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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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COLORADO
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20-2835920
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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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1675 Broadway, Suite 2600, Denver, CO
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80202
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Part I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements (unaudited)
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Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
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Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016
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Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016
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Notes to Condensed Consolidated Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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Part II - OTHER INFORMATION
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults of Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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Exhibits
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SIGNATURES
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ASSETS
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September 30, 2017
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December 31, 2016
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||||
Current assets:
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||||
Cash and cash equivalents
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$
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21,325
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$
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18,615
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Accounts receivable:
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||||
Oil, natural gas, and NGL sales
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72,309
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25,728
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Trade
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45,280
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6,805
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Commodity derivative assets
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—
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297
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Other current assets
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6,289
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2,739
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Total current assets
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145,203
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54,184
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||||
Property and equipment:
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||||
Oil and gas properties, full cost method:
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||||
Unproved properties and land, not subject to depletion
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327,154
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398,547
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Proved properties, net of accumulated depletion
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758,135
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424,082
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Wells in progress
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158,192
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81,780
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Oil and gas properties, net
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1,243,481
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904,409
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Other property and equipment, net
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6,152
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4,327
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Total property and equipment, net
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1,249,633
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908,736
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Cash held in escrow and other deposits
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—
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18,248
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Goodwill
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40,711
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40,711
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Other assets
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2,359
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2,234
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Total assets
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$
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1,437,906
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$
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1,024,113
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$
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134,144
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$
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52,453
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Revenue payable
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58,742
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16,557
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Production taxes payable
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37,017
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17,673
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Asset retirement obligations
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2,738
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2,683
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Commodity derivative liabilities
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786
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2,874
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Total current liabilities
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233,427
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92,240
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Revolving credit facility
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150,000
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—
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Notes payable, net of issuance costs
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76,216
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75,614
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Commodity derivative liabilities
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394
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—
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Asset retirement obligations
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33,981
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13,775
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Other liabilities
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2,268
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1,745
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Total liabilities
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496,286
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183,374
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Commitments and contingencies (See Note 14)
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Shareholders' equity:
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Preferred stock - $0.01 par value, 10,000,000 shares authorized: no shares issued and outstanding
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—
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—
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Common stock - $0.001 par value, 300,000,000 shares authorized: 200,909,101 and 200,647,572 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
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201
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201
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Additional paid-in capital
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1,158,317
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1,148,998
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Retained deficit
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(216,898
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)
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(308,460
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)
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Total shareholders' equity
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941,620
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840,739
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Total liabilities and shareholders' equity
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$
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1,437,906
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$
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1,024,113
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
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Oil, natural gas, and NGL revenues
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$
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103,593
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$
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26,234
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$
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222,419
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$
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68,454
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Sales of purchased oil
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—
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—
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1,268
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—
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||||
Total revenues
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103,593
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26,234
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223,687
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68,454
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Expenses:
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Lease operating expenses
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5,154
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3,819
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13,894
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14,963
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Production taxes
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10,083
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(1,461
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)
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21,013
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2,509
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||||
Costs of purchased oil
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—
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—
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1,518
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—
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Depreciation, depletion, and accretion
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33,740
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9,635
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73,396
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33,001
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|
||||
Full cost ceiling impairment
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—
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25,453
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—
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215,223
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||||
Unused commitment charge
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—
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205
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669
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|
505
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|
||||
General and administrative
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8,484
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8,236
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24,289
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23,199
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|
||||
Total expenses
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57,461
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45,887
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134,779
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289,400
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||||
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||||||||
Operating income (loss)
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46,132
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(19,653
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)
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88,908
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(220,946
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)
|
||||
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||||||||
Other income (expense):
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|
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||||||||
Commodity derivatives gain (loss)
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(2,383
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)
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407
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2,324
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(3,617
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)
|
||||
Interest expense, net of amounts capitalized
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—
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—
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—
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—
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|
||||
Interest income
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16
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11
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47
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176
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|
||||
Other income (expense)
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83
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(1
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)
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385
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3
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|
||||
Total other income (expense)
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(2,284
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)
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417
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2,756
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(3,438
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)
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||||
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||||||||
Income (Loss) before income taxes
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43,848
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(19,236
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)
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91,664
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(224,384
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)
|
||||
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|
||||||||
Income tax expense
|
—
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5
|
|
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—
|
|
|
106
|
|
||||
Net income (loss)
|
$
|
43,848
|
|
|
$
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(19,241
|
)
|
|
$
|
91,664
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|
|
$
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(224,490
|
)
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|
||||||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
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0.22
|
|
|
$
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(0.10
|
)
|
|
$
|
0.46
|
|
|
$
|
(1.36
|
)
|
Diluted
|
$
|
0.22
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.46
|
|
|
$
|
(1.36
|
)
|
|
|
|
|
|
|
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|
||||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
200,881,447
|
|
|
200,515,555
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200,807,436
|
|
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164,771,544
|
|
||||
Diluted
|
201,460,915
|
|
|
200,515,555
|
|
|
201,326,129
|
|
|
164,771,544
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
91,664
|
|
|
$
|
(224,490
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depletion, depreciation, and accretion
|
73,396
|
|
|
33,001
|
|
||
Full cost ceiling impairment
|
—
|
|
|
215,223
|
|
||
Settlement of asset retirement obligation
|
(4,077
|
)
|
|
(196
|
)
|
||
Stock-based compensation
|
8,390
|
|
|
7,285
|
|
||
Mark-to-market of commodity derivative contracts:
|
|
|
|
||||
Total (gain) loss on commodity derivatives contracts
|
(2,324
|
)
|
|
3,617
|
|
||
Cash settlements on commodity derivative contracts
|
778
|
|
|
5,137
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
|
|
|
||||
Oil, natural gas, and NGL sales
|
(46,581
|
)
|
|
602
|
|
||
Trade
|
(38,446
|
)
|
|
2,679
|
|
||
Accounts payable and accrued expenses
|
1,413
|
|
|
1,761
|
|
||
Revenue payable
|
41,997
|
|
|
(363
|
)
|
||
Production taxes payable
|
17,548
|
|
|
(10,158
|
)
|
||
Other
|
(941
|
)
|
|
(905
|
)
|
||
Net cash provided by operating activities
|
142,817
|
|
|
33,193
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Acquisition of oil and gas properties and leaseholds
|
(62,562
|
)
|
|
(503,357
|
)
|
||
Capital expenditures for drilling and completion activities
|
(305,636
|
)
|
|
(72,375
|
)
|
||
Other capital expenditures
|
(11,198
|
)
|
|
(3,078
|
)
|
||
Land and other property and equipment
|
(4,087
|
)
|
|
(3,339
|
)
|
||
Cash held in escrow
|
18,248
|
|
|
(18,244
|
)
|
||
Proceeds from sales of oil and gas properties and other
|
77,017
|
|
|
24,223
|
|
||
Net cash used in investing activities
|
(288,218
|
)
|
|
(576,170
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from the sale of stock
|
—
|
|
|
565,398
|
|
||
Offering costs
|
—
|
|
|
(21,987
|
)
|
||
Proceeds from the employee exercise of stock options
|
114
|
|
|
—
|
|
||
Payment of employee payroll taxes in connection with shares withheld
|
(631
|
)
|
|
(510
|
)
|
||
Proceeds from the revolving credit facility
|
170,000
|
|
|
55,000
|
|
||
Principal repayments on the revolving credit facility
|
(20,000
|
)
|
|
(133,000
|
)
|
||
Financing fees on amendments to the revolving credit facility
|
(1,372
|
)
|
|
(269
|
)
|
||
Proceeds from issuance of the notes payable
|
—
|
|
|
80,000
|
|
||
Financing fees on issuance of the notes payable
|
—
|
|
|
(4,397
|
)
|
||
Net cash provided by financing activities
|
148,111
|
|
|
540,235
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash and equivalents
|
2,710
|
|
|
(2,742
|
)
|
||
|
|
|
|
||||
Cash and equivalents at beginning of period
|
18,615
|
|
|
66,499
|
|
||
|
|
|
|
||||
Cash and equivalents at end of period
|
$
|
21,325
|
|
|
$
|
63,757
|
|
1
.
|
Organization and Summary of Significant Accounting Policies
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
Major Customers
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Company A
|
|
30%
|
|
*
|
|
27%
|
|
*
|
Company B
|
|
27%
|
|
20%
|
|
26%
|
|
20%
|
Company C
|
|
13%
|
|
12%
|
|
15%
|
|
*
|
Company D
|
|
*
|
|
10%
|
|
*
|
|
11%
|
Company E
|
|
*
|
|
27%
|
|
*
|
|
38%
|
|
|
As of
|
|
As of
|
Major Customers
|
|
September 30, 2017
|
|
December 31, 2016
|
Company A
|
|
25%
|
|
23%
|
Company B
|
|
16%
|
|
*
|
Company C
|
|
*
|
|
43%
|
Company D
|
|
*
|
|
10%
|
2
.
|
Property and Equipment
|
|
As of
|
|
As of
|
||||
|
September 30, 2017
|
|
December 31, 2016
|
||||
Oil and gas properties, full cost method:
|
|
|
|
||||
Costs of unproved properties and land, not subject to depletion:
|
|
|
|
||||
Lease acquisition and other costs
|
$
|
319,954
|
|
|
$
|
392,561
|
|
Land
|
7,200
|
|
|
5,986
|
|
||
Subtotal, unproved properties and land
|
327,154
|
|
|
398,547
|
|
||
|
|
|
|
||||
Costs of wells in progress
|
158,192
|
|
|
81,780
|
|
||
|
|
|
|
||||
Costs of proved properties:
|
|
|
|
||||
Producing and non-producing
|
1,375,937
|
|
|
969,239
|
|
||
Less, accumulated depletion and full cost ceiling impairments
|
(617,802
|
)
|
|
(545,157
|
)
|
||
Subtotal, proved properties, net
|
758,135
|
|
|
424,082
|
|
||
|
|
|
|
||||
Costs of other property and equipment:
|
|
|
|
||||
Other property and equipment
|
7,790
|
|
|
5,063
|
|
||
Less, accumulated depreciation
|
(1,638
|
)
|
|
(736
|
)
|
||
Subtotal, other property and equipment, net
|
6,152
|
|
|
4,327
|
|
||
|
|
|
|
||||
Total property and equipment, net
|
$
|
1,249,633
|
|
|
$
|
908,736
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Capitalized overhead
|
$
|
2,518
|
|
|
$
|
1,757
|
|
|
$
|
7,729
|
|
|
$
|
4,745
|
|
3
.
|
Acquisitions, Swaps, and Divestitures
|
Purchase Price
|
June 14, 2016
|
||
Consideration given:
|
|
||
Cash
|
$
|
485,141
|
|
Net liabilities assumed, including asset retirement obligations
|
1,273
|
|
|
Total consideration given
|
$
|
486,414
|
|
|
|
||
Allocation of Purchase Price
|
|
||
Proved oil and gas properties
(1)
|
$
|
132,903
|
|
Unproved oil and gas properties
|
353,511
|
|
|
Total fair value of assets acquired
|
$
|
486,414
|
|
(in thousands)
|
Three Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2016
|
||||
Oil, natural gas, and NGL revenues
|
$
|
26,234
|
|
|
$
|
71,940
|
|
Net loss
|
$
|
(19,241
|
)
|
|
$
|
(227,479
|
)
|
|
|
|
|
||||
Net loss per common share
|
|
|
|
||||
Basic
|
$
|
(0.10
|
)
|
|
$
|
(1.14
|
)
|
Diluted
|
$
|
(0.10
|
)
|
|
$
|
(1.14
|
)
|
4
.
|
Depletion, depreciation, and accretion ("DD&A")
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Depletion of oil and gas properties
|
$
|
32,944
|
|
|
$
|
9,273
|
|
|
$
|
71,389
|
|
|
$
|
31,981
|
|
Depreciation and accretion
|
796
|
|
|
362
|
|
|
2,007
|
|
|
1,020
|
|
||||
Total DD&A Expense
|
$
|
33,740
|
|
|
$
|
9,635
|
|
|
$
|
73,396
|
|
|
$
|
33,001
|
|
5
.
|
Asset Retirement Obligations
|
|
Nine Months Ended September 30, 2017
|
||
Asset retirement obligations, December 31, 2016
|
$
|
16,458
|
|
Obligations incurred with development activities
|
2,782
|
|
|
Obligations assumed with acquisitions
|
23,521
|
|
|
Accretion expense
|
981
|
|
|
Obligations discharged with asset retirements and divestitures
|
(7,023
|
)
|
|
Asset retirement obligation, September 30, 2017
|
$
|
36,719
|
|
Less, current portion
|
(2,738
|
)
|
|
Long-term portion
|
$
|
33,981
|
|
6
.
|
Revolving Credit Facility
|
7
.
|
Notes Payable
|
8
.
|
Commodity Derivative Instruments
|
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(Bbls
per month)
|
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|||||
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
30,667
|
|
|
$
|
40.00
|
|
|
$
|
60.00
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
20,000
|
|
|
$
|
45.00
|
|
|
$
|
70.00
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
30,667
|
|
|
$
|
40.00
|
|
|
$
|
65.00
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
30,667
|
|
|
$
|
40.00
|
|
|
$
|
65.00
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
15,333
|
|
|
$
|
45.00
|
|
|
$
|
65.00
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
15,333
|
|
|
$
|
45.00
|
|
|
$
|
65.10
|
|
Jan 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
76,042
|
|
|
$
|
40.00
|
|
|
$
|
57.60
|
|
|
|
|
|
|
|
|
|
|
|||||
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(MMBtu
per month)
|
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Natural Gas - NYMEX Henry Hub
|
|
|
|
|
|
|
|
|
|||||
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
100,000
|
|
|
$
|
2.75
|
|
|
$
|
4.00
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
153,333
|
|
|
$
|
2.75
|
|
|
$
|
3.90
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
92,000
|
|
|
$
|
2.75
|
|
|
$
|
4.10
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
15,333
|
|
|
$
|
3.00
|
|
|
$
|
4.31
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
110,400
|
|
|
$
|
3.00
|
|
|
$
|
4.30
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
199,333
|
|
|
$
|
3.00
|
|
|
$
|
3.88
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
199,333
|
|
|
$
|
3.00
|
|
|
$
|
3.91
|
|
|
|
|
|
|
|
|
|
|
|||||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|||||
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
200,000
|
|
|
$
|
2.50
|
|
|
$
|
3.27
|
|
Oct 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
100,000
|
|
|
$
|
2.60
|
|
|
$
|
3.20
|
|
Jan 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
456,250
|
|
|
$
|
2.25
|
|
|
$
|
2.81
|
|
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(Bbls per month) |
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|||||
Jan 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
76,042
|
|
|
$
|
45.00
|
|
|
$
|
58.00
|
|
|
|
|
|
As of September 30, 2017
|
||||||||||
Underlying
|
|
Balance Sheet
Location
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the
Balance Sheet
|
|
Net Amounts of Assets and Liabilities Presented in the
Balance Sheet
|
||||||
Commodity derivative contracts
|
|
Current assets
|
|
$
|
1,214
|
|
|
$
|
(1,214
|
)
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Noncurrent assets
|
|
$
|
502
|
|
|
$
|
(502
|
)
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Current liabilities
|
|
$
|
2,000
|
|
|
$
|
(1,214
|
)
|
|
$
|
786
|
|
Commodity derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
896
|
|
|
$
|
(502
|
)
|
|
$
|
394
|
|
|
|
|
|
As of December 31, 2016
|
||||||||||
Underlying
|
|
Balance Sheet
Location
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the
Balance Sheet
|
|
Net Amounts of Assets and Liabilities Presented in the
Balance Sheet
|
||||||
Commodity derivative contracts
|
|
Current assets
|
|
$
|
2,045
|
|
|
$
|
(1,748
|
)
|
|
$
|
297
|
|
Commodity derivative contracts
|
|
Noncurrent assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Current liabilities
|
|
$
|
4,622
|
|
|
$
|
(1,748
|
)
|
|
$
|
2,874
|
|
Commodity derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Realized gain (loss) on commodity derivatives
|
$
|
116
|
|
|
$
|
(13
|
)
|
|
$
|
(26
|
)
|
|
$
|
2,868
|
|
Unrealized gain (loss) on commodity derivatives
|
(2,499
|
)
|
|
420
|
|
|
2,350
|
|
|
(6,485
|
)
|
||||
Total gain (loss)
|
$
|
(2,383
|
)
|
|
$
|
407
|
|
|
$
|
2,324
|
|
|
$
|
(3,617
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Monthly settlement
|
$
|
376
|
|
|
$
|
497
|
|
|
$
|
927
|
|
|
$
|
4,398
|
|
Previously incurred premiums attributable to settled commodity contracts
|
(260
|
)
|
|
(510
|
)
|
|
(953
|
)
|
|
(1,530
|
)
|
||||
Total realized gain (loss)
|
$
|
116
|
|
|
$
|
(13
|
)
|
|
$
|
(26
|
)
|
|
$
|
2,868
|
|
9
.
|
Fair Value Measurements
|
•
|
Level 1: Quoted prices available in active markets for identical assets or liabilities;
|
•
|
Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; and
|
•
|
Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow or other valuation models.
|
|
Fair Value Measurements at September 30, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
1,180
|
|
|
$
|
—
|
|
|
$
|
1,180
|
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
297
|
|
|
$
|
—
|
|
|
$
|
297
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
2,874
|
|
|
$
|
—
|
|
|
$
|
2,874
|
|
10
.
|
Interest Expense
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revolving bank credit facility
|
$
|
1,016
|
|
|
$
|
—
|
|
|
$
|
1,286
|
|
|
$
|
154
|
|
Notes payable
|
1,800
|
|
|
1,800
|
|
|
5,400
|
|
|
2,120
|
|
||||
Amortization of issuance costs
|
1,090
|
|
|
467
|
|
|
2,267
|
|
|
1,076
|
|
||||
Less, interest capitalized
|
(3,906
|
)
|
|
(2,267
|
)
|
|
(8,953
|
)
|
|
(3,350
|
)
|
||||
Interest expense, net of amounts capitalized
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
11
.
|
Weighted-Average Shares Outstanding
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted-average shares outstanding - basic
|
200,881,447
|
|
|
200,515,555
|
|
|
200,807,436
|
|
|
164,771,544
|
|
Potentially dilutive common shares from:
|
|
|
|
|
|
|
|
||||
Stock options
|
415,524
|
|
|
—
|
|
|
412,902
|
|
|
—
|
|
Restricted stock units and stock bonus shares
|
163,944
|
|
|
—
|
|
|
105,791
|
|
|
—
|
|
Weighted-average shares outstanding - diluted
|
201,460,915
|
|
|
200,515,555
|
|
|
201,326,129
|
|
|
164,771,544
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Potentially dilutive common shares from:
|
|
|
|
|
|
|
|
||||
Stock options
|
4,726,500
|
|
|
5,903,500
|
|
|
4,756,500
|
|
|
5,903,500
|
|
Performance-vested stock units
1
|
951,884
|
|
|
478,510
|
|
|
951,884
|
|
|
478,510
|
|
Restricted stock units and stock bonus shares
|
308,094
|
|
|
1,003,879
|
|
|
497,806
|
|
|
1,003,879
|
|
Total
|
5,986,478
|
|
|
7,385,889
|
|
|
6,206,190
|
|
|
7,385,889
|
|
12
.
|
Stock-Based Compensation
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stock options
|
$
|
1,277
|
|
|
$
|
1,274
|
|
|
$
|
3,825
|
|
|
$
|
4,107
|
|
Performance-vested stock units
|
807
|
|
|
354
|
|
|
2,130
|
|
|
692
|
|
||||
Restricted stock units and stock bonus shares
|
1,386
|
|
|
1,023
|
|
|
3,779
|
|
|
3,341
|
|
||||
Total stock-based compensation
|
$
|
3,470
|
|
|
$
|
2,651
|
|
|
$
|
9,734
|
|
|
$
|
8,140
|
|
Less: stock-based compensation capitalized
|
(440
|
)
|
|
(278
|
)
|
|
(1,344
|
)
|
|
(856
|
)
|
||||
Total stock-based compensation expensed
|
$
|
3,030
|
|
|
$
|
2,373
|
|
|
$
|
8,390
|
|
|
$
|
7,284
|
|
|
Three Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2016
|
||||
Number of options to purchase common shares
|
350,000
|
|
|
944,500
|
|
||
Weighted-average exercise price
|
$
|
6.55
|
|
|
$
|
7.20
|
|
Term (in years)
|
10 years
|
|
|
10 years
|
|
||
Vesting Period (in years)
|
5 years
|
|
|
3 - 5 years
|
|
||
Fair Value (in thousands)
|
$
|
1,253
|
|
|
$
|
3,381
|
|
|
Nine Months Ended September 30, 2016
|
|
Expected term
|
6.4 years
|
|
Expected volatility
|
55
|
%
|
Risk free rate
|
1.25 - 1.75%
|
|
Expected dividend yield
|
—
|
%
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value (thousands)
|
|||||
Outstanding, December 31, 2016
|
6,001,500
|
|
|
$
|
9.27
|
|
|
8.0 years
|
|
$
|
6,515
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(30,000
|
)
|
|
3.79
|
|
|
|
|
140
|
|
||
Expired
|
(41,000
|
)
|
|
11.98
|
|
|
|
|
|
|||
Forfeited
|
(104,000
|
)
|
|
11.60
|
|
|
|
|
|
|||
Outstanding, September 30, 2017
|
5,826,500
|
|
|
$
|
9.23
|
|
|
7.2 years
|
|
$
|
8,076
|
|
Outstanding, Exercisable at September 30, 2017
|
3,146,361
|
|
|
$
|
8.77
|
|
|
6.6 years
|
|
$
|
5,660
|
|
|
|
Outstanding Options
|
|
Exercisable Options
|
||||||||||||||
Range of Exercise Prices
|
|
Options
|
|
Weighted-Average Exercise Price per Share
|
|
Weighted-Average Remaining Contractual Life
|
|
Options
|
|
Weighted-Average Exercise Price per Share
|
|
Weighted-Average Remaining Contractual Life
|
||||||
Under $5.00
|
|
600,000
|
|
|
$
|
3.49
|
|
|
3.9 years
|
|
574,000
|
|
|
$
|
3.46
|
|
|
3.8 years
|
$5.00 - $6.99
|
|
1,012,000
|
|
|
6.38
|
|
|
7.2 years
|
|
549,000
|
|
|
6.45
|
|
|
6.0 years
|
||
$7.00 - $10.99
|
|
1,592,500
|
|
|
9.34
|
|
|
7.7 years
|
|
658,661
|
|
|
9.50
|
|
|
7.3 years
|
||
$11.00 - $13.46
|
|
2,622,000
|
|
|
11.58
|
|
|
7.7 years
|
|
1,364,700
|
|
|
11.58
|
|
|
7.6 years
|
||
Total
|
|
5,826,500
|
|
|
$
|
9.23
|
|
|
7.2 years
|
|
3,146,361
|
|
|
$
|
8.77
|
|
|
6.6 years
|
Unrecognized compensation cost (in thousands)
|
$
|
11,101
|
|
Remaining vesting phase
|
2.5 years
|
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Not vested, December 31, 2016
|
890,336
|
|
|
$
|
9.54
|
|
Granted
|
669,323
|
|
|
8.27
|
|
|
Vested
|
(336,445
|
)
|
|
9.17
|
|
|
Forfeited
|
(24,807
|
)
|
|
9.85
|
|
|
Not vested, September 30, 2017
|
1,198,407
|
|
|
$
|
8.93
|
|
Unrecognized compensation cost (in thousands)
|
$
|
8,232
|
|
Remaining vesting phase
|
2.3 years
|
|
|
Nine Months Ended September 30,
|
||||
|
2017
|
|
2016
|
||
Weighted-average expected term
|
2.9 years
|
|
|
2.7 years
|
|
Weighted-average expected volatility
|
59
|
%
|
|
58
|
%
|
Weighted-average risk-free rate
|
1.34
|
%
|
|
0.87
|
%
|
|
Number of Units
1
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Not vested, December 31, 2016
|
478,510
|
|
|
$
|
8.09
|
|
Granted
|
473,374
|
|
|
10.79
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Not vested, September 30, 2017
|
951,884
|
|
|
$
|
9.44
|
|
13
.
|
Income Taxes
|
14
.
|
Other Commitments and Contingencies
|
Year ending December 31,
|
|
Oil
|
|
|
(MBbls)
|
||
Remainder of 2017
|
|
1,072
|
|
2018
|
|
4,942
|
|
2019
|
|
5,167
|
|
2020
|
|
4,003
|
|
2021
|
|
1,672
|
|
Thereafter
|
|
—
|
|
Total
|
|
16,856
|
|
Year ending December 31,
|
|
Rent
|
||
Remainder of 2017
|
|
$
|
208
|
|
2018
|
|
840
|
|
|
2019
|
|
859
|
|
|
2020
|
|
878
|
|
|
2021
|
|
875
|
|
|
Thereafter
|
|
477
|
|
|
Total
|
|
$
|
4,137
|
|
15
.
|
Supplemental Schedule of Information to the Condensed Consolidated Statements of Cash Flows
|
|
Nine Months Ended September 30,
|
||||||
Supplemental cash flow information:
|
2017
|
|
2016
|
||||
Interest paid
|
$
|
4,796
|
|
|
$
|
159
|
|
Income taxes paid
|
—
|
|
|
106
|
|
||
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
||||
Accrued well costs as of period end
|
$
|
122,387
|
|
|
$
|
32,299
|
|
Asset retirement obligations incurred with development activities
|
2,782
|
|
|
366
|
|
||
Asset retirement obligations assumed with acquisitions
|
23,521
|
|
|
2,046
|
|
||
Obligations discharged with asset retirements and divestitures
|
(7,023
|
)
|
|
(3,997
|
)
|
ITEM
2
.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
Year Ended August 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Average NYMEX prices
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil (per Bbl)
|
$
|
43.20
|
|
|
$
|
48.73
|
|
|
$
|
60.65
|
|
|
$
|
100.39
|
|
|
$
|
94.58
|
|
Natural gas (per Mcf)
|
$
|
2.52
|
|
|
$
|
2.58
|
|
|
$
|
3.12
|
|
|
$
|
4.38
|
|
|
$
|
3.55
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Oil (NYMEX WTI)
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Price
|
$
|
48.18
|
|
|
$
|
44.90
|
|
|
$
|
49.44
|
|
|
$
|
41.23
|
|
Realized Price
|
42.37
|
|
|
35.67
|
|
|
42.04
|
|
|
31.47
|
|
||||
Differential
|
$
|
(5.81
|
)
|
|
$
|
(9.23
|
)
|
|
$
|
(7.40
|
)
|
|
$
|
(9.76
|
)
|
|
|
|
|
|
|
|
|
||||||||
Gas (NYMEX Henry Hub)
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Price
|
$
|
2.99
|
|
|
$
|
2.88
|
|
|
$
|
3.03
|
|
|
$
|
2.34
|
|
Realized Price
|
2.35
|
|
|
2.73
|
|
|
2.39
|
|
|
2.18
|
|
||||
Differential
|
$
|
(0.64
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
||||||||
NGL Realized Price
|
$
|
17.32
|
|
|
$
|
—
|
|
|
$
|
15.49
|
|
|
$
|
—
|
|
Vertical Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
482
|
|
|
456
|
|
|
135
|
|
|
32
|
|
|
617
|
|
|
488
|
|
Horizontal Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
208
|
|
|
194
|
|
|
191
|
|
|
33
|
|
|
399
|
|
|
227
|
|
•
|
Concentrate on our existing core area in and around the D-J Basin, where we have significant operating experience.
All of our current wells and our planned acreage development is located either in or adjacent to the Wattenberg Field. Focusing our operations in this area leverages our management, technical, and operational experience in the basin.
|
•
|
Develop and exploit existing oil and gas properties.
Our principal growth strategy has been to develop and exploit our properties to add reserves. In the Wattenberg Field, we target three benches of the Niobrara formation as well as the Codell formation for horizontal drilling and production. We believe horizontal drilling is the most efficient way to recover the potential hydrocarbons and consider the Wattenberg Field to be relatively low-risk because information gained from the large number of existing wells can be applied to potential future wells. There is enough similarity between wells in the Wattenberg Field that the exploitation process is generally repeatable.
|
•
|
Improve hydrocarbon recovery through increased well density.
We utilize what we believe to be industry best practices in our effort to determine the optimal recovery area for each well. Early horizontal well development in the Wattenberg Field generally assumed optimal recoveries would be obtained utilizing between 12 and 16 wells per 640-acre section. As horizontal well development has matured, well density assumptions have generally increased beyond 16 wells per
|
•
|
Complete selective acquisitions.
We seek to acquire developed and undeveloped oil and gas properties, primarily in the Wattenberg Field. We generally seek acquisitions that will provide us with opportunities for reserve additions and increased cash flow through production enhancement and additional development and exploratory prospect generation.
|
•
|
Retain control over the operation of a substantial portion of our production.
As operator of a majority of our wells and undeveloped acreage, we control the timing and selection of new wells to be drilled. This allows us to modify our capital spending as our financial resources and underlying lease terms allow and market conditions permit.
|
•
|
Maintain financial flexibility while focusing on operational cost control.
We strive to be a cost-efficient operator and to maintain a relatively low utilization of debt, which enhances our financial flexibility. Our high degree of operational control, as well as our focus on operating efficiencies and short return on investment cycle times, is central to our operating strategy.
|
•
|
Use the latest technology to maximize returns.
Our development objective for individual well optimization is to drill and complete wells with lateral lengths of 7,000' to 10,000'. Utilizing petrophysical and seismic data, a 3-D model is developed for each leasehold section to assist in determining optimal wellbore placement, well spacing, and stimulation design. This process is augmented with formation-specific drilling and completion execution designs and coupled with localized production results to implement a continuous improvement philosophy in optimizing the value per acre of our leasehold throughout our development program.
|
|
Three Months Ended September 30,
|
|
Percentage
|
|||||||
|
2017
|
|
2016
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
1
|
1,726
|
|
|
517
|
|
|
234
|
%
|
||
Natural Gas (MMcf)
2
|
7,412
|
|
|
2,855
|
|
|
160
|
%
|
||
NGLs (MBbls)
3
|
753
|
|
|
—
|
|
|
nm
|
|
||
MBOE
4
|
3,715
|
|
|
993
|
|
|
274
|
%
|
||
BOED
5
|
40,378
|
|
|
10,794
|
|
|
274
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
73,144
|
|
|
$
|
18,451
|
|
|
296
|
%
|
Natural Gas
|
17,402
|
|
|
7,783
|
|
|
124
|
%
|
||
NGLs
3
|
13,047
|
|
|
—
|
|
|
nm
|
|
||
|
$
|
103,593
|
|
|
$
|
26,234
|
|
|
295
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
42.37
|
|
|
$
|
35.67
|
|
|
19
|
%
|
Natural Gas
|
2.35
|
|
|
2.73
|
|
|
(14
|
)%
|
||
NGLs
3
|
17.32
|
|
|
—
|
|
|
nm
|
|
||
BOE
|
$
|
27.89
|
|
|
$
|
26.42
|
|
|
6
|
%
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Production costs
|
$
|
4,223
|
|
|
$
|
3,529
|
|
Workover
|
93
|
|
|
290
|
|
||
Transportation and gathering
|
838
|
|
|
—
|
|
||
Total LOE
|
$
|
5,154
|
|
|
$
|
3,819
|
|
|
|
|
|
||||
Per BOE:
|
|
|
|
||||
Production costs
|
$
|
1.14
|
|
|
$
|
3.55
|
|
Workover
|
0.03
|
|
|
0.29
|
|
||
Transportation and gathering
|
0.23
|
|
|
—
|
|
||
Total LOE
|
$
|
1.40
|
|
|
$
|
3.84
|
|
|
Three Months Ended September 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Depletion of oil and gas properties
|
$
|
32,944
|
|
|
$
|
9,273
|
|
Depreciation and accretion
|
796
|
|
|
362
|
|
||
Total DD&A
|
$
|
33,740
|
|
|
$
|
9,635
|
|
|
|
|
|
||||
DD&A expense per BOE
|
$
|
9.08
|
|
|
$
|
9.70
|
|
|
Nine Months Ended September 30,
|
|
Percentage
|
|||||||
|
2017
|
|
2016
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
|
3,668
|
|
|
1,552
|
|
|
136
|
%
|
||
Natural Gas (MMcf)
|
17,122
|
|
|
8,991
|
|
|
90
|
%
|
||
NGLs (MBbls)
1
|
1,758
|
|
|
—
|
|
|
nm
|
|
||
MBOE
|
8,280
|
|
|
3,050
|
|
|
171
|
%
|
||
BOED
|
30,331
|
|
|
11,133
|
|
|
172
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
154,232
|
|
|
$
|
48,838
|
|
|
216
|
%
|
Natural Gas
|
40,945
|
|
|
19,616
|
|
|
109
|
%
|
||
NGLs
1
|
27,242
|
|
|
—
|
|
|
nm
|
|
||
|
$
|
222,419
|
|
|
$
|
68,454
|
|
|
225
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
42.04
|
|
|
$
|
31.47
|
|
|
34
|
%
|
Natural Gas
|
2.39
|
|
|
2.18
|
|
|
10
|
%
|
||
NGLs
1
|
15.49
|
|
|
—
|
|
|
nm
|
|
||
BOE
|
$
|
26.86
|
|
|
$
|
22.44
|
|
|
20
|
%
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Production costs
|
$
|
12,511
|
|
|
$
|
14,464
|
|
Workover
|
$
|
497
|
|
|
$
|
499
|
|
Transportation and gathering
|
$
|
886
|
|
|
$
|
—
|
|
Total LOE
|
$
|
13,894
|
|
|
$
|
14,963
|
|
|
|
|
|
||||
Per BOE:
|
|
|
|
||||
Production costs
|
$
|
1.51
|
|
|
$
|
4.74
|
|
Workover
|
0.06
|
|
|
0.16
|
|
||
Transportation and gathering
|
0.11
|
|
|
—
|
|
||
Total LOE
|
$
|
1.68
|
|
|
$
|
4.90
|
|
|
Nine Months Ended September 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Depletion of oil and gas properties
|
$
|
71,389
|
|
|
$
|
31,981
|
|
Depreciation and accretion
|
2,007
|
|
|
1,020
|
|
||
Total DD&A
|
$
|
73,396
|
|
|
$
|
33,001
|
|
|
|
|
|
||||
DD&A expense per BOE
|
$
|
8.86
|
|
|
$
|
10.82
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operations
|
$
|
142,817
|
|
|
$
|
33,193
|
|
Capital expenditures
|
(383,483
|
)
|
|
(582,149
|
)
|
||
Net cash provided by other investing activities
|
95,265
|
|
|
5,979
|
|
||
Net cash (used in) provided by equity financing activities
|
(517
|
)
|
|
542,901
|
|
||
Net cash provided by (used in) debt financing activities
|
148,628
|
|
|
(2,666
|
)
|
||
Net increase (decrease) in cash and equivalents
|
$
|
2,710
|
|
|
$
|
(2,742
|
)
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||
Capital expenditures for drilling and completion activities
|
|
|
|
||||
Operated
|
$
|
94,971
|
|
|
$
|
290,717
|
|
Non-operated
|
64,561
|
|
|
92,311
|
|
||
Total
|
159,532
|
|
|
383,028
|
|
||
|
|
|
|
||||
Acquisitions of oil and gas properties and leasehold*
|
56,835
|
|
|
89,677
|
|
||
Capitalized interest, capitalized G&A, and other
|
5,718
|
|
|
17,514
|
|
||
Accrual basis capital expenditures**
|
$
|
222,085
|
|
|
$
|
490,219
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
43,848
|
|
|
$
|
(19,241
|
)
|
|
$
|
91,664
|
|
|
$
|
(224,490
|
)
|
Depreciation, depletion, and accretion
|
33,740
|
|
|
9,635
|
|
|
73,396
|
|
|
33,001
|
|
||||
Full cost ceiling impairment
|
—
|
|
|
25,453
|
|
|
—
|
|
|
215,223
|
|
||||
Income tax expense
|
—
|
|
|
5
|
|
|
—
|
|
|
106
|
|
||||
Stock-based compensation
|
3,030
|
|
|
2,374
|
|
|
8,390
|
|
|
7,285
|
|
||||
Mark-to-market of commodity derivative contracts:
|
|
|
|
|
|
|
|
||||||||
Total (gain) loss on commodity derivatives contracts
|
2,383
|
|
|
(407
|
)
|
|
(2,324
|
)
|
|
3,617
|
|
||||
Cash settlements on commodity derivative contracts
|
544
|
|
|
486
|
|
|
778
|
|
|
5,137
|
|
||||
Interest income, net of interest expense
|
(16
|
)
|
|
(11
|
)
|
|
(47
|
)
|
|
(176
|
)
|
||||
Adjusted EBITDA
|
$
|
83,529
|
|
|
$
|
18,294
|
|
|
$
|
171,857
|
|
|
$
|
39,703
|
|
•
|
declines in oil and natural
gas
prices;
|
•
|
operating hazards that adversely affect our ability to conduct business;
|
•
|
uncertainties in the estimates of proved reserves;
|
•
|
the effect of seasonal weather conditions and wildlife and plant species restrictions on our operations;
|
•
|
our ability to fund, develop, produce, and acquire additional oil and natural gas reserves that are economically recoverable;
|
•
|
our ability to obtain adequate financing;
|
•
|
the effect of local and regional factors on oil and natural gas prices;
|
•
|
incurrence of ceiling test write-downs;
|
•
|
our inability to control operations on properties that we do not operate;
|
•
|
the availability and capacity of gathering systems, pipelines, and other midstream infrastructure for our production;
|
•
|
the strength and financial resources of our competitors;
|
•
|
our ability to complete, and the effect of, pending and planned transactions;
|
•
|
our ability to successfully identify, execute, and effectively integrate acquisitions;
|
•
|
the effect of federal, state, and local laws and regulations;
|
•
|
the effects of, including costs to comply with, environmental legislation or regulatory initiatives, including those related to hydraulic fracturing;
|
•
|
our ability to market our production;
|
•
|
the effects of local moratoria or bans on our business;
|
•
|
the effect of environmental liabilities;
|
•
|
the effect of the adoption and implementation of statutory and regulatory requirements for derivative transactions;
|
•
|
changes in U.S. tax laws;
|
•
|
our ability to satisfy our contractual obligations and commitments;
|
•
|
the amount of our indebtedness and our ability to maintain compliance with debt covenants;
|
•
|
the effectiveness of our disclosure controls and our internal controls over financial reporting;
|
•
|
the geographic concentration of our principal properties;
|
•
|
our ability to protect critical data and technology systems;
|
•
|
the availability of water for use in our operations; and
|
•
|
the risks and uncertainties described and referenced in "Risk Factors."
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|||
July 1, 2017 - July 31, 2017
(1)
|
|
—
|
|
|
$
|
—
|
|
August 1, 2017 - August 31, 2017
(1)
|
|
5,167
|
|
|
$
|
7.68
|
|
September 1, 2017 - September 30, 2017
(1)
|
|
3,235
|
|
|
$
|
7.95
|
|
Total
|
|
8,402
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Exhibit
Number
|
|
Exhibit
|
3.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
99.1
|
|
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
*
|
|
Filed herewith
|
**
|
|
Furnished herewith
|
|
SRC Energy Inc.
|
|
|
|
/s/ Lynn A. Peterson
|
|
Lynn A. Peterson, President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
/s/ James P. Henderson
|
|
James P. Henderson, Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
|
|
|
|
/s/ Jared C. Grenzenbach
|
|
Jared C. Grenzenbach, Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of SRC Energy Inc.;
|
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 the 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.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of SRC Energy Inc.;
|
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 the 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.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
Date:
|
November 1, 2017
|
By:
|
/s/ Lynn A. Peterson
|
|
|
|
|
Lynn A. Peterson, Principal Executive Officer
|
|
Date:
|
November 1, 2017
|
By:
|
/s/ James P. Henderson
|
|
|
|
|
James P. Henderson, Principal Financial Officer
|
|
BORROWER:
|
SRC ENERGY INC.
|
||
|
|
|
|
|
|
|
|
|
By:
|
/s/ James P. Henderson
|
|
|
|
James P. Henderson
|
|
|
|
Executive Vice President Finance and Chief Financial Officer
|
|
|
SUNTRUST BANK,
|
|
|
as Administrative Agent and as an Issuing Bank and a Lender
|
|
|
|
|
|
By:
|
/s/ Chulley Bogle
|
|
Name:
|
Chulley Bogle
|
|
Title:
|
Vice President
|
|
DEUTSCHE BANK AG NEW YORK BRANCH
,
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Dusan Lazarov
|
|
Name:
|
Dusan Lazarov
|
|
Title:
|
Director
|
|
|
|
|
By:
|
/s/ Anca Trifan
|
|
Name:
|
Anca Trifan
|
|
Title:
|
Managing Director
|
|
JPMORGAN CHASE BANK, N.A.,
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Arina Mavilian
|
|
Name:
|
Arina Mavilian
|
|
Title:
|
Authorized Officer
|
|
KEYBANK NATIONAL ASSOCIATION
,
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ George E. McKean
|
|
Name:
|
George E. McKean
|
|
Title:
|
Senior Vice President
|
|
CAPTIAL ONE, NATIONAL ASSOCIATION
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Matthew Molero
|
|
Name:
|
Matthew Molero
|
|
Title:
|
Senior Vice President
|
|
CITIBANK, N.A.
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Eamon Baqui
|
|
Name:
|
Eamon Baqui
|
|
Title:
|
Vice President
|
|
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Nupur Kumar
|
|
Name:
|
Nupur Kumar
|
|
Title:
|
Authorized Signatory
|
|
WELLS FARGO BANK, N.A.
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Suzanne Ridenhour
|
|
Name:
|
Suzanne Ridenhour
|
|
Title:
|
Director
|
|
ZB N.A. DBA
AMEGY BANK
,
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Ronnie Causey
|
|
Name:
|
Ronnie Causey
|
|
Title:
|
Vice President
|
|
COMERICA BANK,
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Cassandra M. Lucas
|
|
Name:
|
Cassandra M. Lucas
|
|
Title:
|
Portfolio Manager
|
|
COMMUNITY BANKS OF COLORADO
, a division
|
|
|
of NBH Bank, as a Lender
|
|
|
|
|
|
By:
|
/s/ William Holliday
|
|
Name:
|
William Holliday
|
|
Title:
|
Portfolio Manager
|
|
IBERIABANK
,
|
|
|
as a Lender
|
|
|
|
|
|
By:
|
/s/ Tyler S. Thoem
|
|
Name:
|
Tyler S. Thoem
|
|
Title:
|
Senior Vice President
|
Name of Lender
|
Applicable
Percentage
|
Maximum Credit Amount
|
SunTrust Bank
|
12.5%
|
$62,500,000
|
Deutsche Bank AG New York Branch
|
9.5%
|
$47,500,000
|
JPMorgan Chase Bank, National Association
|
9.5%
|
$47,500,000
|
KeyBank National Association
|
9.5%
|
$47,500,000
|
Capital One, National Association
|
8.3%
|
$41,250,000
|
Citibank, N.A.
|
8.3%
|
$41,250,000
|
Credit Suisse AG
|
8.3%
|
$41,250,000
|
Wells Fargo Bank, National Association
|
8.3%
|
$41,250,000
|
ZB N.A. dba Amegy Bank
|
7.0%
|
$35,000,000
|
Comerica Bank
|
7.0%
|
$35,000,000
|
Community Banks of Colorado
|
7.0%
|
$35,000,000
|
IBERIABANK
|
5.0%
|
$25,000,000
|
Total
|
100.00%
|
$500,000,000
|