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(Mark One)
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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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For the quarterly period ended September 30, 2017
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OR
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o
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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
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80-0411494
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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o
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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☑
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Smaller reporting company
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(Do not check if a smaller reporting company)
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o
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Emerging growth company
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Page
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/day
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= per day
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Mcf
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= thousand cubic feet
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Bbls
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= barrels
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Mcfe
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= thousand cubic feet of natural gas equivalents
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Bcf
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= billion cubic feet
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MMBbls
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= million barrels
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Bcfe
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= billion cubic feet equivalents
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MMBOE
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= million barrels of oil equivalent
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BOE
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= barrel of oil equivalent
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MMBtu
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= million British thermal units
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Btu
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= British thermal unit
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MMcf
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= million cubic feet
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MBbls
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= thousand barrels
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MMcfe
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= million cubic feet equivalent
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MBOE
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= thousand barrels of oil equivalent
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NGLs
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= natural gas liquids
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•
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our ability to achieve the anticipated benefits from the consummation of the cases filed under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”);
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•
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our ability to execute our business strategies, including our business strategies post-emergence from the Chapter 11 Cases (as defined below);
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•
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ability to maintain relationships with suppliers, customers, employees and other third parties as a result of our Chapter 11 filing and following emergence from the Chapter 11 Cases;
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•
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our ability to obtain sufficient financing to execute our business plan post-emergence;
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•
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our ability to meet our liquidity needs;
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•
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the potential adverse effects of the consummation of the Chapter 11 restructuring on our liquidity and results of operations;
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•
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increased advisory costs to implement the reorganization;
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•
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the impact of the Chapter 11 restructuring on the liquidity and market price of our common stock and on our ability to access the public capital markets;
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•
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risks relating to any of our unforeseen liabilities;
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•
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further declines in oil, “NGLs” or natural gas prices;
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•
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the level of success in exploration, development and production activities;
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•
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adverse weather conditions that may negatively impact development or production activities;
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•
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the timing of exploitation and development expenditures;
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•
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inaccuracies of reserve estimates or assumptions underlying them;
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•
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revisions to reserve estimates as a result of changes in commodity prices;
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•
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impacts to financial statements as a result of impairment write-downs;
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•
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risks related to the level of indebtedness and periodic redeterminations of the borrowing base under our credit agreements;
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•
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ability to comply with restrictive covenants contained in the agreements governing our indebtedness that may adversely affect operational flexibility;
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•
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ability to generate sufficient cash flows from operations to meet the internally funded portion of any capital expenditures budget;
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•
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ability to obtain external capital to finance exploitation and development operations and acquisitions;
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•
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federal, state and local initiatives and efforts relating to the regulation of hydraulic fracturing;
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•
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failure of properties to yield oil or natural gas in commercially viable quantities;
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•
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uninsured or underinsured losses resulting from oil and natural gas operations;
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•
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ability to access oil and natural gas markets due to market conditions or operational impediments;
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•
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the impact and costs of compliance with laws and regulations governing oil and natural gas operations;
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•
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ability to replace oil and natural gas reserves;
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•
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any loss of senior management or technical personnel;
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•
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competition in the oil and natural gas industry;
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•
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risks arising out of hedging transactions;
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•
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the costs and effects of litigation;
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•
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sabotage, terrorism or other malicious intentional acts (including cyber attacks), war and other similar acts that disrupt operations or cause damage greater than covered by insurance; and
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•
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costs of tax treatment as a corporation.
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Successor
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Predecessor
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||||||||
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Two Months
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One Month
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Three Months
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||||||
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Ended
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Ended
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Ended
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||||||
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September 30, 2017
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July 31, 2017
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September 30, 2016
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||||||
Revenues:
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|||||
Oil sales
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$
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27,303
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$
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11,820
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$
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41,999
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Natural gas sales
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39,032
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4,412
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52,454
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|||
NGLs sales
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13,465
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4,792
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10,733
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|||
Oil, natural gas and NGLs sales
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79,800
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21,024
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105,186
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|||
Net gains (losses) on commodity derivative contracts
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(32,352
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)
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(12,019
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)
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21,099
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|
|||
Total revenues
|
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47,448
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9,005
|
|
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126,285
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|||
Costs and expenses:
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||||||
Production:
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|
|
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||||||
Lease operating expenses
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26,447
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|
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11,787
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|
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39,386
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|||
Transportation, gathering, processing and compression
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8,044
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—
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—
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|||
Production and other taxes
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5,737
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|
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1,983
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11,823
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|||
Depreciation, depletion, amortization, and accretion
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27,578
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7,328
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32,096
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Impairment of goodwill
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—
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—
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252,676
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Exploration expense
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105
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—
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—
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|||
Selling, general and administrative expenses
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7,194
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8,738
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11,454
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|||
Total costs and expenses
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75,105
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29,836
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347,435
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Loss from operations
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(27,657
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)
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(20,831
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)
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(221,150
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)
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Other income (expense):
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||||||
Interest expense
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(9,615
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)
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(5,003
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)
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(22,976
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)
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Net gains on interest rate derivative contracts
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—
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—
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764
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Net loss on acquisition of oil and natural gas properties
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—
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—
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(2,117
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)
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Other
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36
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472
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111
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|||
Total other expense, net
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(9,579
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)
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(4,531
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)
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(24,218
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)
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Loss before reorganization items
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(37,236
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)
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(25,362
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)
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(245,368
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)
|
|||
Reorganization items (Note 3)
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—
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|
|
|
988,452
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|
|
—
|
|
|||
Net income (loss)
|
|
$
|
(37,236
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)
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|
|
$
|
963,090
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|
$
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(245,368
|
)
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Less: Net income attributable to non-controlling interests
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|
(61
|
)
|
|
|
(1
|
)
|
|
(27
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)
|
|||
Net income (loss) attributable to Vanguard stockholders/unitholders
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|
(37,297
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)
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963,089
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(245,395
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)
|
|||
Distributions to Preferred unitholders
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—
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—
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(6,690
|
)
|
|||
Net income (loss) attributable to Common stockholders/Common and Class B unitholders
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|
$
|
(37,297
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)
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|
$
|
963,089
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|
|
$
|
(252,085
|
)
|
Net income (loss) per share/unit – basic and diluted
|
|
$
|
(1.86
|
)
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|
|
$
|
7.33
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|
$
|
(1.92
|
)
|
Weighted average Common shares/units outstanding
|
|
|
|
|
|
|
|
||||||
Common shares/units – basic and diluted
|
|
20,056
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|
|
|
130,978
|
|
|
131,040
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|
|||
Predecessor Class B units – basic and diluted
|
|
—
|
|
|
|
420
|
|
|
420
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
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Two Months
|
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|
Seven Months
|
|
Nine Months
|
||||||
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Ended
|
|
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Ended
|
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Ended
|
||||||
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|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||
Oil sales
|
|
$
|
27,303
|
|
|
|
$
|
97,496
|
|
|
$
|
127,594
|
|
Natural gas sales
|
|
39,032
|
|
|
|
113,587
|
|
|
121,756
|
|
|||
NGLs sales
|
|
13,465
|
|
|
|
35,565
|
|
|
30,752
|
|
|||
Oil, natural gas and NGLs sales
|
|
79,800
|
|
|
|
246,648
|
|
|
280,102
|
|
|||
Net losses on commodity derivative contracts
|
|
(32,352
|
)
|
|
|
(24,887
|
)
|
|
(15,752
|
)
|
|||
Total revenues
|
|
47,448
|
|
|
|
221,761
|
|
|
264,350
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||
Production:
|
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
|
26,447
|
|
|
|
87,092
|
|
|
120,228
|
|
|||
Transportation, gathering, processing and compression
|
|
8,044
|
|
|
|
—
|
|
|
—
|
|
|||
Production and other taxes
|
|
5,737
|
|
|
|
21,186
|
|
|
29,967
|
|
|||
Depreciation, depletion, amortization, and accretion
|
|
27,578
|
|
|
|
58,384
|
|
|
118,935
|
|
|||
Impairment of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
365,658
|
|
|||
Impairment of goodwill
|
|
—
|
|
|
|
—
|
|
|
252,676
|
|
|||
Exploration expense
|
|
105
|
|
|
|
—
|
|
|
—
|
|
|||
Selling, general and administrative expenses
|
|
7,194
|
|
|
|
28,810
|
|
|
35,884
|
|
|||
Total costs and expenses
|
|
75,105
|
|
|
|
195,472
|
|
|
923,348
|
|
|||
Income (loss) from operations
|
|
(27,657
|
)
|
|
|
26,289
|
|
|
(658,998
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(9,615
|
)
|
|
|
(35,276
|
)
|
|
(72,612
|
)
|
|||
Net gains (losses) on interest rate derivative contracts
|
|
—
|
|
|
|
30
|
|
|
(6,061
|
)
|
|||
Net loss on acquisition of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
(3,782
|
)
|
|||
Gain on extinguishment of debt
|
|
—
|
|
|
|
—
|
|
|
89,714
|
|
|||
Other
|
|
36
|
|
|
|
783
|
|
|
363
|
|
|||
Total other income (expense), net
|
|
(9,579
|
)
|
|
|
(34,463
|
)
|
|
7,622
|
|
|||
Loss before reorganization items
|
|
(37,236
|
)
|
|
|
(8,174
|
)
|
|
(651,376
|
)
|
|||
Reorganization items (Note 3)
|
|
—
|
|
|
|
908,485
|
|
|
—
|
|
|||
Net income (loss)
|
|
$
|
(37,236
|
)
|
|
|
$
|
900,311
|
|
|
$
|
(651,376
|
)
|
Less: Net income attributable to non-controlling interests
|
|
(61
|
)
|
|
|
(13
|
)
|
|
(91
|
)
|
|||
Net income (loss) attributable to Vanguard stockholders/unitholders
|
|
(37,297
|
)
|
|
|
900,298
|
|
|
(651,467
|
)
|
|||
Distributions to Preferred unitholders
|
|
—
|
|
|
|
(2,230
|
)
|
|
(20,069
|
)
|
|||
Net income (loss) attributable to Common stockholders/Common and Class B unitholders
|
|
$
|
(37,297
|
)
|
|
|
$
|
898,068
|
|
|
$
|
(671,536
|
)
|
Net income (loss) per share/unit – basic and diluted
|
|
$
|
(1.86
|
)
|
|
|
$
|
6.84
|
|
|
$
|
(5.12
|
)
|
Weighted average Common shares/units outstanding
|
|
|
|
|
|
|
|
||||||
Common shares/units – basic and diluted
|
|
20,056
|
|
|
|
130,962
|
|
|
130,862
|
|
|||
Predecessor Class B units – basic and diluted
|
|
—
|
|
|
|
420
|
|
|
420
|
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
|
September 30, 2017
|
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
16,765
|
|
|
|
$
|
49,957
|
|
Trade accounts receivable, net
|
|
56,265
|
|
|
|
97,138
|
|
||
Derivative assets
|
|
254
|
|
|
|
—
|
|
||
Restricted cash
|
|
28,455
|
|
|
|
—
|
|
||
Other current assets
|
|
4,709
|
|
|
|
7,944
|
|
||
Total current assets
|
|
106,448
|
|
|
|
155,039
|
|
||
Oil and natural gas properties
|
|
|
|
|
|
||||
Proved properties
|
|
1,535,917
|
|
|
|
4,725,692
|
|
||
Unproved properties
|
|
95,611
|
|
|
|
—
|
|
||
|
|
1,631,528
|
|
|
|
4,725,692
|
|
||
Accumulated depletion, amortization and impairment
|
|
(25,905
|
)
|
|
|
(3,867,439
|
)
|
||
Oil and natural gas properties, net – successful efforts method at
September 30, 2017 and full cost method at December 31, 2016
|
|
1,605,623
|
|
|
|
858,253
|
|
||
Other assets
|
|
|
|
|
|
|
|
||
Goodwill
|
|
—
|
|
|
|
253,370
|
|
||
Other assets
|
|
24,476
|
|
|
|
42,626
|
|
||
Total assets
|
|
$
|
1,736,547
|
|
|
|
$
|
1,309,288
|
|
|
|
|
|
|
|
||||
Liabilities and equity (deficit)
|
|
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
|
|
||
Accounts payable:
|
|
|
|
|
|
|
|
||
Trade
|
|
$
|
12,889
|
|
|
|
$
|
12,929
|
|
Affiliates
|
|
—
|
|
|
|
1,443
|
|
||
Accrued liabilities:
|
|
|
|
|
|
|
|
||
Lease operating
|
|
12,346
|
|
|
|
14,909
|
|
||
Developmental capital
|
|
12,596
|
|
|
|
6,676
|
|
||
Interest
|
|
4,973
|
|
|
|
13,345
|
|
||
Production and other taxes
|
|
25,314
|
|
|
|
32,663
|
|
||
Other
|
|
23,818
|
|
|
|
5,416
|
|
||
Derivative liabilities
|
|
29,506
|
|
|
|
125
|
|
||
Oil and natural gas revenue payable
|
|
27,120
|
|
|
|
33,672
|
|
||
Long-term debt classified as current (Note 5)
|
|
—
|
|
|
|
1,753,345
|
|
||
Other current liabilities
|
|
11,757
|
|
|
|
14,160
|
|
||
Total current liabilities
|
|
160,319
|
|
|
|
1,888,683
|
|
||
Long-term debt, net of current portion (Note 5)
|
|
938,224
|
|
|
|
15,475
|
|
||
Derivative liabilities
|
|
25,669
|
|
|
|
—
|
|
||
Asset retirement obligations, net of current portion
|
|
140,079
|
|
|
|
264,552
|
|
||
Other long-term liabilities
|
|
403
|
|
|
|
39,443
|
|
||
Total liabilities
|
|
1,264,694
|
|
|
|
2,208,153
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||
|
|
September 30, 2017
|
|
|
December 31, 2016
|
||||
Stockholders’ equity/Members’ (deficit) (Note 10)
|
|
|
|
|
|
|
|
||
Predecessor Preferred units, no units issued or outstanding at September 30,
2017; 13,881,873 units issued and outstanding at December 31, 2016 |
|
—
|
|
|
|
335,444
|
|
||
Predecessor Common units, no units issued or outstanding at September 30,
2017; 131,008,670 units issued and outstanding at December 31, 2016 |
|
—
|
|
|
|
(1,248,767
|
)
|
||
Predecessor Class B units, no units issued or outstanding at September 30,
2017; 420,000 issued and outstanding at December 31, 2016 |
|
—
|
|
|
|
7,615
|
|
||
Successor common stock ($0.001 par value, 50,000,000 shares authorized
and 20,055,694 shares issued and outstanding at September 30, 2017; no shares authorized or issued at December 31, 2016 |
|
20
|
|
|
|
—
|
|
||
Successor additional paid-in capital
|
|
506,923
|
|
|
|
—
|
|
||
Successor accumulated deficit
|
|
(37,297
|
)
|
|
|
—
|
|
||
Total stockholders' equity/members’ (deficit)
|
|
469,646
|
|
|
|
(905,708
|
)
|
||
Non-controlling interest in subsidiary
|
|
2,207
|
|
|
|
6,843
|
|
||
Total stockholders' equity/members’ (deficit)
|
|
471,853
|
|
|
|
(898,865
|
)
|
||
Total liabilities and equity (deficit)
|
|
$
|
1,736,547
|
|
|
|
$
|
1,309,288
|
|
|
|
Cumulative Preferred Units
|
|
Common Units
|
|
Class B
Units
|
|
Non-controlling Interest
|
|
Total Members’ Deficit
|
||||||||||
Balance at January 1, 2016 (Predecessor)
|
|
$
|
335,444
|
|
|
$
|
(430,494
|
)
|
|
$
|
7,615
|
|
|
$
|
—
|
|
|
$
|
(87,435
|
)
|
Issuance costs related to prior period equity transactions
|
|
—
|
|
|
(250
|
)
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|||||
Distributions to Preferred unitholders (see Note 9)
|
|
—
|
|
|
(5,575
|
)
|
|
—
|
|
|
—
|
|
|
(5,575
|
)
|
|||||
Distributions to Common and Class B unitholders (see Note 9)
|
|
—
|
|
|
(7,998
|
)
|
|
—
|
|
|
—
|
|
|
(7,998
|
)
|
|||||
Unit-based compensation
|
|
—
|
|
|
10,639
|
|
|
—
|
|
|
—
|
|
|
10,639
|
|
|||||
Non-controlling interest in subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,452
|
|
|
7,452
|
|
|||||
Net income (loss)
|
|
—
|
|
|
(815,089
|
)
|
|
—
|
|
|
82
|
|
|
(815,007
|
)
|
|||||
Potato Hills cash distribution to non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(691
|
)
|
|
(691
|
)
|
|||||
Balance at December 31, 2016 (Predecessor)
|
|
$
|
335,444
|
|
|
$
|
(1,248,767
|
)
|
|
$
|
7,615
|
|
|
$
|
6,843
|
|
|
$
|
(898,865
|
)
|
Issuance costs related to prior period equity transactions
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||
Unit-based compensation
|
|
—
|
|
|
5,391
|
|
|
—
|
|
|
—
|
|
|
5,391
|
|
|||||
Net income
|
|
—
|
|
|
900,298
|
|
|
—
|
|
|
13
|
|
|
900,311
|
|
|||||
Potato Hills cash distribution to non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(235
|
)
|
|
(235
|
)
|
|||||
Balance at July 31, 2017 (Predecessor)
|
|
$
|
335,444
|
|
|
$
|
(343,059
|
)
|
|
$
|
7,615
|
|
|
$
|
6,621
|
|
|
$
|
6,621
|
|
Cancellation of Predecessor equity
|
|
(335,444
|
)
|
|
343,059
|
|
|
(7,615
|
)
|
|
(4,347
|
)
|
|
(4,347
|
)
|
|||||
Balance at July 31, 2017 (Predecessor)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,274
|
|
|
$
|
2,274
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Non- controlling Interest
|
|
Total Stockholders' Equity
|
||||||||||
Issuance of Successor common stock and
warrants
|
|
$
|
20
|
|
|
$
|
506,923
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
506,943
|
|
Balance at July 31, 2017 (Successor)
|
|
20
|
|
|
506,923
|
|
|
—
|
|
|
2,274
|
|
|
509,217
|
|
|||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
(37,297
|
)
|
|
61
|
|
|
(37,236
|
)
|
|||||
Potato Hills cash distribution to non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(128
|
)
|
|
(128
|
)
|
|||||
Balance at September 30, 2017 (Successor)
|
|
$
|
20
|
|
|
$
|
506,923
|
|
|
$
|
(37,297
|
)
|
|
$
|
2,207
|
|
|
$
|
471,853
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Two Months
|
|
|
Seven Months
|
|
Nine Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
(in thousands)
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Operating activities
|
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
(37,236
|
)
|
|
|
$
|
900,311
|
|
|
$
|
(651,376
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||||
Depreciation, depletion, amortization, and accretion
|
|
27,578
|
|
|
|
58,384
|
|
|
118,935
|
|
|||
Impairment of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
365,658
|
|
|||
Impairment of goodwill
|
|
—
|
|
|
|
—
|
|
|
252,676
|
|
|||
Amortization of deferred financing costs
|
|
443
|
|
|
|
2,584
|
|
|
3,306
|
|
|||
Amortization of debt discount
|
|
—
|
|
|
|
348
|
|
|
2,739
|
|
|||
Reorganization cost
|
|
—
|
|
|
|
(937,956
|
)
|
|
—
|
|
|||
Compensation related items
|
|
—
|
|
|
|
5,429
|
|
|
8,850
|
|
|||
Net losses on commodity and interest rate derivative contracts
|
|
32,352
|
|
|
|
24,858
|
|
|
21,813
|
|
|||
Cash settlements received on matured commodity derivative contracts
|
|
(2,326
|
)
|
|
|
7
|
|
|
198,104
|
|
|||
Cash settlements paid on matured interest rate derivative contracts
|
|
—
|
|
|
|
(95
|
)
|
|
(6,770
|
)
|
|||
Net loss on acquisition of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
3,782
|
|
|||
Gain on extinguishment of debt
|
|
—
|
|
|
|
—
|
|
|
(89,714
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||||
Trade accounts receivable
|
|
(398
|
)
|
|
|
34,845
|
|
|
10,482
|
|
|||
Other current assets
|
|
(253
|
)
|
|
|
1,435
|
|
|
(553
|
)
|
|||
Net premiums received (paid) on commodity derivative contracts
|
|
—
|
|
|
|
(16
|
)
|
|
176
|
|
|||
Increase in restricted cash
|
|
—
|
|
|
|
(28,455
|
)
|
|
—
|
|
|||
Accounts payable and oil and natural gas revenue payable
|
|
(6,692
|
)
|
|
|
19,444
|
|
|
(36,296
|
)
|
|||
Payable to affiliates
|
|
—
|
|
|
|
(895
|
)
|
|
65
|
|
|||
Accrued expenses and other current liabilities
|
|
(186
|
)
|
|
|
(27,018
|
)
|
|
(32,497
|
)
|
|||
Other assets
|
|
446
|
|
|
|
(922
|
)
|
|
10,197
|
|
|||
Net cash provided by operating activities
|
|
13,728
|
|
|
|
52,288
|
|
|
179,577
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
|||||
Additions to property and equipment
|
|
—
|
|
|
|
(102
|
)
|
|
(73
|
)
|
|||
Potato Hills Gas Gathering System acquisition
|
|
—
|
|
|
|
—
|
|
|
(7,501
|
)
|
|||
Additions to oil and natural gas properties
|
|
(14,431
|
)
|
|
|
(25,694
|
)
|
|
(49,117
|
)
|
|||
Deposits and prepayments of oil and natural gas properties
|
|
—
|
|
|
|
(23,731
|
)
|
|
(12,257
|
)
|
|||
Proceeds from the sale of oil and natural gas properties
|
|
(9,013
|
)
|
|
|
126,363
|
|
|
288,483
|
|
|||
Net cash provided by (used in) investing activities
|
|
(23,444
|
)
|
|
|
76,836
|
|
|
219,535
|
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
|||||
Proceeds from long-term debt
|
|
—
|
|
|
|
—
|
|
|
93,500
|
|
|||
Repayment of long-term debt
|
|
(835
|
)
|
|
|
(41,603
|
)
|
|
(430,897
|
)
|
|||
Proceeds from Term Loan borrowings
|
|
—
|
|
|
|
125,000
|
|
|
—
|
|
|||
Repayment of debt under the predecessor revolving credit facility
|
|
—
|
|
|
|
(500,266
|
)
|
|
—
|
|
|||
Proceeds from rights offerings and second lien investment
|
|
—
|
|
|
|
275,000
|
|
|
—
|
|
|||
Distributions to Preferred unitholders
|
|
—
|
|
|
|
—
|
|
|
(6,690
|
)
|
|||
Distributions to Common and Class B unitholders
|
|
—
|
|
|
|
—
|
|
|
(11,917
|
)
|
|||
Potato Hills distribution to non-controlling interest
|
|
(128
|
)
|
|
|
(235
|
)
|
|
(550
|
)
|
|||
Financing fees
|
|
(166
|
)
|
|
|
(9,367
|
)
|
|
(3,764
|
)
|
|||
Net cash used in financing activities
|
|
(1,129
|
)
|
|
|
(151,471
|
)
|
|
(360,318
|
)
|
|||
Net increase (decrease) cash and cash equivalents
|
|
(10,845
|
)
|
|
|
(22,347
|
)
|
|
38,794
|
|
|||
Cash and cash equivalents
, beginning of period
|
|
27,610
|
|
|
|
49,957
|
|
|
—
|
|
|||
Cash and cash equivalents
, end of period
|
|
$
|
16,765
|
|
|
|
$
|
27,610
|
|
|
$
|
38,794
|
|
•
|
the Green River Basin in Wyoming;
|
•
|
the Piceance Basin in Colorado;
|
•
|
the Permian Basin in West Texas and New Mexico;
|
•
|
the Gulf Coast Basin in Texas, Louisiana, Mississippi and Alabama;
|
•
|
the Arkoma Basin in Arkansas and Oklahoma;
|
•
|
the Big Horn Basin in Wyoming and Montana;
|
•
|
the Anadarko Basin in Oklahoma and North Texas;
|
•
|
the Williston Basin in North Dakota and Montana;
|
•
|
the Wind River Basin in Wyoming; and
|
•
|
the Powder River Basin in Wyoming.
|
(a)
|
Basis of Presentation and Principles of Consolidation
|
(b)
|
Emergence from Voluntary Reorganization under Chapter 11
|
(c)
|
Oil and Natural Gas Properties - Transition from Full Cost Method to Successful Efforts Accounting Method
|
(d)
|
Goodwill and Other Intangible Assets
|
(e)
|
Income Taxes
|
(f)
|
New Pronouncements Recently Adopted
|
(g)
|
New Pronouncements Issued But Not Yet Adopted
|
(h)
|
Use of Estimates
|
•
|
The Predecessor transferred all of its membership interests in VNG, a Kentucky limited liability company and the Predecessor’s wholly owned first-tier subsidiary, to the Successor (formerly known as VNR Finance Corp.). VNG directly or indirectly owned all of the other subsidiaries of the Predecessor. As a result of the foregoing and certain other transactions, the Successor is no longer a subsidiary of the Predecessor and now owns all of the former subsidiaries of the Predecessor;
|
•
|
VNG, as borrower, entered into that certain Fourth Amended and Restated Credit Agreement dated as of August 1, 2017 (the “Successor Credit Facility”), by and among VNG as borrower, Citibank, N.A. as administrative agent (the “Administrative Agent”) and Issuing Bank, and the lenders party thereto (the “Lenders”). Pursuant to the Successor Credit Facility, the lenders party thereto agreed to provide VNG with an
$850.0 million
exit senior secured reserve-based revolving credit facility (the “Revolving Loans”). The initial borrowing base available under the Successor Credit Facility as of the Effective Date was
$850.0 million
and the aggregate principal amount of Revolving Loans outstanding under the Successor Credit Facility as of the Effective Date was
$730.0 million
. The Successor Credit
|
•
|
The Successor issued approximately
$80.7 million
aggregate principal amount of new
9.0%
Senior Secured Second Lien Notes due 2024 (the “New Notes” or “Senior Notes due 2024”) to certain eligible holders of their outstanding Old Second Lien Notes in full satisfaction of their claim of approximately
$80.7 million
related to the Old Second Lien Notes held by such holders;
|
•
|
The Predecessor’s Senior Notes were cancelled and the Consenting Senior Noteholders received their pro rata share of
3.38%
(subject to dilution) of the Common Stock, in full and final satisfaction of their claims;
|
•
|
The Predecessor completed a rights offering backstopped by certain holders of our Senior Notes (the “Backstop Parties”) which generated
$275.0 million
of gross proceeds. The rights offering resulted in the issuance of Common Stock, representing approximately
89.92%
of outstanding shares of Common Stock, to holders of claims arising under the Senior Notes and to the Backstop Parties;
|
•
|
The Successor entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain recipients of shares of its Common Stock distributed on the Effective Date that were parties to the Amended and Restated Backstop Commitment Agreement (including the Backstop Parties and certain of their affiliates and related funds), in accordance with the terms set forth in the Final Plan (collectively, the “Registration Rights Holders”). Pursuant to the Registration Rights Agreement, we agreed to, among other things, file a registration statement with the SEC within 90 days of the Effective Date covering the offer and resale of “Registrable Securities” (as defined in the Registration Rights Agreement); We filed the registration statement on October 30, 2017;
|
•
|
Additional shares of Common Stock, representing
eleven percent
of outstanding shares of Common Stock on a fully diluted basis, were authorized for issuance under the Vanguard Natural Resources, Inc. 2017 Management Incentive Plan (the “MIP”);
|
•
|
All outstanding Preferred Units (defined below) issued and outstanding immediately prior to the Effective Date were cancelled and the holders thereof received their pro rata shares of (i)
3%
of outstanding shares of Common Stock and (ii) Preferred Unit Warrants (as defined below), in full and final satisfaction of their interests;
|
•
|
All common equity of the Predecessor issued and outstanding immediately prior to the Effective Date were cancelled and the holders of the common equity received Common Unit Warrants (as defined below), in full and final satisfaction of their interests;
|
•
|
The Successor entered into a warrant agreement (the “Warrant Agreement”) with American Stock Transfer & Trust Company, LLC, as warrant agent, pursuant to which the Successor issued (i) to electing holders of the Predecessor’s (A)
7.875%
Series A Cumulative Redeemable Perpetual Preferred Units (“Series A Preferred Units”), (B)
7.625%
Series B Cumulative Redeemable Perpetual Preferred Units (“Series B Preferred Units”), and (C)
7.75%
Series C Cumulative Redeemable Perpetual Preferred Units (“Series C Preferred Units” and, together with the Series A Preferred Units and Series B Preferred Units, the “Preferred Units”), three and a half year warrants (the “Preferred Unit Warrants”), which will be exercisable to purchase up to
621,649
shares of the Common Stock as of the Effective Date; and (ii) to electing holders of the Predecessor’s common units representing limited liability company interests, three and a half year warrants (the “Common Unit Warrants” and, together with the Preferred Unit Warrants, the “Warrants”) which will be exercisable to purchase up to
640,876
shares of the Common Stock as of the Effective Date. The expiration date of the Warrants will be February 1, 2021. The strike price for the Preferred Unit Warrants is
$44.25
, and the strike price for the Common Unit Warrants is
$61.45
;
|
•
|
By operation of the Final Plan and the Confirmation Order, the terms of the Predecessor’s board of directors expired as of the Effective Date. Our current board of directors (the “Board”) consists of
seven
members, including our and our Predecessor’s Chief Executive Officer. Our Chief Financial Officer was initially appointed as a director upon emergence and became our Chief Financial Officer as well, following the resignation of our Predecessor’s Chief Financial Officer;
|
•
|
Certain other priority or convenience class claims were paid in full in cash, reinstated or otherwise treated in a manner acceptable to the creditor claimholders; and
|
•
|
On the Effective Date, the Successor reserved for issuance
20,100,000
shares of Common Stock.
|
|
July 31, 2017
|
||
Enterprise Value
|
$
|
1,425,000
|
|
Plus: Cash and cash equivalents
|
27,610
|
|
|
Less: Debt
|
(943,392
|
)
|
|
Total stockholders' equity
|
509,217
|
|
|
Less: Fair value of warrants
|
(11,734
|
)
|
|
Less: Fair value of non-controlling interest
|
(2,274
|
)
|
|
Fair Value of Successor common stock
|
$
|
495,209
|
|
|
July 31, 2017
|
||
Successor Credit Facility
|
$
|
730,000
|
|
Successor Term Loan
|
125,000
|
|
|
Senior Notes due 2024
|
80,722
|
|
|
Lease Financing Obligation, net of current portion
|
12,464
|
|
|
Current portion of Lease Financing Obligation
|
4,647
|
|
|
Total Fair value of debt
|
952,833
|
|
|
Successor Credit Facility fees and debt issuance costs
|
(9,441
|
)
|
|
Total Debt
|
$
|
943,392
|
|
|
July 31, 2017
|
||
Enterprise Value
|
$
|
1,425,000
|
|
Plus: Cash and cash equivalents
|
27,610
|
|
|
Plus: Current liabilities, excluding current portion of Lease Financing Obligation
|
147,552
|
|
|
Plus: Other noncurrent liabilities
|
15,589
|
|
|
Plus: Long-term asset retirement obligation
|
136,769
|
|
|
Reorganization Value of Successor assets
|
$
|
1,752,520
|
|
|
|
As of July 31, 2017
|
||||||||||||||||
(in thousands)
|
|
Predecessor
|
|
Reorganization Adjustments
(1)
|
|
|
Fresh-Start Adjustments
|
|
|
Successor
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
68,933
|
|
|
$
|
(41,323
|
)
|
(2)
|
|
$
|
—
|
|
|
|
$
|
27,610
|
|
Trade accounts receivable, net
|
|
64,253
|
|
|
(155
|
)
|
(3)
|
|
(8,231
|
)
|
(15)
|
|
55,867
|
|
||||
Derivative assets
|
|
3,236
|
|
|
—
|
|
|
|
—
|
|
|
|
3,236
|
|
||||
Restricted cash
|
|
102,556
|
|
|
(74,101
|
)
|
(4)
|
|
—
|
|
|
|
28,455
|
|
||||
Other current assets
|
|
4,430
|
|
|
(394
|
)
|
(5)
|
|
416
|
|
(16)
|
|
4,452
|
|
||||
Total current assets
|
|
243,408
|
|
|
(115,973
|
)
|
|
|
(7,815
|
)
|
|
|
119,620
|
|
||||
Oil and natural gas properties, at cost
|
|
4,635,867
|
|
|
—
|
|
|
|
(3,029,173
|
)
|
(17)
|
|
1,606,694
|
|
||||
Accumulated depletion
|
|
(3,916,889
|
)
|
|
—
|
|
|
|
3,916,889
|
|
(17)
|
|
—
|
|
||||
Oil and natural gas properties
|
|
718,978
|
|
|
—
|
|
|
|
887,716
|
|
|
|
1,606,694
|
|
||||
Other assets
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
253,370
|
|
|
—
|
|
|
|
(253,370
|
)
|
(18)
|
|
—
|
|
||||
Other assets
|
|
44,315
|
|
|
—
|
|
|
|
(18,109
|
)
|
(19)(20)
|
|
26,206
|
|
||||
Total assets
|
|
$
|
1,260,071
|
|
|
$
|
(115,973
|
)
|
|
|
$
|
608,422
|
|
|
|
$
|
1,752,520
|
|
Liabilities and equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Trade
|
|
$
|
8,444
|
|
|
$
|
9,978
|
|
(6)
|
|
$
|
—
|
|
|
|
$
|
18,422
|
|
Accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Lease operating
|
|
13,199
|
|
|
—
|
|
|
|
—
|
|
|
|
13,199
|
|
||||
Development capital
|
|
8,928
|
|
|
—
|
|
|
|
—
|
|
|
|
8,928
|
|
||||
Interest
|
|
8,478
|
|
|
(8,478
|
)
|
(7)
|
|
—
|
|
|
|
—
|
|
||||
Production and other taxes
|
|
23,494
|
|
|
—
|
|
|
|
—
|
|
|
|
23,494
|
|
||||
Other
|
|
20,933
|
|
|
12,297
|
|
(8)
|
|
—
|
|
|
|
33,230
|
|
||||
Derivative liabilities
|
|
12,987
|
|
|
—
|
|
|
|
—
|
|
|
|
12,987
|
|
||||
Oil and natural gas revenue payable
|
|
36,087
|
|
|
—
|
|
|
|
(7,808
|
)
|
(15)
|
|
28,279
|
|
||||
Long-term debt classified as current
|
|
1,300,971
|
|
|
(1,300,971
|
)
|
(9)
|
|
—
|
|
|
|
—
|
|
||||
Other
|
|
14,246
|
|
|
(382
|
)
|
(10)
|
|
(203
|
)
|
(21)
|
|
13,661
|
|
||||
Total current liabilities
|
|
1,447,767
|
|
|
(1,287,556
|
)
|
|
|
(8,011
|
)
|
|
|
152,200
|
|
||||
Long-term debt, net of current portion
|
|
12,647
|
|
|
926,281
|
|
(11)
|
|
(183
|
)
|
(22)
|
|
938,745
|
|
||||
Derivative liabilities
|
|
15,143
|
|
|
—
|
|
|
|
—
|
|
|
|
15,143
|
|
||||
Asset retirement obligations, net of current portion
|
|
260,089
|
|
|
—
|
|
|
|
(123,320
|
)
|
(23)
|
|
136,769
|
|
||||
Other long-term liabilities
|
|
37,683
|
|
|
—
|
|
|
|
(37,237
|
)
|
(24)
|
|
446
|
|
||||
Total liabilities not subject to compromise
|
|
1,773,329
|
|
|
(361,275
|
)
|
|
|
(168,751
|
)
|
|
|
1,243,303
|
|
||||
Liabilities subject to compromise
|
|
479,911
|
|
|
(479,911
|
)
|
(12)
|
|
—
|
|
|
|
—
|
|
||||
Total Liabilities
|
|
2,253,240
|
|
|
(841,186
|
)
|
|
|
(168,751
|
)
|
|
|
1,243,303
|
|
|
|
As of July 31, 2017
|
||||||||||||||||
|
|
Predecessor
|
|
Reorganization Adjustments
(1)
|
|
|
Fresh-Start Adjustments
|
|
|
Successor
|
||||||||
Stockholders’ equity/Members’ (deficit) (Note 9)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Preferred units (Predecessor)
|
|
335,444
|
|
|
(335,444
|
)
|
(13)
|
|
—
|
|
|
|
—
|
|
||||
Common units (Predecessor)
|
|
(1,342,849
|
)
|
|
763,217
|
|
(13)
|
|
579,632
|
|
(25)
|
|
—
|
|
||||
Class B units (Predecessor)
|
|
7,615
|
|
|
(7,615
|
)
|
(13)
|
|
—
|
|
|
|
—
|
|
||||
Common stock (Successor)
|
|
—
|
|
|
20
|
|
(14)
|
|
—
|
|
|
|
20
|
|
||||
Additional paid-in capital (Successor)
|
|
—
|
|
|
305,035
|
|
(14)
|
|
201,888
|
|
(25)
|
|
506,923
|
|
||||
Total VNR stockholders' equity/ members’ (deficit)
|
|
(999,790
|
)
|
|
725,213
|
|
|
|
781,520
|
|
|
|
506,943
|
|
||||
Non-controlling interest in subsidiary
|
|
6,621
|
|
|
—
|
|
|
|
(4,347
|
)
|
(26)
|
|
2,274
|
|
||||
Total stockholders' equity/members’ (deficit)
|
|
(993,169
|
)
|
|
725,213
|
|
|
|
777,173
|
|
|
|
509,217
|
|
||||
Total liabilities and equity (deficit)
|
|
$
|
1,260,071
|
|
|
$
|
(115,973
|
)
|
|
|
$
|
608,422
|
|
|
|
$
|
1,752,520
|
|
1)
|
Represent amounts recorded as of the Convenience Date for the implementation of the Final 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 common stock and equity warrants, 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):
|
Proceeds from equity investment from holders of Old Second Lien Notes
|
$
|
19,250
|
|
Proceeds from rights offering
|
255,750
|
|
|
Borrowings under the Successor's Term Loan
|
125,000
|
|
|
Removal of restriction on cash balance
|
102,556
|
|
|
Payment of holders of claims under the Predecessor Credit Facility
|
(500,266
|
)
|
|
Payment of interest and fees under the Predecessor Credit Facility
|
(3,390
|
)
|
|
Payment of Successor Credit Facility fees
|
(9,300
|
)
|
|
Payment of professional fees
|
(2,468
|
)
|
|
Funding of the general unsecured claims cash distribution pools
|
(6,750
|
)
|
|
Funding of the professional fees escrow account
|
(21,705
|
)
|
|
Changes in cash and cash equivalents
|
$
|
(41,323
|
)
|
3)
|
Reflects the write-off of lease incentive costs due to the rejection of the related lease contract.
|
4)
|
Net change to restricted cash includes the following:
|
Removal of restriction on cash balance
|
$
|
(102,556
|
)
|
Funding of the general unsecured claims cash distribution pools
|
6,750
|
|
|
Funding of the professional fees escrow account
|
21,705
|
|
|
|
$
|
(74,101
|
)
|
5)
|
Primarily reflects the write-off of the Predecessor’s equity offering costs.
|
6)
|
Reflects reinstatement of payables for the general unsecured claims and trade claims cash distribution pool.
|
7)
|
Reflects payment of accrued interest related to Predecessor Credit Facility and Predecessor debtor-in-possession credit facility of
$3.4 million
and the capitalization of approximately
$5.1 million
accrued interest on the Old Second Lien Notes into the principal amount of the Senior Notes due 2024.
|
8)
|
Net increase in other accrued expenses reflect (in thousands):
|
Recognition of payables for the professional fees escrow account
|
$
|
12,627
|
|
Write-off of accrued non cash compensation related to Phantom Units granted
|
(330
|
)
|
|
Net increase in accounts payable and accrued expenses
|
$
|
12,297
|
|
9)
|
Reflects the repayment of outstanding borrowings under the Predecessor Credit Facility of approximately
$500.3 million
and the conversion of the remaining outstanding debt to Successor Credit Facility and the Senior Notes due 2024 to Long-Term Debt, net of the write-off of deferred financing fees.
|
10)
|
Reflects the write-off of deferred rent due to the rejection of the related lease contract.
|
11)
|
Reflects
$855.0 million
of outstanding borrowings under the Successor Credit Facility, which includes a
$730.0 million
revolving loan and a
$125.0 million
Term Loan. The adjustment also reflects the issuance of Senior Notes due 2024 of
$80.7 million
. The amounts are presented net of capitalized deferred financing fees related to each debt.
|
12)
|
Settlement of Liabilities subject to compromise and the resulting net gain were determined as follows (in thousands):
|
Accounts payable and accrued expenses
|
$
|
36,224
|
|
Accrued interest payable
|
10,737
|
|
|
Debt
|
432,950
|
|
|
Total liabilities subject to compromise
|
479,911
|
|
|
Reinstatement of liability for the general unsecured claims
|
(4,978
|
)
|
|
Reinstatement of liability for settlement of an unsecured claim
|
(5,000
|
)
|
|
Issuance of common shares to holders of general unsecured claims
|
(1,089
|
)
|
|
Issuance of common shares to holders of Senior Notes claims
|
(16,715
|
)
|
|
Gain on settlement of liabilities subject to compromise
|
$
|
452,129
|
|
13)
|
Net change in Predecessor common units reflects (in thousands):
|
Recognition of gain on settlement of liabilities subject to compromise
|
$
|
452,129
|
|
Cancellation of Predecessor Preferred units
|
335,444
|
|
|
Cancellation of Predecessor Class B units
|
7,615
|
|
|
Write-off of deferred financing costs and debt discounts
|
(4,917
|
)
|
|
Recognition of professional and success fees
|
(14,968
|
)
|
|
Fair value of warrants issued to Predecessor unitholders
|
(11,734
|
)
|
|
Fair value of shares issued to Predecessor unitholders
|
(517
|
)
|
|
Terminated contracts
|
165
|
|
|
Net change in Predecessor Common units
|
$
|
763,217
|
|
14)
|
Net change in Successor equity reflects net increase in capital accounts as follows (in thousands):
|
Issuance of common stock to general unsecured creditors
|
$
|
1,089
|
|
Issuance of common stock to holders of Senior Notes claims
|
16,715
|
|
|
Issuance of common stock to Predecessor preferred unitholders
|
517
|
|
|
Issuance of common stock for the second lien equity investment
|
19,250
|
|
|
Issuance of common stock pursuant to the rights offering
|
255,750
|
|
|
Issuance of warrants
|
11,734
|
|
|
Change in additional paid-in capital
|
305,055
|
|
|
Par value of common stock
|
(20
|
)
|
|
Net increase in capital accounts
|
$
|
305,035
|
|
15)
|
Reflects a change in accounting policy from the entitlements method for natural gas production imbalances in accordance with the adoption of ASC 606.
|
16)
|
Reflects fair value adjustment for oil inventory.
|
17)
|
Reflects the adjustments to oil and natural gas properties, based on the methodology discussed above, and the elimination of accumulated depletion. The following table summarizes the components of oil and natural gas properties as of the Convenience Date (in thousands):
|
|
Successor
|
|
|
Predecessor
|
||||
|
Fair Value
|
|
|
Historical Book Value
|
||||
Proved properties
|
$
|
1,511,083
|
|
|
|
$
|
4,635,867
|
|
Unproved properties
|
95,611
|
|
|
|
—
|
|
||
|
1,606,694
|
|
|
|
4,635,867
|
|
||
Less: accumulated depletion and amortization
|
—
|
|
|
|
(3,916,889
|
)
|
||
|
$
|
1,606,694
|
|
|
|
$
|
718,978
|
|
18)
|
Reflects the write-off of Predecessor goodwill.
|
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 Convenience Date (in thousands):
|
|
Successor
|
|
|
Predecessor
|
||||
|
Fair Value
|
|
|
Historical Book Value
|
||||
Gas gathering assets
|
$
|
4,196
|
|
|
|
$
|
19,942
|
|
Office equipment and furniture
|
574
|
|
|
|
5,847
|
|
||
Buildings and leasehold improvements
|
57
|
|
|
|
836
|
|
||
Vehicles
|
1,311
|
|
|
|
1,549
|
|
||
|
6,138
|
|
|
|
28,174
|
|
||
Less: accumulated depreciation
|
—
|
|
|
|
(13,657
|
)
|
||
|
$
|
6,138
|
|
|
|
$
|
14,517
|
|
20)
|
Reflects an adjustment for the intangible asset related to the Company’s nickel gas contract of
$5.6 million
and the write-off of deferred tax asset of
$4.1 million
.
|
21)
|
Reflects the adjustment of current portion of financing obligation to fair value and write-off of deferred rent.
|
22)
|
Reflects the adjustment of long-term portion of financing obligation to fair value.
|
23)
|
Primarily reflects the fair value adjustment of asset retirement obligations (“ARO”) to fair value of approximately
$145.2 million
, of which
$136.8 million
is reflected as long-term ARO and
$8.4 million
of current ARO shown in other current liabilities. The fair value of asset retirement obligations was estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors; and (iv) a credit-adjusted risk-free interest rate. Refer to Note 8, “
Asset Retirement Obligations”
for further details of the Company's asset retirement obligations.
|
24)
|
Reflects the write-off of deferred tax liabilities.
|
25)
|
Reflects the cumulative impact of the fresh-start accounting adjustments discussed above and the elimination of Common units (Predecessor).
|
|
Predecessor
|
||
|
Seven Months Ended
July 31, 2017
|
||
Gain on settlement of Liabilities subject to compromise
|
$
|
452,129
|
|
Fresh-start accounting adjustments
|
781,520
|
|
|
Issuance of common shares and warrants
|
(214,140
|
)
|
|
Legal and other professional fees
|
(58,482
|
)
|
|
Recognition of additional unsecured claims
|
(31,346
|
)
|
|
Write-off of deferred financing costs and debt discounts
|
(21,361
|
)
|
|
Terminated contracts
|
165
|
|
|
Reorganization items
|
$
|
908,485
|
|
|
Successor
|
||||||||||
|
Two Months Ended September 30, 2017
|
||||||||||
|
Under ASC 606
|
|
Under ASC 605
|
|
Increase/(Decrease)
|
||||||
Revenues :
|
|
|
|
|
|
||||||
Oil sales
|
$
|
27,303
|
|
|
$
|
27,303
|
|
|
$
|
—
|
|
Natural gas sales
|
39,032
|
|
|
32,983
|
|
|
6,049
|
|
|||
NGLs sales
|
13,465
|
|
|
11,470
|
|
|
1,995
|
|
|||
Oil, natural gas and NGLs sales
|
79,800
|
|
|
71,756
|
|
|
8,044
|
|
|||
Net losses on commodity derivative contracts
|
(32,352
|
)
|
|
(32,352
|
)
|
|
—
|
|
|||
Total revenues
|
47,448
|
|
|
39,404
|
|
|
8,044
|
|
|||
Costs and expenses :
|
|
|
|
|
|
||||||
Transportation, gathering, processing, and compression
|
8,044
|
|
|
—
|
|
|
8,044
|
|
|||
Net loss
|
$
|
(37,236
|
)
|
|
$
|
(37,236
|
)
|
|
$
|
—
|
|
•
|
We sell oil production at the wellhead and collect an agreed-upon index price, net of pricing differentials. In this scenario, we recognize revenue when control transfers to the purchaser at the wellhead at the net price received.
|
•
|
We deliver oil to the purchaser at a contractually agreed-upon delivery point at which the purchaser takes custody, title, and risk of loss of the product. Under this arrangement, we pay a third party to transport the product and receive a specified index price from the purchaser with no deduction. In this scenario, we recognize revenue when control transfers to the purchaser at the delivery point based on the price received from the purchaser. The third-party costs are recorded as Transportation, gathering, processing and compression expense in our consolidated statements of operations.
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||
Description
|
|
Interest Rate
|
|
Maturity Date
|
|
September 30, 2017
|
|
|
December 31, 2016
|
||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
||||
Successor Credit Facility
|
|
Variable (1)
|
|
February 1, 2021
|
|
$
|
730,000
|
|
|
|
$
|
—
|
|
Successor term loan
|
|
Variable (2)
|
|
May 1, 2021
|
|
125,000
|
|
|
|
—
|
|
||
Senior Notes due 2024
|
|
9.0%
|
|
February 15, 2024
|
|
80,722
|
|
|
|
—
|
|
||
Predecessor Credit Facility
|
|
Variable
(3)
|
|
April 16, 2018
|
|
—
|
|
|
|
1,269,000
|
|
||
Senior Notes due 2019
|
|
8.375% (4)
|
|
June 1, 2019
|
|
—
|
|
|
|
51,120
|
|
||
Senior Notes due 2020
|
|
7.875% (5)
|
|
April 1, 2020
|
|
—
|
|
|
|
381,830
|
|
||
Senior Notes due 2023
|
|
7.00%
|
|
February 15, 2023
|
|
—
|
|
|
|
75,634
|
|
||
Lease Financing Obligation
|
|
4.16%
|
|
August 10, 2020 (6)
|
|
16,354
|
|
|
|
20,167
|
|
||
Unamortized discount on Senior Notes
|
|
|
|
—
|
|
|
|
(13,167
|
)
|
||||
Unamortized deferred financing costs
|
|
|
|
(9,164
|
)
|
|
|
(11,072
|
)
|
||||
Total debt
|
|
|
|
|
|
$
|
942,912
|
|
|
|
$
|
1,773,512
|
|
Less:
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt classified as current
|
|
—
|
|
|
|
(1,753,345
|
)
|
||||||
Current portion of Lease Financing Obligation
|
|
(4,688
|
)
|
|
|
(4,692
|
)
|
||||||
Total long-term debt
|
|
|
|
|
|
$
|
938,224
|
|
|
|
$
|
15,475
|
|
(1)
|
Variable interest rate of
4.74%
at
September 30, 2017
.
|
(2)
|
Variable interest rate of
8.74%
at
September 30, 2017
.
|
(3)
|
Variable interest rate of
3.11%
at
December 31, 2016
.
|
(4)
|
Effective interest rate of
21.45%
at
December 31, 2016
.
|
(5)
|
Effective interest rate of
8.0%
at
December 31, 2016
.
|
(6)
|
The Lease Financing Obligations expire on August 10, 2020, except for certain obligations which expire on July 10, 2021.
|
Year
|
|
|
||
2018
|
|
$
|
1,250
|
|
2019
|
|
1,250
|
|
|
2020
|
|
1,250
|
|
|
2021 through Maturity date
|
|
121,250
|
|
Year
|
|
Percentage
|
|
2020
|
|
106.75
|
%
|
2021
|
|
104.50
|
%
|
2022
|
|
102.25
|
%
|
2023 and thereafter
|
|
100.00
|
%
|
|
|
Gas
|
|
Oil
|
|
NGLs
|
|||||||||||||||
Contract Period
|
|
MMBtu
|
|
Weighted
Average
Fixed Price
|
|
Bbls
|
|
Weighted Average
WTI Price
|
|
Gallons
|
|
Weighted Average
Fixed Price |
|||||||||
October 1, 2017 – December 31, 2017
|
|
18,400,000
|
|
|
$
|
3.11
|
|
|
818,900
|
|
|
$
|
45.20
|
|
|
15,842,400
|
|
|
$
|
0.63
|
|
January 1, 2018 – December 31, 2018
|
|
70,242,000
|
|
|
$
|
3.00
|
|
|
3,059,200
|
|
|
$
|
46.47
|
|
|
56,721,000
|
|
|
$
|
0.60
|
|
January 1, 2019 - December 31, 2019
|
|
52,539,000
|
|
|
$
|
2.79
|
|
|
1,858,200
|
|
|
$
|
48.50
|
|
|
—
|
|
|
$
|
—
|
|
January 1, 2020 - December 31, 2020
|
|
47,227,500
|
|
|
$
|
2.75
|
|
|
1,393,800
|
|
|
$
|
49.53
|
|
|
—
|
|
|
$
|
—
|
|
|
|
Gas
|
Oil
|
|||||||||||||||||||
Contract Period
|
|
MMBtu
|
|
Floor Price ($/MMBtu)
|
|
Ceiling Price ($/MMBtu)
|
|
Bbls
|
|
Floor Price ($/Bbl)
|
|
Ceiling Price ($/Bbl)
|
||||||||||
January 1, 2019 - December 31, 2019
|
|
4,125,000
|
|
|
$
|
2.60
|
|
|
$
|
3.00
|
|
|
575,730
|
|
|
$
|
43.81
|
|
|
$
|
54.04
|
|
January 1, 2020 - December 31, 2020
|
|
5,490,000
|
|
|
$
|
2.60
|
|
|
$
|
3.00
|
|
|
659,340
|
|
|
$
|
44.17
|
|
|
$
|
55.00
|
|
|
|
Successor
|
||||||||||
|
|
September 30, 2017
|
||||||||||
Offsetting Derivative Assets:
|
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts Presented in the Consolidated Balance Sheets
|
||||||
Commodity price derivative contracts
|
|
$
|
3,650
|
|
|
$
|
(3,396
|
)
|
|
$
|
254
|
|
Total derivative instruments
|
|
$
|
3,650
|
|
|
$
|
(3,396
|
)
|
|
$
|
254
|
|
|
|
|
|
|
|
|
||||||
Offsetting Derivative Liabilities:
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts Presented in the Consolidated Balance Sheets
|
||||||
Commodity price derivative contracts
|
|
$
|
(58,572
|
)
|
|
$
|
3,397
|
|
|
$
|
(55,175
|
)
|
Total derivative instruments
|
|
$
|
(58,572
|
)
|
|
$
|
3,397
|
|
|
$
|
(55,175
|
)
|
|
|
Predecessor
|
||
|
|
December 31, 2016
|
||
Derivative Liabilities:
|
|
Amount Presented in the Consolidated Balance Sheets
|
||
Interest rate derivative contracts
|
|
$
|
(125
|
)
|
Total derivative instruments
|
|
$
|
(125
|
)
|
|
Successor
|
|
|
Predecessor
|
|||||||
|
Two Months
Ended
September 30, 2017
|
|
|
Seven Months Ended
July 31, 2017
|
December 31, 2016
|
||||||
|
|
|
|
|
|
||||||
Derivative asset (liability) at beginning of period, net
|
$
|
(24,895
|
)
|
|
|
$
|
(125
|
)
|
$
|
316,691
|
|
Purchases
|
|
|
|
|
|
||||||
Net premiums and fees received for derivative contracts
|
—
|
|
|
|
—
|
|
(2,444
|
)
|
|||
Net losses on commodity and interest rate derivative contracts
|
(32,352
|
)
|
|
|
(24,858
|
)
|
(46,939
|
)
|
|||
Settlements
|
|
|
|
|
|
||||||
Cash settlements paid (received) on matured commodity derivative contracts
|
2,326
|
|
|
|
(7
|
)
|
(226,876
|
)
|
|||
Cash settlements paid on matured interest rate derivative contracts
|
—
|
|
|
|
95
|
|
13,398
|
|
|||
Termination of derivative contracts
|
—
|
|
|
|
—
|
|
(53,955
|
)
|
|||
Derivative liability at end of period, net
|
$
|
(54,921
|
)
|
|
|
$
|
(24,895
|
)
|
$
|
(125
|
)
|
Level 1
|
Quoted prices for identical instruments in active markets.
|
Level 2
|
Quoted market prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
|
Level 3
|
Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Level 3 assets and liabilities generally include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation or for which there is a lack of transparency as to the inputs used.
|
|
|
Successor
|
||||||
|
|
September 30, 2017
|
||||||
|
|
Fair Value Measurements
|
|
Assets/Liabilities
|
||||
|
|
Using Level 2
|
|
at Fair Value
|
||||
Assets:
|
|
|
|
|
||||
Commodity price derivative contracts
|
|
$
|
254
|
|
|
$
|
254
|
|
Total derivative instruments
|
|
$
|
254
|
|
|
$
|
254
|
|
Liabilities:
|
|
|
|
|
|
|
||
Commodity price derivative contracts
|
|
$
|
(55,175
|
)
|
|
$
|
(55,175
|
)
|
Total derivative instruments
|
|
$
|
(55,175
|
)
|
|
$
|
(55,175
|
)
|
|
|
Predecessor
|
||||||
|
|
December 31, 2016
|
||||||
|
|
Fair Value Measurements
|
|
|
Assets/Liabilities
|
|||
|
|
Using Level 2
|
|
at Fair Value
|
||||
Liabilities:
|
|
|
|
|
|
|
||
Interest rate derivative contracts
|
|
$
|
(125
|
)
|
|
$
|
(125
|
)
|
Total derivative instruments
|
|
$
|
(125
|
)
|
|
$
|
(125
|
)
|
|
|
Predecessor
|
||
|
|
Nine Months Ended September 30, 2016
|
||
|
|
(in thousands)
|
||
Unobservable inputs, beginning of period
|
|
$
|
(5,933
|
)
|
Total gains
|
|
9,381
|
|
|
Settlements
|
|
(4,608
|
)
|
|
Unobservable inputs, end of period
|
|
$
|
(1,160
|
)
|
|
|
|
||
Change in fair value included in earnings related to derivatives
still held as of September 30,
|
|
$
|
223
|
|
Asset retirement obligations as of December 31, 2016 (Predecessor)
|
|
$
|
272,436
|
|
Liabilities added during the current period
|
|
555
|
|
|
Accretion expense
|
|
6,795
|
|
|
Retirements
|
|
(1,161
|
)
|
|
Liabilities related to assets divested
|
|
(10,107
|
)
|
|
Change in estimate
|
|
(29
|
)
|
|
Asset retirement obligation at July 31, 2017 (Predecessor)
|
|
268,489
|
|
|
Fresh-start adjustment
(1)
|
|
(123,320
|
)
|
|
Asset retirement obligation at July 31, 2017 (Successor)
|
|
145,169
|
|
|
Liabilities added during the current period
|
|
206
|
|
|
Accretion expense
|
|
1,478
|
|
|
Retirements
|
|
(317
|
)
|
|
Asset retirement obligation at September 30, 2017 (Successor)
|
|
146,536
|
|
|
Less: current obligations
|
|
(6,457
|
)
|
|
Long-term asset retirement obligation at September 30, 2017 (Successor)
|
|
$
|
140,079
|
|
|
|
September 30, 2017
|
||
|
|
(in thousands)
|
||
October 1, 2017 - December 31, 2017
|
|
$
|
356
|
|
2018
|
|
1,009
|
|
|
2019
|
|
821
|
|
|
2020
|
|
410
|
|
|
Total
|
|
$
|
2,596
|
|
•
|
678,464
shares of New Common Stock were issued pro rata to holders of claims arising under the Senior Notes;
|
•
|
1,283,333
shares of New Common Stock were issued pro rata to holders of the Old Second Lien Notes in exchange for a fully committed
$19.25 million
investment;
|
•
|
678,405
shares of New Common Stock were issued to participants in the
1145
rights offering extended by the Debtors to certain holders of claims arising under the Senior Notes (including certain of the commitment parties party to the Backstop Commitment Agreement);
|
•
|
7,846,595
shares of New Common Stock were issued to participants who were eligible to participate in the accredited investor rights offering extended by the Debtors to certain holders of claims arising under the Senior Notes (including certain of the commitment parties party to the Backstop Commitment Agreement);
|
•
|
1,023,000
shares of New Common Stock were issued to commitment parties under the Amended and Restated Backstop Commitment Agreement in respect of the premium due thereunder;
|
•
|
8,525,000
shares of New Common Stock were issued to commitment parties under the Amended and Restated Backstop Commitment Agreement in connection with their backstop obligation thereunder together with
1,482,021
shares of New Common Stock reflecting shares purchased by such commitment parties in respect of unsubscribed shares in the rights offerings; and
|
•
|
20,983
shares of New Common Stock were issued to holders of Old Vanguard’s Preferred Units.
|
•
|
the Green River Basin in Wyoming;
|
•
|
the Piceance Basin in Colorado;
|
•
|
the Permian Basin in West Texas and New Mexico;
|
•
|
the Gulf Coast Basin in Texas, Louisiana, Mississippi and Alabama;
|
•
|
the Arkoma Basin in Arkansas and Oklahoma;
|
•
|
the Big Horn Basin in Wyoming and Montana;
|
•
|
the Anadarko Basin in Oklahoma and North Texas;
|
•
|
the Williston Basin in North Dakota and Montana;
|
•
|
the Wind River Basin in Wyoming; and
|
•
|
the Powder River Basin in Wyoming.
|
•
|
The Predecessor transferred all of its membership interests in VNG, a Kentucky limited liability company and the Predecessor’s wholly owned first-tier subsidiary, to the Successor (formerly known as VNR Finance Corp.). VNG directly or indirectly owned all of the other subsidiaries of the Predecessor. As a result of the foregoing and certain
|
•
|
VNG, as borrower, entered into that certain Fourth Amended and Restated Credit Agreement dated as of August 1, 2017 (the “Successor Credit Facility”), by and among VNG as borrower, Citibank, N.A. as administrative agent (the “Administrative Agent”) and Issuing Bank, and the lenders party thereto (the “Lenders”). Pursuant to the Successor Credit Facility, the lenders party thereto agreed to provide VNG with an $850.0 million exit senior secured reserve-based revolving credit facility (the “Revolving Loans”). The initial borrowing base available under the Successor Credit Facility as of the Effective Date was $850.0 million and the aggregate principal amount of Revolving Loans outstanding under the Successor Credit Facility as of the Effective Date was
$730.0 million
. The Successor Credit Facility also includes an additional $125.0 million senior secured term loan (the “Term Loan”). The holders of claims under the Predecessor Credit Facility received a full recovery, consisting of a cash pay down and their pro rata share of the Successor Credit Facility; The next borrowing base redetermination is scheduled for August of 2018;
|
•
|
The Successor issued approximately $80.7 million aggregate principal amount of New Notes to certain eligible holders of their outstanding 7% Senior Secured Second Lien Notes due 2023 (the “Old Second Lien Notes”) in full satisfaction of their claim of approximately $80.7 million related to the Old Second Lien Notes held by such holders;
|
•
|
The Predecessor’s Senior Notes were cancelled and the Consenting Senior Noteholders received their pro rata share of 3.38% (subject to dilution) of the Common Stock, in full and final satisfaction of their claims;
|
•
|
The Predecessor completed a rights offering backstopped by certain holders of our Senior Notes (the “Backstop Parties”) which generated $275.0 million of gross proceeds. The rights offering resulted in the issuance of Common Stock, representing approximately 89.92% of outstanding shares of Common Stock, to holders of claims arising under the Senior Notes and to the Backstop Parties;
|
•
|
The Successor entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain recipients of shares of its Common Stock distributed on the Effective Date that were parties to the Amended and Restated Backstop Commitment Agreement (including the Backstop Parties and certain of their affiliates and related funds), in accordance with the terms set forth in the Final Plan (collectively, the “Registration Rights Holders”). Pursuant to the Registration Rights Agreement, we agreed to, among other things, file a registration statement with the SEC within 90 days of the Effective Date covering the offer and resale of “Registrable Securities” (as defined in the Registration Rights Agreement); We filed the registration statement on October 30, 2017;
|
•
|
Additional shares of Common Stock, representing eleven percent of outstanding shares of Common Stock on a fully diluted basis, were authorized for issuance under the Vanguard Natural Resources, Inc. 2017 Management Incentive Plan (the “MIP”);
|
•
|
All outstanding Preferred Units (defined below) issued and outstanding immediately prior to the Effective Date were cancelled and the holders thereof received their pro rata shares of (i) 3% of outstanding shares of Common Stock and (ii) Preferred Unit Warrants (as defined below), in full and final satisfaction of their interests;
|
•
|
All common equity of the Predecessor issued and outstanding immediately prior to the Effective Date were cancelled and the holders of the common equity received Common Unit Warrants (as defined below), in full and final satisfaction of their interests;
|
•
|
The Successor entered into a warrant agreement (the “Warrant Agreement”) with American Stock Transfer & Trust Company, LLC, as warrant agent, pursuant to which the Successor issued (i) to electing holders of the Predecessor’s (A) 7.875% Series A Cumulative Redeemable Perpetual Preferred Units (“Series A Preferred Units”), (B) 7.625% Series B Cumulative Redeemable Perpetual Preferred Units (“Series B Preferred Units”), and (C) 7.75% Series C Cumulative Redeemable Perpetual Preferred Units (“Series C Preferred Units” and, together with the Series A Preferred Units and Series B Preferred Units, the “Preferred Units”), three and a half year warrants (the “Preferred Unit Warrants”), which will be exercisable to purchase up to 621,649.49 shares of the Common Stock as of the Effective Date, subject to dilution; and (ii) to electing holders of the Predecessor’s common units representing limited liability company interests, three and a half year warrants (the “Common Unit Warrants” and, together with the Preferred Unit Warrants, the “Warrants”) which will be exercisable to purchase up to 640,875.75 shares of the Common Stock as of the Effective Date, subject to dilution. The expiration date of the Warrants will be February 1, 2021. The strike price for the Preferred Unit Warrants is $44.25, and the strike price for the Common Unit Warrants is $61.45;
|
•
|
By operation of the Final Plan and the Confirmation Order, the terms of the Predecessor’s board of directors expired as of the Effective Date. Our current Board consists of seven members, including our and our Predecessor’s Chief Executive Officer. Our Chief Financial Officer was initially appointed as a director upon emergence and became our Chief Financial Officer as well, following the resignation of our Predecessor’s Chief Financial Officer;
|
•
|
Certain other priority or convenience class claims were paid in full in cash, reinstated or otherwise treated in a manner acceptable to the creditor claimholders; and
|
•
|
On the Effective Date, the Successor reserved for issuance 20,100,000 shares of Common Stock.
|
•
|
We applied fresh-start accounting in accordance with Accounting Standards Codification (“ASC”) 852, which resulted in our becoming a new entity for financial reporting purposes. Upon adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of our emergence from the Chapter 11 Cases on August 1, 2017. The fair values of our assets and liabilities differ materially from the recorded values of our assets and liabilities as reflected in our Predecessor’s historical consolidated balance sheets;
|
•
|
We changed our method of accounting for natural gas and oil properties from the full cost method of accounting (the “Full Cost Method”) to the successful efforts method of accounting (the “Successful Efforts Method”);
|
•
|
We have elected to adopt the new standard for revenue recognition under Accounting Standards Codification 606 (“ASC 606”) upon emergence. The new guidance requires us to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services; and
|
•
|
We elected to change from a pass-through entity for tax purposes to a c-corp and, accordingly, a taxable entity;
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Two Months
|
|
|
One Month
|
|
Three Months
|
||||||
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Oil sales
|
$
|
27,303
|
|
|
|
$
|
11,820
|
|
|
$
|
41,999
|
|
Natural gas sales
|
39,032
|
|
|
|
4,412
|
|
|
52,454
|
|
|||
NGLs sales
|
13,465
|
|
|
|
4,792
|
|
|
10,733
|
|
|||
Oil, natural gas and NGLs sales
|
79,800
|
|
|
|
21,024
|
|
|
105,186
|
|
|||
Net gains (losses) on commodity derivative contracts
|
(32,352
|
)
|
|
|
(12,019
|
)
|
|
21,099
|
|
|||
Total revenues
|
$
|
47,448
|
|
|
|
$
|
9,005
|
|
|
$
|
126,285
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Production:
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
26,447
|
|
|
|
11,787
|
|
|
39,386
|
|
|||
Transportation, gathering, processing, and compression
|
8,044
|
|
|
|
—
|
|
|
—
|
|
|||
Production and other taxes
|
5,737
|
|
|
|
1,983
|
|
|
11,823
|
|
|||
Depreciation, depletion, amortization, and accretion
|
27,578
|
|
|
|
7,328
|
|
|
32,096
|
|
|||
Impairment of goodwill
|
—
|
|
|
|
—
|
|
|
252,676
|
|
|||
Exploration expense
|
105
|
|
|
|
—
|
|
|
—
|
|
|||
Other selling, general and administrative expenses
|
7,194
|
|
|
|
8,027
|
|
|
8,708
|
|
|||
Non-cash compensation
|
—
|
|
|
|
711
|
|
|
2,746
|
|
|||
Total costs and expenses
|
$
|
75,105
|
|
|
|
$
|
29,836
|
|
|
$
|
347,435
|
|
Other income (expense):
|
|
|
|
|
|
|
||||||
Interest expense
|
(9,615
|
)
|
|
|
(5,003
|
)
|
|
(22,976
|
)
|
|||
Net gains on interest rate derivative contracts
|
—
|
|
|
|
—
|
|
|
764
|
|
|||
Net loss on acquisitions or divestitures of oil and
natural gas properties |
—
|
|
|
|
—
|
|
|
(2,117
|
)
|
|||
Other
|
36
|
|
|
|
472
|
|
|
111
|
|
|||
Reorganization items
|
—
|
|
|
|
988,452
|
|
|
—
|
|
(a)
|
During the three and
nine months ended September 30, 2017
and
September 30, 2016
, we divested certain oil and natural gas properties and related assets. As such, there are no operating results from these properties included in our operating results from the closing date of the divestitures forward.
|
|
|
Successor
|
|
|
Predecessor
(a)
|
||||||||
|
|
Two Months
|
|
|
One Month
|
|
Three Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Average realized prices, excluding hedges:
|
|
|
|
|
|
|
|
|
|
|
|||
Oil (Price/Bbl)
|
|
$
|
43.70
|
|
|
|
$
|
40.32
|
|
|
$
|
39.94
|
|
Natural Gas (Price/Mcf)
(b)
|
|
$
|
2.51
|
|
|
|
$
|
0.53
|
|
|
$
|
1.92
|
|
NGLs (Price/Bbl)
|
|
$
|
25.82
|
|
|
|
$
|
17.09
|
|
|
$
|
12.15
|
|
Average realized prices, including hedges
(c)
:
|
|
|
|
|
|
|
|
|
|
|
|||
Oil (Price/Bbl)
|
|
$
|
40.45
|
|
|
|
$
|
40.32
|
|
|
$
|
60.25
|
|
Natural Gas (Price/Mcf)
|
|
$
|
2.63
|
|
|
|
$
|
0.53
|
|
|
$
|
3.13
|
|
NGLs (Price/Bbl)
|
|
$
|
21.90
|
|
|
|
$
|
17.09
|
|
|
$
|
13.32
|
|
Average NYMEX prices:
|
|
|
|
|
|
|
|
||||||
Oil (Price/Bbl)
|
|
$
|
48.94
|
|
|
|
$
|
46.68
|
|
|
$
|
44.95
|
|
Natural Gas (Price/Mcf)
|
|
$
|
2.97
|
|
|
|
$
|
3.07
|
|
|
$
|
2.82
|
|
Total production volumes:
|
|
|
|
|
|
|
|
||||||
Oil (MBbls)
|
|
625
|
|
|
|
293
|
|
|
1,051
|
|
|||
Natural Gas (MMcf)
|
|
15,537
|
|
|
|
8,353
|
|
|
27,381
|
|
|||
NGLs (MBbls)
|
|
521
|
|
|
|
280
|
|
|
883
|
|
|||
Combined (MMcfe)
|
|
22,414
|
|
|
|
11,794
|
|
|
38,988
|
|
|||
Average daily production volumes:
|
|
|
|
|
|
|
|
|
|
|
|||
Oil (Bbls/day)
|
|
10,242
|
|
|
|
9,456
|
|
|
11,428
|
|
|||
Natural Gas (Mcf/day)
|
|
254,702
|
|
|
|
269,450
|
|
|
297,619
|
|
|||
NGLs (Bbls/day)
|
|
8,548
|
|
|
|
9,043
|
|
|
9,599
|
|
|||
Combined (Mcfe/day)
|
|
362,402
|
|
|
|
380,447
|
|
|
423,787
|
|
(a)
|
During the
three months ended September 30, 2017
and
2016
, we divested certain oil and natural gas properties and related assets. As such, there are no operating results from these properties included in our operating results from the closing date of the divestitures forward.
|
(b)
|
Includes expenses related to transportation, gathering, processing, and compression of natural gas production.
|
(c)
|
Excludes the premiums paid, whether at inception or deferred, for derivative contracts that settled during the period and the fair value of derivative contracts acquired as part of prior period business combinations that apply to contracts settled during the period.
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Two Months
|
|
|
Seven Months
|
|
Nine Months
|
||||||
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Oil sales
|
$
|
27,303
|
|
|
|
$
|
97,496
|
|
|
$
|
127,594
|
|
Natural gas sales
|
39,032
|
|
|
|
113,587
|
|
|
121,756
|
|
|||
NGLs sales
|
13,465
|
|
|
|
35,565
|
|
|
30,752
|
|
|||
Oil, natural gas and NGLs sales
|
79,800
|
|
|
|
246,648
|
|
|
280,102
|
|
|||
Net losses on commodity derivative contracts
|
(32,352
|
)
|
|
|
(24,887
|
)
|
|
(15,752
|
)
|
|||
Total revenues
|
$
|
47,448
|
|
|
|
$
|
221,761
|
|
|
$
|
264,350
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Production:
|
|
|
|
|
|
|
||||||
Lease operating expenses
|
26,447
|
|
|
|
87,092
|
|
|
120,228
|
|
|||
Transportation, gathering, processing and compression
|
8,044
|
|
|
|
—
|
|
|
—
|
|
|||
Production and other taxes
|
5,737
|
|
|
|
21,186
|
|
|
29,967
|
|
|||
Depreciation, depletion, amortization, and accretion
|
27,578
|
|
|
|
58,384
|
|
|
118,935
|
|
|||
Impairment of oil and natural gas properties
|
—
|
|
|
|
—
|
|
|
365,658
|
|
|||
Impairment of goodwill
|
—
|
|
|
|
—
|
|
|
252,676
|
|
|||
Exploration expense
|
105
|
|
|
|
—
|
|
|
—
|
|
|||
Other selling, general and administrative expenses
|
7,194
|
|
|
|
28,099
|
|
|
28,163
|
|
|||
Non-cash compensation
|
—
|
|
|
|
711
|
|
|
7,721
|
|
|||
Total costs and expenses
|
$
|
75,000
|
|
|
|
$
|
195,472
|
|
|
$
|
923,348
|
|
Other income (expense):
|
|
|
|
|
|
|
||||||
Interest expense
|
(9,615
|
)
|
|
|
(35,276
|
)
|
|
(72,612
|
)
|
|||
Net gains (losses) on interest rate derivative contracts
|
—
|
|
|
|
30
|
|
|
(6,061
|
)
|
|||
Net loss on acquisitions or divestitures of oil and
natural gas properties |
—
|
|
|
|
—
|
|
|
(3,782
|
)
|
|||
Gain on extinguishment of debt
|
—
|
|
|
|
—
|
|
|
89,714
|
|
|||
Other
|
36
|
|
|
|
783
|
|
|
363
|
|
|||
Reorganization items
|
—
|
|
|
|
908,485
|
|
|
—
|
|
(a)
|
During the three and
nine months ended September 30, 2017
and
September 30, 2016
, we divested certain oil and natural gas properties and related assets. As such, there are no operating results from these properties included in our operating results from the closing date of the divestitures forward.
|
|
|
Successor
|
|
|
Predecessor
(a)
|
||||||||
|
|
Two Months
|
|
|
Seven Months
|
|
Nine Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Average realized prices, excluding hedges:
|
|
|
|
|
|
|
|
|
|
|
|||
Oil (Price/Bbl)
|
|
$
|
43.70
|
|
|
|
$
|
43.33
|
|
|
$
|
34.87
|
|
Natural Gas (Price/Mcf)
(b)
|
|
$
|
2.51
|
|
|
|
$
|
2.05
|
|
|
$
|
1.46
|
|
NGLs (Price/Bbl)
|
|
$
|
25.82
|
|
|
|
$
|
17.87
|
|
|
$
|
10.84
|
|
Average realized prices, including hedges
(c)
:
|
|
|
|
|
|
|
|
|
|
|
|||
Oil (Price/Bbl)
|
|
$
|
40.45
|
|
|
|
$
|
43.34
|
|
|
$
|
53.69
|
|
Natural Gas (Price/Mcf)
|
|
$
|
2.63
|
|
|
|
$
|
2.05
|
|
|
$
|
2.95
|
|
NGLs (Price/Bbl)
|
|
$
|
21.90
|
|
|
|
$
|
17.87
|
|
|
$
|
12.31
|
|
Average NYMEX prices:
|
|
|
|
|
|
|
|
||||||
Oil (Price/Bbl)
|
|
$
|
48.94
|
|
|
|
$
|
49.72
|
|
|
$
|
40.85
|
|
Natural Gas (Price/Mcf)
|
|
$
|
2.97
|
|
|
|
$
|
3.22
|
|
|
$
|
2.28
|
|
Total production volumes:
|
|
|
|
|
|
|
|
||||||
Oil (MBbls)
|
|
625
|
|
|
|
2,250
|
|
|
3,660
|
|
|||
Natural Gas (MMcf)
|
|
15,537
|
|
|
|
55,375
|
|
|
83,592
|
|
|||
NGLs (MBbls)
|
|
521
|
|
|
|
1,990
|
|
|
2,837
|
|
|||
Combined (MMcfe)
|
|
22,414
|
|
|
|
80,814
|
|
|
122,573
|
|
|||
Average daily production volumes:
|
|
|
|
|
|
|
|
|
|
|
|||
Oil (Bbls/day)
|
|
10,242
|
|
|
|
10,613
|
|
|
13,356
|
|
|||
Natural Gas (Mcf/day)
|
|
254,702
|
|
|
|
261,201
|
|
|
305,081
|
|
|||
NGLs (Bbls/day)
|
|
8,548
|
|
|
|
9,387
|
|
|
10,355
|
|
|||
Combined (Mcfe/day)
|
|
362,402
|
|
|
|
381,198
|
|
|
447,347
|
|
(a)
|
During the
nine months ended September 30, 2017
and
2016
, we divested certain oil and natural gas properties and related assets. As such, there are no operating results from these properties included in our operating results from the closing date of the divestitures forward.
|
(b)
|
Includes expenses related to transportation, gathering, processing, and compression of natural gas production.
|
(c)
|
Excludes the premiums paid, whether at inception or deferred, for derivative contracts that settled during the period and the fair value of derivative contracts acquired as part of prior period business combinations that apply to contracts settled during the period.
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Two Months
|
|
|
Seven Months
|
|
Nine Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Net cash provided by operating activities
|
|
$
|
13,728
|
|
|
|
$
|
52,288
|
|
|
$
|
179,577
|
|
Net cash (used in) provided by investing activities
|
|
$
|
(23,444
|
)
|
|
|
$
|
76,836
|
|
|
$
|
219,535
|
|
Net cash used in financing activities
|
|
$
|
(1,129
|
)
|
|
|
$
|
(151,471
|
)
|
|
$
|
(360,318
|
)
|
Year
|
|
Percentage
|
|
2020
|
|
106.75
|
%
|
2021
|
|
104.50
|
%
|
2022
|
|
102.25
|
%
|
2023 and thereafter
|
|
100.00
|
%
|
|
|
Payments Due by Year
|
||||||||||||||||||||||||||
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
After 2021
|
|
Total
|
||||||||||||||
Management base salaries
|
|
$
|
403
|
|
|
$
|
1,670
|
|
|
$
|
510
|
|
|
$
|
510
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,093
|
|
Asset retirement obligations
(1)
|
|
2,798
|
|
|
4,879
|
|
|
5,122
|
|
|
5,379
|
|
|
5,647
|
|
|
122,711
|
|
|
146,536
|
|
|||||||
Derivative liabilities
|
|
9,980
|
|
|
29,546
|
|
|
12,034
|
|
|
7,012
|
|
|
—
|
|
|
—
|
|
|
58,572
|
|
|||||||
Reserve-Based Credit Facility
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
730,000
|
|
|
—
|
|
|
730,000
|
|
|||||||
Term Loan
(2)
|
|
—
|
|
|
1,250
|
|
|
1,250
|
|
|
1,250
|
|
|
121,250
|
|
|
—
|
|
|
125,000
|
|
|||||||
Senior Notes due 2024 and interest
|
|
—
|
|
|
7,265
|
|
|
7,265
|
|
|
7,265
|
|
|
7,265
|
|
|
97,654
|
|
|
126,714
|
|
|||||||
Operating leases
|
|
318
|
|
|
1,202
|
|
|
1,149
|
|
|
1,136
|
|
|
1,169
|
|
|
5,707
|
|
|
10,681
|
|
|||||||
Development commitments
(3)
|
|
24,487
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,487
|
|
|||||||
Firm transportation agreements
(4)
|
|
356
|
|
|
1,009
|
|
|
821
|
|
|
410
|
|
|
—
|
|
|
—
|
|
|
2,596
|
|
|||||||
Lease financing obligations
(5)
|
|
2,268
|
|
|
5,442
|
|
|
5,442
|
|
|
4,359
|
|
|
1,278
|
|
|
—
|
|
|
18,789
|
|
|||||||
Other future obligations
|
|
117
|
|
|
468
|
|
|
308
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
893
|
|
|||||||
Total
|
|
$
|
40,727
|
|
|
$
|
52,731
|
|
|
$
|
33,901
|
|
|
$
|
27,321
|
|
|
$
|
866,609
|
|
|
$
|
226,072
|
|
|
$
|
1,247,361
|
|
(1)
|
Represents the discounted future plugging and abandonment costs of oil and natural gas wells and decommissioning of our Elk Basin, Big Escambia Creek and Fairway gas plants. Please read Note 8, “
Asset Retirement Obligations”
to the consolidated financial statements for additional information regarding our asset retirement obligations.
|
(2)
|
This table does not include interest to be paid on the principal balances shown as the interest rates on our financing arrangements are variable.
|
(3)
|
Represents authorized expenditures for drilling, completion and major workover projects.
|
(4)
|
Represents transportation demand charges. Please read Note 9, “
Commitments and Contingencies”
to the consolidated financial statements for additional information regarding our firm transportation agreements.
|
(5)
|
The Lease Financing Obligations are calculated based on the aggregate present value of minimum future lease payments. The amounts presented include interest payable for each year.
|
•
|
Net income (loss) attributable to non-controlling interest.
|
•
|
Net interest expense;
|
•
|
Depreciation, depletion, amortization, and accretion;
|
•
|
Impairment of oil and natural gas properties;
|
•
|
Impairment of goodwill;
|
•
|
Net gains or losses on commodity derivative contracts;
|
•
|
Cash settlements on matured commodity derivative contracts;
|
•
|
Net gains or losses on interest rate derivative contracts;
|
•
|
Gain on extinguishment of debt;
|
•
|
Net gains or losses on acquisitions of oil and gas properties;
|
•
|
Taxes;
|
•
|
Compensation related items, which include unit-based compensation expense, unrealized fair value of phantom units granted to officers and cash settlement of phantom units granted to officers;
|
•
|
Reorganization items;
|
•
|
Transaction costs incurred on reorganization, acquisitions, mergers and divestitures; and
|
•
|
Non-controlling interest amounts attributable to each of the items above which revert the calculation back to an amount attributable to the Vanguard stockholders/unitholders.
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Two Months
|
|
|
One Month
|
|
Three Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Net income (loss) attributable to Vanguard stockholders/
unitholders |
|
$
|
(37,297
|
)
|
|
|
$
|
963,089
|
|
|
$
|
(245,395
|
)
|
Add: Net income attributable to non-controlling interests
|
|
61
|
|
|
|
1
|
|
|
27
|
|
|||
Net income (loss)
|
|
$
|
(37,236
|
)
|
|
|
$
|
963,090
|
|
|
$
|
(245,368
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||
Interest expense
|
|
9,615
|
|
|
|
5,003
|
|
|
22,976
|
|
|||
Depreciation, depletion, amortization, and accretion
|
|
27,578
|
|
|
|
7,328
|
|
|
32,096
|
|
|||
Impairment of goodwill
|
|
—
|
|
|
|
—
|
|
|
252,676
|
|
|||
Change in fair value of commodity derivative contracts
(a)
|
|
30,026
|
|
|
|
12,019
|
|
|
30,135
|
|
|||
Premiums paid, whether at inception or deferred, for derivative contracts that settled during the period
(a)
|
|
—
|
|
|
|
—
|
|
|
833
|
|
|||
Fair value of derivative contracts acquired that apply to contracts settled during the period
(a)
|
|
—
|
|
|
|
—
|
|
|
3,561
|
|
|||
Net gains on interest rate derivative contracts
(b)
|
|
—
|
|
|
|
—
|
|
|
(764
|
)
|
|||
Net loss on acquisition of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
2,117
|
|
|||
Taxes
|
|
—
|
|
|
|
158
|
|
|
(571
|
)
|
|||
Compensation related items
|
|
—
|
|
|
|
711
|
|
|
2,746
|
|
|||
Reorganization items
|
|
—
|
|
|
|
(988,452
|
)
|
|
—
|
|
|||
Transaction costs incurred on reorganization, acquisitions,
mergers and divestitures
|
|
903
|
|
|
|
—
|
|
|
75
|
|
|||
Adjusted EBITDA before non-controlling interest
|
|
30,886
|
|
|
|
(143
|
)
|
|
100,512
|
|
|||
Adjusted EBITDA attributable to non-controlling interest
|
|
(24
|
)
|
|
|
(39
|
)
|
|
(115
|
)
|
|||
Adjusted EBITDA attributable to Vanguard stockholders/
unitholders |
|
$
|
30,862
|
|
|
|
$
|
(182
|
)
|
|
$
|
100,397
|
|
(a)
|
These items are included in the net gains (losses) on commodity derivative contracts line item in the consolidated statements of operations as follows:
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Two Months
|
|
|
One Month
|
|
Three Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Net cash settlements received (paid) on matured commodity
derivative contracts |
|
$
|
(2,326
|
)
|
|
|
$
|
—
|
|
|
$
|
55,628
|
|
Change in fair value of commodity derivative contracts
|
|
(30,026
|
)
|
|
|
(12,019
|
)
|
|
(30,135
|
)
|
|||
Premiums paid, whether at inception or deferred, for
derivative contracts that settled during the period |
|
—
|
|
|
|
—
|
|
|
(833
|
)
|
|||
Fair value of derivative contracts acquired that apply to
contracts settled during the period |
|
—
|
|
|
|
—
|
|
|
(3,561
|
)
|
|||
Net gain (losses) on commodity derivative contracts
|
|
$
|
(32,352
|
)
|
|
|
$
|
(12,019
|
)
|
|
$
|
21,099
|
|
(b)
|
Net gains on interest rate derivative contracts as shown on the consolidated statements of operations is comprised of the following:
|
|
|
Predecessor
|
||
|
|
Three Months
|
||
|
|
Ended
|
||
|
|
September 30, 2016
|
||
Cash settlements paid on interest rate derivative contracts
|
|
$
|
(2,043
|
)
|
Change in fair value of interest rate derivative contracts
|
|
2,807
|
|
|
Net gains on interest rate derivative contracts
|
|
$
|
764
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Two Months
|
|
|
Seven Months
|
|
Nine Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Net income (loss) attributable to Vanguard stockholders/
unitholders |
|
$
|
(37,297
|
)
|
|
|
$
|
900,298
|
|
|
$
|
(651,467
|
)
|
Add: Net income attributable to non-controlling interests
|
|
61
|
|
|
|
13
|
|
|
91
|
|
|||
Net income (loss)
|
|
$
|
(37,236
|
)
|
|
|
$
|
900,311
|
|
|
$
|
(651,376
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||
Interest expense
|
|
9,615
|
|
|
|
35,276
|
|
|
72,612
|
|
|||
Depreciation, depletion, amortization, and accretion
|
|
27,578
|
|
|
|
58,384
|
|
|
118,935
|
|
|||
Impairment of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
365,658
|
|
|||
Impairment of goodwill
|
|
—
|
|
|
|
—
|
|
|
252,676
|
|
|||
Change in fair value of commodity derivative contracts
(a)
|
|
30,026
|
|
|
|
24,894
|
|
|
201,388
|
|
|||
Premiums paid, whether at inception or deferred, for derivative contracts that settled during the period
(a)
|
|
—
|
|
|
|
—
|
|
|
2,532
|
|
|||
Fair value of derivative contracts acquired that apply to contracts settled during the period
(a)
|
|
—
|
|
|
|
—
|
|
|
9,936
|
|
|||
Net (gains) losses on interest rate derivative contracts
(b)
|
|
—
|
|
|
|
(30
|
)
|
|
6,061
|
|
|||
Gain on extinguishment of debt
|
|
—
|
|
|
|
—
|
|
|
(89,714
|
)
|
|||
Net loss on acquisition of oil and natural gas properties
|
|
—
|
|
|
|
—
|
|
|
3,782
|
|
|||
Taxes
|
|
—
|
|
|
|
(634
|
)
|
|
(3,205
|
)
|
|||
Compensation related items
|
|
—
|
|
|
|
5,797
|
|
|
7,721
|
|
|||
Reorganization items
|
|
—
|
|
|
|
(908,485
|
)
|
|
—
|
|
|||
Transaction costs incurred on reorganization, acquisitions,
mergers and divestitures |
|
903
|
|
|
|
—
|
|
|
3,198
|
|
|||
Adjusted EBITDA before non-controlling interest
|
|
30,886
|
|
|
|
115,513
|
|
|
300,204
|
|
|||
Adjusted EBITDA attributable to non-controlling interest
|
|
(24
|
)
|
|
|
(271
|
)
|
|
(347
|
)
|
|||
Adjusted EBITDA attributable to Vanguard stockholders/
unitholders |
|
$
|
30,862
|
|
|
|
$
|
115,242
|
|
|
$
|
299,857
|
|
(a)
|
These items are included in the net losses on commodity derivative contracts line item in the consolidated statements of operations as follows:
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Two Months
|
|
|
Seven Months
|
|
Nine Months
|
||||||
|
|
Ended
|
|
|
Ended
|
|
Ended
|
||||||
|
|
September 30, 2017
|
|
|
July 31, 2017
|
|
September 30, 2016
|
||||||
Net cash settlements received (paid) on matured commodity
derivative contracts |
|
$
|
(2,326
|
)
|
|
|
7
|
|
|
$
|
198,104
|
|
|
Change in fair value of commodity derivative contracts
|
|
(30,026
|
)
|
|
|
(24,894
|
)
|
|
(201,388
|
)
|
|||
Premiums paid, whether at inception or deferred, for
derivative contracts that settled during the period |
|
—
|
|
|
|
—
|
|
|
(2,532
|
)
|
|||
Fair value of derivative contracts acquired that apply to
contracts settled during the period |
|
—
|
|
|
|
—
|
|
|
(9,936
|
)
|
|||
Net losses on commodity derivative contracts
|
|
$
|
(32,352
|
)
|
|
|
$
|
(24,887
|
)
|
|
$
|
(15,752
|
)
|
(b)
|
Net gains (losses) on interest rate derivative contracts as shown on the consolidated statements of operations is comprised of the following:
|
|
|
Predecessor
|
|
Predecessor
|
||||
|
|
Seven Months
|
|
Nine Months
|
||||
|
|
Ended
|
|
Ended
|
||||
|
|
July 31, 2017
|
|
September 30, 2016
|
||||
Cash settlements paid on interest rate derivative contracts
|
|
$
|
(95
|
)
|
|
$
|
(6,770
|
)
|
Change in fair value of interest rate derivative contracts
|
|
125
|
|
|
709
|
|
||
Net gains (losses) on interest rate derivative contracts
|
|
$
|
30
|
|
|
$
|
(6,061
|
)
|
•
|
Fixed-price swaps -
where we will receive a fixed-price for our production and pay a variable market price to the contract counterparty.
|
•
|
Collars
- where we pay the counterparty if the market price is above the ceiling price (short call) and the counterparty pays us if the market price is below the floor (long put) on a notional quantity.
|
|
|
October 1 -December 31, 2017
|
|
Year
2018
|
|
Year
2019
|
|
Year
2020
|
||||||||
Gas Positions:
|
|
|
|
|
|
|
|
|
||||||||
Fixed-Price Swaps:
|
|
|
|
|
|
|
|
|
||||||||
Notional Volume (MMBtu)
|
|
18,400,000
|
|
|
70,242,000
|
|
|
52,539,000
|
|
|
47,227,500
|
|
||||
Fixed Price ($/MMBtu)
|
|
$
|
3.11
|
|
|
$
|
3.00
|
|
|
$
|
2.79
|
|
|
$
|
2.75
|
|
Collars:
|
|
|
|
|
|
|
|
|
||||||||
Notional Volume (MMBtu)
|
|
—
|
|
|
—
|
|
|
4,125,000
|
|
|
5,490,000
|
|
||||
Floor Price ($/MMBtu)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.60
|
|
|
$
|
2.60
|
|
Ceiling Price ($/MMBtu)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.00
|
|
|
$
|
3.00
|
|
|
|
October 1 -December 31, 2017
|
|
Year
2018
|
|
Year
2019
|
|
Year
2020
|
||||||||
Oil Positions:
|
|
|
|
|
|
|
|
|
|
|||||||
Fixed-Price Swaps (West Texas Intermediate):
|
|
|
|
|
|
|
|
|
|
|||||||
Notional Volume (Bbls)
|
|
818,900
|
|
|
3,059,200
|
|
|
1,858,200
|
|
|
1,393,800
|
|
||||
Fixed Price ($/Bbl)
|
|
$
|
45.20
|
|
|
$
|
46.47
|
|
|
$
|
48.50
|
|
|
$
|
49.53
|
|
Collars:
|
|
|
|
|
|
|
|
|
|
|||||||
Notional Volume (Bbls)
|
|
—
|
|
|
—
|
|
|
575,730
|
|
|
659,340
|
|
||||
Floor Price ($/Bbl)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43.81
|
|
|
$
|
44.17
|
|
Ceiling Price ($/Bbl)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
54.04
|
|
|
$
|
55.00
|
|
|
|
October 1 -December 31, 2017
|
|
Year
2018
|
||||
NGLs Positions:
|
|
|
|
|
||||
Fixed-Price Swaps:
|
|
|
|
|
||||
Mont Belvieu Ethane
|
|
|
|
|
||||
Notional Volume (Gallons)
|
|
2,704,800
|
|
|
9,198,000
|
|
||
Fixed Price ($/Gallon)
|
|
$
|
0.25
|
|
|
$
|
0.28
|
|
Mont Belvieu Propane
|
|
|
|
|
||||
Notional Volume (Gallons)
|
|
6,182,400
|
|
|
22,995,000
|
|
||
Fixed Price ($/Bbl)
|
|
$
|
0.58
|
|
|
$
|
0.53
|
|
Mont Belvieu N. Butane
|
|
|
|
|
||||
Notional Volume (Gallons)
|
|
2,318,400
|
|
|
7,665,000
|
|
||
Fixed Price ($/Gallon)
|
|
$
|
0.70
|
|
|
$
|
0.65
|
|
Mont Belvieu Isobutane
|
|
|
|
|
||||
Notional Volume (Gallons)
|
|
1,545,600
|
|
|
6,132,000
|
|
||
Fixed Price ($/Gallon)
|
|
$
|
0.70
|
|
|
$
|
0.65
|
|
Mont Belvieu N. Gasoline
|
|
|
|
|
||||
Notional Volume (Gallons)
|
|
3,091,200
|
|
|
10,731,000
|
|
||
Fixed Price ($/Gallon)
|
|
$
|
0.98
|
|
|
$
|
0.99
|
|
|
|
Current
Assets
|
|
Long-Term Assets
|
|
Current
Liabilities
|
|
Long-Term Liabilities
|
|
Total Amount Due From/(Owed To) Counterparty at
September 30, 2017
|
||||||||||
ABN AMRO (A)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20,777
|
)
|
|
$
|
(8,155
|
)
|
|
$
|
(28,932
|
)
|
Capital One (BBB+)
|
|
254
|
|
|
—
|
|
|
—
|
|
|
(2,212
|
)
|
|
(1,958
|
)
|
|||||
Citibank (A+)
|
|
—
|
|
|
—
|
|
|
(6,522
|
)
|
|
(5,335
|
)
|
|
(11,857
|
)
|
|||||
Huntington Bank (BBB+)
|
|
—
|
|
|
—
|
|
|
(1,475
|
)
|
|
(4,466
|
)
|
|
(5,941
|
)
|
|||||
JP Morgan (A-)
|
|
—
|
|
|
—
|
|
|
(732
|
)
|
|
(5,501
|
)
|
|
(6,233
|
)
|
|||||
Total
|
|
$
|
254
|
|
|
$
|
—
|
|
|
$
|
(29,506
|
)
|
|
$
|
(25,669
|
)
|
|
$
|
(54,921
|
)
|
•
|
Application of fresh start accounting,
|
•
|
Transition from the full cost method of accounting to the successful efforts method of accounting for our natural gas and oil properties,
|
•
|
Adoption of the new revenue recognition standard (ASC 606), and
|
•
|
Corporate taxes due to Vanguard’s new C-corp structure.
|
•
|
key suppliers, vendors or other contract counterparties may terminate their relationships with us or require additional financial assurances or enhanced performance from us;
|
•
|
our ability to renew existing contracts and compete for new business may be adversely affected;
|
•
|
our ability to attract, motivate and/or retain key executives and employees may be adversely affected;
|
•
|
employees may be distracted from performance of their duties or more easily attracted to other employment opportunities; and
|
•
|
competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted.
|
Exhibit
Number
|
|
Description of Exhibit
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
|
|
|
10.11
|
|
|
10.12
|
|
|
10.13*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1*
|
|
|
32.2*
|
|
Exhibit
Number |
|
Description of Exhibit
|
99.1
|
|
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Schema Document
|
101.CAL*
|
|
XBRL Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Definition Linkbase Document
|
101.LAB*
|
|
XBRL Label Linkbase Document
|
101.PRE*
|
|
XBRL Presentation Linkbase Document
|
*
|
Provided herewith.
|
|
|
VANGUARD NATURAL RESOURCES, INC.
|
|
|
(Registrant)
|
|
|
|
|
Date: November 9, 2017
|
/s/ R. Scott Sloan
|
|
|
R. Scott Sloan
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
2.
|
Definitions
. Wherever the following capitalized terms are used in the Plan, they shall have the meanings specified below:
|
(a)
|
one Person (or more than one Person acting as a group) acquires beneficial ownership of stock of the Company that, together with the stock held by such Person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company;
|
(b)
|
a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or
|
(c)
|
one Person (or more than one Person acting as a group), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition(s).
|
3.
|
Administration
.
|
4.
|
Shares Subject to the Plan
.
|
1.
|
Restricted Stock Awards
.
|
2.
|
Restricted Stock Unit Awards
.
|
4.
|
Forfeiture Events
.
|
6.
|
General Provisions
.
|
7.
|
Legal Compliance
|
8.
|
Term; Amendment and Termination
.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Vanguard Natural Resources, Inc. (the “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/ Scott W. Smith
|
|
Scott W. Smith
|
|
President and Chief Executive Officer
(Principal Executive Officer)
Vanguard Natural Resources, Inc.
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Vanguard Natural Resources, Inc. (the “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/ R. Scott Sloan
|
|
R. Scott Sloan
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Vanguard Natural Resources, Inc.
|
|
/s/ Scott W. Smith
|
|
Scott W. Smith
|
|
President and Chief Executive Officer
(Principal 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.
|
/s/ R. Scott Sloan
|
|
R. Scott Sloan
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) |
|