|
|
2,733
|
|
|||
Capital expenditures, excluding acquisitions
|
$
|
19,410
|
|
|
|
$
|
46,078
|
|
|
$
|
27,992
|
|
Capital expenditures, excluding acquisitions – discontinued operations
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
9,303
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Net cash:
|
|
|
|
|
|
|
||||||
Provided by (used in) operating activities
|
$
|
17,693
|
|
|
|
$
|
(20,814
|
)
|
|
$
|
291,028
|
|
Used in investing activities
|
(22,384
|
)
|
|
|
(58,756
|
)
|
|
(91,421
|
)
|
|||
Provided by (used in) financing activities
|
(48,592
|
)
|
|
|
(560,932
|
)
|
|
857,781
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(53,283
|
)
|
|
|
$
|
(640,502
|
)
|
|
$
|
1,057,388
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
$
|
(22,710
|
)
|
|
|
$
|
(58,590
|
)
|
|
$
|
(76,811
|
)
|
Proceeds from sale of properties and equipment and other
|
326
|
|
|
|
(166
|
)
|
|
(280
|
)
|
|||
Net cash used in investing activities – continuing operations
|
(22,384
|
)
|
|
|
(58,756
|
)
|
|
(77,091
|
)
|
|||
Net cash used in investing activities – discontinued operations
|
—
|
|
|
|
—
|
|
|
(14,330
|
)
|
|||
Net cash used in investing activities
|
$
|
(22,384
|
)
|
|
|
$
|
(58,756
|
)
|
|
$
|
(91,421
|
)
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
One Month Ended March 31, 2017
|
|
|
Two Months Ended February 28, 2017
|
|
Three Months Ended March 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Proceeds from borrowings:
|
|
|
|
|
|
|
||||||
Successor Credit Facility
|
$
|
30,000
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Predecessor Credit Facility
|
—
|
|
|
|
—
|
|
|
978,500
|
|
|||
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
978,500
|
|
Repayments of debt:
|
|
|
|
|
|
|
||||||
Successor Credit Facility
|
$
|
(96,250
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Predecessor Credit Facility
|
—
|
|
|
|
(1,038,986
|
)
|
|
(100,000
|
)
|
|||
|
$
|
(96,250
|
)
|
|
|
$
|
(1,038,986
|
)
|
|
$
|
(100,000
|
)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
Successor
|
|
|
Predecessor
|
||||
|
March 31, 2017
|
|
|
December 31, 2016
|
||||
(in thousands, except percentages)
|
|
|
|
|
||||
Successor revolving loan
|
$
|
540,000
|
|
|
|
$
|
—
|
|
Successor term loan
|
293,750
|
|
|
|
—
|
|
||
Predecessor credit facility
|
—
|
|
|
|
1,654,745
|
|
||
Predecessor term loan
|
—
|
|
|
|
284,241
|
|
||
6.50% senior notes due May 2019
|
—
|
|
|
|
562,234
|
|
||
6.25% senior notes due November 2019
|
—
|
|
|
|
581,402
|
|
||
8.625% senior notes due April 2020
|
—
|
|
|
|
718,596
|
|
||
12.00% senior secured second lien notes due December 2020
|
—
|
|
|
|
1,000,000
|
|
||
7.75% senior notes due February 2021
|
—
|
|
|
|
779,474
|
|
||
6.50% senior notes due September 2021
|
—
|
|
|
|
381,423
|
|
||
Net unamortized deferred financing fees
|
—
|
|
|
|
(1,257
|
)
|
||
Total debt, net
|
833,750
|
|
|
|
5,960,858
|
|
||
Less current portion, net
(1)
|
(28,125
|
)
|
|
|
(1,937,729
|
)
|
||
Less liabilities subject to compromise
(2)
|
—
|
|
|
|
(4,023,129
|
)
|
||
Long-term debt
|
$
|
805,625
|
|
|
|
$
|
—
|
|
(1)
|
At March 31, 2017, the current portion of long-term debt reflects required payments on the Successor’s term loan in the next twelve months. Due to covenant violations, the Predecessor’s credit facility and term loan were classified as current at December 31, 2016.
|
(2)
|
The Predecessor’s senior notes and Second Lien Notes were classified as liabilities subject to compromise at December 31, 2016. On the Effective Date, pursuant to the terms of the Plan, all outstanding amounts under these debt instruments were canceled.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
|
|
Payments Due
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
2017
|
|
2018 – 2019
|
|
2020 – 2021
|
|
2022 and Beyond
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Debt obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Successor revolving loan
|
|
$
|
540,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
540,000
|
|
|
$
|
—
|
|
Successor term loan
|
|
293,750
|
|
|
18,750
|
|
|
87,500
|
|
|
187,500
|
|
|
—
|
|
|||||
Interest
(1)
|
|
165,435
|
|
|
35,659
|
|
|
86,705
|
|
|
43,071
|
|
|
—
|
|
|||||
Operating lease obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Office, property and equipment leases
|
|
7,987
|
|
|
2,595
|
|
|
4,860
|
|
|
472
|
|
|
60
|
|
|||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commodity derivatives
|
|
18,701
|
|
|
16,081
|
|
|
2,620
|
|
|
—
|
|
|
—
|
|
|||||
Asset retirement obligations
|
|
358,337
|
|
|
9,858
|
|
|
19,643
|
|
|
17,438
|
|
|
311,398
|
|
|||||
Other
|
|
946
|
|
|
46
|
|
|
122
|
|
|
122
|
|
|
656
|
|
|||||
|
|
$
|
1,385,156
|
|
|
$
|
82,989
|
|
|
$
|
201,450
|
|
|
$
|
788,603
|
|
|
$
|
312,114
|
|
(1)
|
Represents interest on the Successor’s revolving loan and the term loan computed at 4.33% and 8.33%, respectively, through contractual maturity.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
|
•
|
business strategy;
|
•
|
acquisition and disposition strategy;
|
•
|
financial strategy;
|
•
|
new capital structure and the adoption of fresh start accounting;
|
•
|
uncertainty of the Company’s ability to improve its financial results and profitability following emergence from bankruptcy and other risks and uncertainties related to the Company’s emergence from bankruptcy;
|
•
|
inability to maintain relationships with suppliers, customers, employees and other third parties following emergence from bankruptcy;
|
•
|
failure to satisfy the Company’s short- or long-term liquidity needs, including its inability to generate sufficient cash flow from operations or to obtain adequate financing to fund its capital expenditures and meet working capital needs following emergence from bankruptcy;
|
•
|
large or multiple customer defaults on contractual obligations, including defaults resulting from actual or potential insolvencies;
|
•
|
ability to comply with covenants under the Successor Credit Facility;
|
•
|
effects of legal proceedings;
|
•
|
drilling locations;
|
•
|
oil, natural gas and NGL reserves;
|
•
|
realized oil, natural gas and NGL prices;
|
•
|
production volumes;
|
•
|
capital expenditures;
|
•
|
economic and competitive advantages;
|
•
|
credit and capital market conditions;
|
•
|
regulatory changes;
|
•
|
lease operating expenses, general and administrative expenses and development costs;
|
•
|
future operating results, including results of acquired properties;
|
•
|
plans, objectives, expectations and intentions; and
|
•
|
taxes.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Exhibit Number
|
|
Description
|
|
|
|
|
|
2.1
|
—
|
Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and Its Debtor Affiliates Other Than Linn Acquisition Company, LLC and Berry Petroleum Company, LLC, dated January 25, 2017 (incorporated by reference to Exhibit 2.1 to Current Report on Form 8‑K filed on January 31, 2017 (Case No. 16-60040))
|
|
2.2
|
—
|
Purchase and Sale Agreement, dated April 30, 2017, by and between Linn Energy Holdings, LLC, Linn Operating, LLC and Jonah Energy LLC (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on May 4, 2017)
|
|
3.1
|
—
|
Amended and Restated Certificate of Incorporation of Linn Energy, Inc. (incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-8 filed on February 28, 2017)
|
|
3.2
|
—
|
Bylaws of Linn Energy, Inc. (incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-8 filed on February 28, 2017)
|
|
4.1
|
—
|
Form of specimen New Common Stock certificate of Linn Energy, Inc. (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.1
|
—
|
Credit Agreement dated as of February 28, 2017, among Linn Energy Holdco II LLC, as borrower, Linn Energy Holdco LLC, as parent, Linn Energy, Inc. as holdings, subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.2
|
—
|
Registration Rights Agreement dated as of February 28, 2017, among Linn Energy, Inc. and the holders party thereto (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.3†
|
—
|
Linn Energy, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-8 filed on February 28, 2017)
|
|
10.4†
|
—
|
Form of Restricted Stock Unit Agreement (for executive officers with employment agreements) (incorporated by reference to Exhibit 10.2 to Registration Statement on Form S-8 filed on February 28, 2017)
|
|
10.5†
|
—
|
Form of Restricted Stock Unit Agreement (for employees) (incorporated by reference to Exhibit 10.3 to Registration Statement on Form S-8 filed on February 28, 2017)
|
|
10.6†
|
—
|
Linn Energy Holdco LLC Incentive Interest Plan (incorporated herein by reference to Exhibit 10.6 to Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 23, 2017)
|
|
10.7†
|
—
|
Form of Award Agreement (base interests) (incorporated herein by reference to Exhibit 10.7 to Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 23, 2017)
|
|
10.8†
|
—
|
Form of Award Agreement (appreciation interests) (incorporated herein by reference to Exhibit 10.8 to Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 23, 2017)
|
|
10.9*†
|
—
|
Form of Special Bonus Award Agreement
|
|
10.10
|
—
|
Membership Interest Purchase Agreement, dated as of February 28, 2017, by and between Linn Energy, LLC and Linn Energy, Inc. (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.11
|
—
|
Transition Services and Separation Agreement, dated as of February 28, 2017, by and between Linn Energy, LLC, LinnCo, LLC, and certain subsidiaries of Linn Energy, Inc. party thereto and Berry Petroleum Company, LLC (incorporated by reference to Exhibit 10.7 to Current Report on Form 8‑K filed on March 3, 2017)
|
|
10.12
|
—
|
Joint Operating Agreement, dated February 28, 2017, between Linn Operating, Inc., as operator, and Berry Petroleum Company, LLC, as non-operator (Hugoton) (incorporated by reference to Exhibit 10.8 to Current Report on Form 8-K filed on March 3, 2017)
|
Exhibit Number
|
|
Description
|
|
|
|
|
|
10.13
|
—
|
Joint Operating Agreement, dated February 28, 2017, between Berry Petroleum Company, LLC, as operator, and Linn Energy Holdings, LLC, as non-operator (Hill) (incorporated by reference to Exhibit 10.9 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.14†
|
—
|
Form of Indemnity Agreement between Linn Energy, Inc. and the directors and officers of Linn Energy, Inc. (incorporated by reference to Exhibit 10.4 to Registration Statement on Form S-8 filed on February 28, 2017)
|
|
10.15†
|
—
|
Second Amended and Restated Employment Agreement of Mark E. Ellis, dated February 28, 2017 (incorporated by reference to Exhibit 10.11 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.16†
|
—
|
Third Amended and Restated Employment Agreement of David B. Rottino, dated February 28, 2017 (incorporated by reference to Exhibit 10.12 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.17†
|
—
|
Second Amended and Restated Employment Agreement of Arden L. Walker, Jr., dated February 28, 2017 (incorporated by reference to Exhibit 10.13 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.18†
|
—
|
Employment Agreement of Jamin B. McNeil, dated February 28, 2017 (incorporated by reference to Exhibit 10.14 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.19†
|
—
|
Employment Agreement of Thomas E. Emmons, dated February 28, 2017 (incorporated by reference to Exhibit 10.15 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.20†
|
—
|
Employment Agreement of Candice J. Wells, dated February 28, 2017 (incorporated by reference to Exhibit 10.16 to Current Report on Form 8-K filed on March 3, 2017)
|
|
10.21*†
|
—
|
Linn Energy, Inc. Severance Plan, dated February 28, 2017
|
|
31.1*
|
—
|
Section 302 Certification of Chief Executive Officer
|
|
31.2*
|
—
|
Section 302 Certification of Chief Financial Officer
|
|
32.1*
|
—
|
Section 906 Certification of Chief Executive Officer
|
|
32.2*
|
—
|
Section 906 Certification of Chief Financial Officer
|
|
101.INS**
|
—
|
XBRL Instance Document
|
|
101.SCH**
|
—
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL**
|
—
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF**
|
—
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB**
|
—
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE**
|
—
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Management contract or compensatory plan or arrangement to be filed as an Exhibit hereto pursuant to Item 601 of Regulation S‑K.
|
|
LINN ENERGY, INC.
|
|
(Registrant)
|
|
|
Date: May 11, 2017
|
/s/ Darren R. Schluter
|
|
Darren R. Schluter
|
|
Vice President and Controller
|
|
(Duly Authorized Officer and Principal Accounting Officer)
|
|
|
|
|
Date: May 11, 2017
|
/s/ David B. Rottino
|
|
David B. Rottino
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
[LINN ENERGY, INC.]
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
PARTICIPANT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Tier
|
Period of Continued
COBRA Coverage
|
1
|
12 Months
|
2
|
9 Months
|
3
|
6 Months
|
4
|
5 Months
|
5
|
3 Months
|
Plan Administrator
|
|
Linn Energy, Inc. Severance Plan
Linn Energy, Inc.
JP Morgan Chase Tower
600 Travis
Houston, Texas 77002
|
Appeals Committee
|
Linn Energy, Inc. Severance Plan
Linn Energy, Inc.
JP Morgan Chase Tower
600 Travis
Houston, Texas 77002
|
|
LINN ENERGY, INC.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mark E. Ellis
|
|
Mark E. Ellis
President and Chief Executive Officer
|
/s/ Mark E. Ellis
|
|
Mark E. Ellis
|
|
President and Chief Executive Officer
|
|
/s/ David B. Rottino
|
|
David B. Rottino
|
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 11, 2017
|
/s/ Mark E. Ellis
|
|
Mark E. Ellis
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 11, 2017
|
/s/ David B. Rottino
|
|
David B. Rottino
|
|
Executive Vice President and Chief Financial Officer
|