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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
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Delaware
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45-4502447
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(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer
Identification Number)
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500 West Texas, Suite 1200
Midland, Texas
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79701
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(Address of Principal Executive Offices)
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(Zip Code)
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Large Accelerated Filer
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ý
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Accelerated Filer
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o
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Non-Accelerated Filer
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o
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Smaller Reporting Company
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o
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Page
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PART I. FINANCIAL INFORMATION
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PART II. OTHER INFORMATION
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3-D seismic
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Geophysical data that depict the subsurface strata in three dimensions. 3-D seismic typically provides a more detailed and accurate interpretation of the subsurface strata than 2-D, or two-dimensional, seismic.
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Basin
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A large depression on the earth’s surface in which sediments accumulate.
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Bbl
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Stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.
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Bbls/d
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Bbls per day.
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BOE
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Barrels of oil equivalent, with six thousand cubic feet of natural gas being equivalent to one barrel of oil.
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BOE/d
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BOE per day.
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Completion
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The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
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Condensate
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Liquid hydrocarbons associated with the production of a primarily natural gas reserve.
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Crude oil
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Liquid hydrocarbons retrieved from geological structures underground to be refined into fuel sources.
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Finding and development costs
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Capital costs incurred in the acquisition, exploitation and exploration of proved oil and natural gas reserves divided by proved reserve additions and revisions to proved reserves.
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Gross acres or gross wells
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The total acres or wells, as the case may be, in which a working interest is owned.
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Horizontal drilling
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A drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle with a specified interval.
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Horizontal wells
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Wells drilled directionally horizontal to allow for development of structures not reachable through traditional vertical drilling mechanisms.
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MBOE
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One thousand barrels of crude oil equivalent, determined using a ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.
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Mcf
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Thousand cubic feet of natural gas.
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Mcf/d
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Mcf per day.
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Mineral interests
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The interests in ownership of the resource and mineral rights, giving an owner the right to profit from the extracted resources.
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MMBtu
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Million British Thermal Units.
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Net acres or net wells
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The sum of the fractional working interest owned in gross acres.
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Net revenue interest
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An owner’s interest in the revenues of a well after deducting proceeds allocated to royalty and overriding interests.
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Oil and natural gas properties
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Tracts of land consisting of properties to be developed for oil and natural gas resource extraction.
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Operator
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The individual or company responsible for the exploration and/or production of an oil or natural gas well or lease.
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Play
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A set of discovered or prospective oil and/or natural gas accumulations sharing similar geologic, geographic and temporal properties, such as source rock, reservoir structure, timing, trapping mechanism and hydrocarbon type.
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Plugging and abandonment
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Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another or to the surface. Regulations of all states require plugging of abandoned wells.
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Prospect
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A specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.
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Proved reserves
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The estimated quantities of oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions.
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Reserves
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Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to the market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).
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Reservoir
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A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.
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Royalty interest
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An interest that gives an owner the right to receive a portion of the resources or revenues without having to carry any costs of development.
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Spacing
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The distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres (e.g., 40-acre spacing) and is often established by regulatory agencies.
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Working interest
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An operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production and requires the owner to pay a share of the costs of drilling and production operations.
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2012 Plan
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The Company’s 2012 Equity Incentive Plan.
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Company
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Diamondback Energy, Inc., a Delaware corporation.
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Exchange Act
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The Securities Exchange Act of 1934, as amended.
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GAAP
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Accounting principles generally accepted in the United States.
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General Partner
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Viper Energy Partners GP LLC, a Delaware limited liability company and the General Partner of the Partnership.
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Indenture
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The indenture relating to the Senior Notes, dated as of September 18, 2013, among the Company, the subsidiary guarantors party thereto and Wells Fargo, as the trustee, as supplemented.
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NYMEX
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New York Mercantile Exchange.
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Partnership
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Viper Energy Partners LP, a Delaware limited partnership.
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Partnership agreement
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The first amended and restated agreement of limited partnership, dated June 23, 2014, entered into by the General Partner and Diamondback in connection with the closing of the Viper Offering.
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SEC
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Securities and Exchange Commission.
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Securities Act
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The Securities Act of 1933, as amended.
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Senior Notes
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The Company’s 7.625% senior unsecured notes due 2021 in the aggregate principal amount of $450 million.
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Viper LTIP
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Viper Energy Partners LP Long Term Incentive Plan.
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Viper Offering
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The Partnerships’ initial public offering.
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Wells Fargo
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Wells Fargo Bank, National Association.
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•
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business strategy;
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•
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exploration and development drilling prospects, inventories, projects and programs;
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•
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oil and natural gas reserves;
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•
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acquisitions;
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•
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identified drilling locations;
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•
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ability to obtain permits and governmental approvals;
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•
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technology;
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•
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financial strategy;
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•
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realized oil and natural gas prices;
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•
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production;
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•
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lease operating expenses, general and administrative costs and finding and development costs;
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•
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future operating results; and
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•
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plans, objectives, expectations and intentions.
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September 30,
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December 31,
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2015
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2014
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(In thousands, except par values and share data)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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43,827
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$
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30,183
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Restricted cash
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500
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500
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Accounts receivable:
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Joint interest and other
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41,021
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50,943
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Oil and natural gas sales
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42,221
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43,050
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Related party
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—
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4,001
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Inventories
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2,602
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2,827
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Derivative instruments
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40,009
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115,607
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Prepaid expenses and other
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3,259
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4,600
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Total current assets
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173,439
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251,711
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Property and equipment:
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Oil and natural gas properties, based on the full cost method of accounting ($1,099,604 and $773,520 excluded from amortization at September 30, 2015 and December 31, 2014, respectively)
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3,850,064
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3,118,597
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Pipeline and gas gathering assets
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7,176
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7,174
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Other property and equipment
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48,913
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48,180
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Accumulated depletion, depreciation, amortization and impairment
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(1,147,936
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)
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(382,144
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)
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Net property and equipment
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2,758,217
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2,791,807
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Derivative instruments
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—
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1,934
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Deferred income taxes
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5,641
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—
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Other assets
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54,257
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50,029
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Total assets
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$
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2,991,554
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$
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3,095,481
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Liabilities and Stockholders’ Equity
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||||
Current liabilities:
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Accounts payable-trade
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$
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32,010
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$
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26,230
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Accrued capital expenditures
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58,818
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129,397
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Other accrued liabilities
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76,527
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41,149
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Revenues and royalties payable
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20,421
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30,000
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Deferred income taxes
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12,396
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39,953
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|
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Total current liabilities
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200,172
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266,729
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Long-term debt
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489,000
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673,500
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Asset retirement obligations
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12,662
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8,447
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Deferred income taxes
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—
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161,592
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Total liabilities
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701,834
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1,110,268
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Commitments and contingencies (Note 14)
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Stockholders’ equity:
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Common stock, $0.01 par value, 100,000,000 shares authorized, 66,656,433 issued and outstanding at September 30, 2015; 56,887,583 issued and outstanding at December 31, 2014
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667
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|
569
|
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Additional paid-in capital
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2,222,695
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1,554,174
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Retained earnings
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(166,951
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)
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196,268
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Total Diamondback Energy, Inc. stockholders’ equity
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2,056,411
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1,751,011
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Noncontrolling interest
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233,309
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234,202
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Total equity
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2,289,720
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1,985,213
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Total liabilities and equity
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$
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2,991,554
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$
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3,095,481
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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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2015
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2014
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2015
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2014
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||||||||
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(In thousands, except per share amounts)
|
||||||||||||
Revenues:
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|
||||||||
Oil sales
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$
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101,307
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$
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126,406
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|
|
$
|
301,850
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|
$
|
331,446
|
|
Natural gas sales
|
5,673
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|
2,338
|
|
|
11,791
|
|
6,006
|
|
||||
Natural gas sales - related party
|
—
|
|
2,374
|
|
|
2,640
|
|
6,370
|
|
||||
Natural gas liquid sales
|
4,966
|
|
3,619
|
|
|
13,585
|
|
9,507
|
|
||||
Natural gas liquid sales - related party
|
—
|
|
4,390
|
|
|
2,544
|
|
10,806
|
|
||||
Total revenues
|
111,946
|
|
139,127
|
|
|
332,410
|
|
364,135
|
|
||||
Costs and expenses:
|
|
|
|
|
|
||||||||
Lease operating expenses
|
22,189
|
|
13,766
|
|
|
65,117
|
|
31,998
|
|
||||
Lease operating expenses - related party
|
—
|
|
39
|
|
|
—
|
|
218
|
|
||||
Production and ad valorem taxes
|
8,966
|
|
8,634
|
|
|
24,883
|
|
22,318
|
|
||||
Production and ad valorem taxes - related party
|
—
|
|
320
|
|
|
153
|
|
1,032
|
|
||||
Gathering and transportation
|
1,688
|
|
110
|
|
|
3,374
|
|
426
|
|
||||
Gathering and transportation - related party
|
—
|
|
750
|
|
|
969
|
|
1,719
|
|
||||
Depreciation, depletion and amortization
|
52,375
|
|
45,370
|
|
|
169,148
|
|
116,364
|
|
||||
Impairment of oil and gas properties
|
273,737
|
|
—
|
|
|
597,188
|
|
—
|
|
||||
General and administrative expenses (including non-cash equity based compensation, net of capitalized amounts, of $4,402 and $2,069 for the three months ended September 30, 2015 and 2014, respectively, and $13,659 and $5,387 for the nine months ended September 30, 2015 and 2014, respectively)
|
6,861
|
|
6,016
|
|
|
21,774
|
|
13,891
|
|
||||
General and administrative expenses - related party
|
665
|
|
479
|
|
|
1,672
|
|
1,095
|
|
||||
Asset retirement obligation accretion expense
|
238
|
|
127
|
|
|
588
|
|
303
|
|
||||
Total costs and expenses
|
366,719
|
|
75,611
|
|
|
884,866
|
|
189,364
|
|
||||
Income (loss) from operations
|
(254,773
|
)
|
63,516
|
|
|
(552,456
|
)
|
174,771
|
|
||||
Other income (expense)
|
|
|
|
|
|
||||||||
Interest expense
|
(10,633
|
)
|
(9,846
|
)
|
|
(31,404
|
)
|
(24,090
|
)
|
||||
Other income
|
260
|
|
17
|
|
|
1,130
|
|
17
|
|
||||
Other income - related party
|
40
|
|
31
|
|
|
118
|
|
91
|
|
||||
Other expense
|
—
|
|
(8
|
)
|
|
—
|
|
(1,416
|
)
|
||||
Gain (loss) on derivative instruments, net
|
27,603
|
|
14,909
|
|
|
26,834
|
|
(577
|
)
|
||||
Total other income (expense), net
|
17,270
|
|
5,103
|
|
|
(3,322
|
)
|
(25,975
|
)
|
||||
Income (loss) before income taxes
|
(237,503
|
)
|
68,619
|
|
|
(555,778
|
)
|
148,796
|
|
||||
Provision for (benefit from) income taxes
|
(81,461
|
)
|
23,978
|
|
|
(194,823
|
)
|
52,742
|
|
||||
Net income (loss)
|
(156,042
|
)
|
44,641
|
|
|
(360,955
|
)
|
96,054
|
|
||||
Less: Net income attributable to noncontrolling interest
|
739
|
|
902
|
|
|
2,264
|
|
973
|
|
||||
Net income (loss) attributable to Diamondback Energy, Inc.
|
$
|
(156,781
|
)
|
$
|
43,739
|
|
|
$
|
(363,219
|
)
|
$
|
95,081
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share
|
|
|
|
|
|
||||||||
Basic
|
$
|
(2.40
|
)
|
$
|
0.79
|
|
|
$
|
(5.88
|
)
|
$
|
1.85
|
|
Diluted
|
$
|
(2.40
|
)
|
$
|
0.79
|
|
|
$
|
(5.88
|
)
|
$
|
1.83
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
||||||||
Basic
|
65,251
|
|
55,152
|
|
|
61,727
|
|
51,489
|
|
||||
Diluted
|
65,251
|
|
55,442
|
|
|
61,727
|
|
51,888
|
|
|
Common Stock
|
Additional Paid-in Capital
|
Retained Earnings
|
Non-controlling Interest
|
Total
|
||||||||||||
|
Shares
|
Amount
|
|||||||||||||||
|
|
|
|
|
|
|
|||||||||||
|
(In thousands)
|
||||||||||||||||
Balance December 31, 2013
|
47,106
|
|
$
|
471
|
|
$
|
842,557
|
|
$
|
2,513
|
|
$
|
—
|
|
$
|
845,541
|
|
Net proceeds from issuance of common units - Viper Energy Partners LP
|
—
|
|
—
|
|
—
|
|
—
|
|
232,334
|
|
232,334
|
|
|||||
Unit-based compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
1,011
|
|
1,011
|
|
|||||
Stock-based compensation
|
—
|
|
—
|
|
9,134
|
|
—
|
|
—
|
|
9,134
|
|
|||||
Tax benefits related to stock-based compensation
|
—
|
|
—
|
|
3,173
|
|
—
|
|
—
|
|
3,173
|
|
|||||
Common shares issued in public offering, net of offering costs
|
9,200
|
|
92
|
|
693,289
|
|
—
|
|
—
|
|
693,381
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
380
|
|
4
|
|
5,214
|
|
—
|
|
—
|
|
5,218
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
95,081
|
|
973
|
|
96,054
|
|
|||||
Balance September 30, 2014
|
56,686
|
|
$
|
567
|
|
$
|
1,553,367
|
|
$
|
97,594
|
|
$
|
234,318
|
|
$
|
1,885,846
|
|
|
|
|
|
|
|
|
|||||||||||
Balance December 31, 2014
|
56,888
|
|
$
|
569
|
|
$
|
1,554,174
|
|
$
|
196,268
|
|
$
|
234,202
|
|
$
|
1,985,213
|
|
Unit-based compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
2,956
|
|
2,956
|
|
|||||
Stock-based compensation
|
—
|
|
—
|
|
15,827
|
|
—
|
|
—
|
|
15,827
|
|
|||||
Distribution to noncontrolling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
(6,113
|
)
|
(6,113
|
)
|
|||||
Common shares issued in public offering, net of offering costs
|
9,487
|
|
94
|
|
649,979
|
|
—
|
|
—
|
|
650,073
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
282
|
|
4
|
|
2,715
|
|
—
|
|
—
|
|
2,719
|
|
|||||
Net income (loss)
|
—
|
|
—
|
|
—
|
|
(363,219
|
)
|
2,264
|
|
(360,955
|
)
|
|||||
Balance September 30, 2015
|
66,657
|
|
$
|
667
|
|
$
|
2,222,695
|
|
$
|
(166,951
|
)
|
$
|
233,309
|
|
$
|
2,289,720
|
|
|
Nine Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(In thousands)
|
|||||
Cash flows from operating activities:
|
|
|
||||
Net income (loss)
|
$
|
(360,955
|
)
|
$
|
96,054
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
||||
(Benefit from) provision for deferred income taxes
|
(194,790
|
)
|
48,760
|
|
||
Excess tax benefit from stock-based compensation
|
—
|
|
749
|
|
||
Impairment of oil and gas properties
|
597,188
|
|
—
|
|
||
Asset retirement obligation accretion expense
|
588
|
|
303
|
|
||
Depreciation, depletion, and amortization
|
169,148
|
|
116,364
|
|
||
Amortization of debt issuance costs
|
1,918
|
|
1,505
|
|
||
Change in fair value of derivative instruments
|
77,532
|
|
(5,630
|
)
|
||
Stock-based compensation expense
|
13,659
|
|
5,387
|
|
||
Gain on sale of assets, net
|
(91
|
)
|
1,405
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Accounts receivable
|
13,112
|
|
(33,985
|
)
|
||
Accounts receivable-related party
|
—
|
|
(2,612
|
)
|
||
Inventories
|
225
|
|
915
|
|
||
Prepaid expenses and other
|
569
|
|
(5,681
|
)
|
||
Accounts payable and accrued liabilities
|
22,756
|
|
7,812
|
|
||
Accounts payable and accrued liabilities-related party
|
—
|
|
(17
|
)
|
||
Accrued interest
|
8,324
|
|
11,940
|
|
||
Revenues and royalties payable
|
(9,579
|
)
|
8,726
|
|
||
Net cash provided by operating activities
|
339,604
|
|
251,995
|
|
||
Cash flows from investing activities:
|
|
|
||||
Additions to oil and natural gas properties
|
(326,441
|
)
|
(309,009
|
)
|
||
Additions to oil and natural gas properties-related party
|
(26
|
)
|
(3,410
|
)
|
||
Acquisition of mineral interests
|
(32,291
|
)
|
(57,688
|
)
|
||
Acquisition of leasehold interests
|
(425,507
|
)
|
(840,482
|
)
|
||
Pipeline and gas gathering assets
|
(2
|
)
|
(1,437
|
)
|
||
Purchase of other property and equipment
|
(992
|
)
|
(43,215
|
)
|
||
Proceeds from sale of property and equipment
|
97
|
|
11
|
|
||
Equity investments
|
(2,702
|
)
|
(33,851
|
)
|
||
Net cash used in investing activities
|
(787,864
|
)
|
(1,289,081
|
)
|
||
Cash flows from financing activities:
|
|
|
||||
Proceeds from borrowings on credit facility
|
392,501
|
|
425,900
|
|
||
Repayment on credit facility
|
(577,001
|
)
|
(295,900
|
)
|
||
Debt issuance costs
|
(303
|
)
|
(2,358
|
)
|
||
Public offering costs
|
(586
|
)
|
(2,203
|
)
|
||
Proceeds from public offerings
|
650,688
|
|
928,432
|
|
||
Exercise of stock options
|
2,718
|
|
5,131
|
|
||
Excess tax benefits of stock-based compensation
|
—
|
|
3,173
|
|
||
Distribution to non-controlling interest
|
(6,113
|
)
|
—
|
|
||
Net cash provided by financing activities
|
461,904
|
|
1,062,175
|
|
||
Net increase in cash and cash equivalents
|
13,644
|
|
25,089
|
|
||
Cash and cash equivalents at beginning of period
|
30,183
|
|
15,555
|
|
||
Cash and cash equivalents at end of period
|
$
|
43,827
|
|
$
|
40,644
|
|
|
Nine Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(In thousands)
|
|||||
Supplemental disclosure of cash flow information:
|
|
|
||||
Interest paid, net of capitalized interest
|
$
|
21,117
|
|
$
|
12,729
|
|
Supplemental disclosure of non-cash transactions:
|
|
|
||||
Asset retirement obligation incurred
|
$
|
448
|
|
$
|
567
|
|
Asset retirement obligation revisions in estimated liability
|
$
|
60
|
|
$
|
588
|
|
Asset retirement obligation acquired
|
$
|
3,123
|
|
$
|
3,678
|
|
Change in accrued capital expenditures
|
$
|
(70,579
|
)
|
$
|
43,865
|
|
Capitalized stock-based compensation
|
$
|
5,125
|
|
$
|
4,758
|
|
|
Pro Forma
|
|||||
|
(Unaudited)
|
|||||
|
Three Months Ended
|
Nine Months Ended
|
||||
|
September 30, 2014
|
September 30, 2014
|
||||
|
|
|
||||
|
(in thousands)
|
|||||
Revenues
|
$
|
139,127
|
|
$
|
409,520
|
|
Income from operations
|
63,516
|
|
186,483
|
|
||
Net income
|
43,739
|
|
102,583
|
|
|
September 30,
|
December 31,
|
||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands)
|
|||||
Oil and natural gas properties:
|
|
|
||||
Subject to depletion
|
$
|
2,750,460
|
|
$
|
2,345,077
|
|
Not subject to depletion-acquisition costs
|
|
|
||||
Incurred in 2015
|
421,576
|
|
—
|
|
||
Incurred in 2014
|
543,499
|
|
576,802
|
|
||
Incurred in 2013
|
71,802
|
|
130,474
|
|
||
Incurred in 2012
|
62,727
|
|
65,480
|
|
||
Incurred in 2011
|
—
|
|
764
|
|
||
Total not subject to depletion
|
1,099,604
|
|
773,520
|
|
||
Gross oil and natural gas properties
|
3,850,064
|
|
3,118,597
|
|
||
Accumulated depletion
|
(870,569
|
)
|
(379,481
|
)
|
||
Impairment
|
(273,737
|
)
|
—
|
|
||
Oil and natural gas properties, net
|
2,705,758
|
|
2,739,116
|
|
||
Pipeline and gas gathering assets
|
7,176
|
|
7,174
|
|
||
Other property and equipment
|
48,913
|
|
48,180
|
|
||
Accumulated depreciation
|
(3,630
|
)
|
(2,663
|
)
|
||
Property and equipment, net of accumulated depreciation, depletion, amortization and impairment
|
$
|
2,758,217
|
|
$
|
2,791,807
|
|
|
Nine Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands)
|
|||||
Asset retirement obligation, beginning of period
|
$
|
8,486
|
|
$
|
3,029
|
|
Additional liability incurred
|
448
|
|
567
|
|
||
Liabilities acquired
|
3,123
|
|
3,678
|
|
||
Liabilities settled
|
(4
|
)
|
(10
|
)
|
||
Accretion expense
|
588
|
|
303
|
|
||
Revisions in estimated liabilities
|
60
|
|
588
|
|
||
Asset retirement obligation, end of period
|
12,701
|
|
8,155
|
|
||
Less current portion
|
39
|
|
40
|
|
||
Asset retirement obligations - long-term
|
$
|
12,662
|
|
$
|
8,115
|
|
|
September 30,
|
December 31,
|
||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands)
|
|||||
Revolving credit facility
|
$
|
10,000
|
|
$
|
223,500
|
|
7.625 % Senior Notes due 2021
|
450,000
|
|
450,000
|
|
||
Partnership revolving credit facility
|
29,000
|
|
—
|
|
||
Total long-term debt
|
$
|
489,000
|
|
$
|
673,500
|
|
Financial Covenant
|
|
Required Ratio
|
Ratio of total debt to EBITDAX
|
Not greater than 4.0 to 1.0
|
|
Ratio of current assets to liabilities, as defined in the credit agreement
|
Not less than 1.0 to 1.0
|
Financial Covenant
|
|
Required Ratio
|
Ratio of total debt to EBITDAX
(1)
|
Not greater than 4.0 to 1.0
|
|
Ratio of current assets to liabilities, as defined in the credit agreement
|
Not less than 1.0 to 1.0
|
(1)
|
EBITDAX is annualized for the four fiscal quarters ending on the last day of the fiscal quarter for which financial statements are available, beginning with the quarter ended September 30, 2014.
|
|
Three Months Ended September 30,
|
|||||||||||||||
|
2015
|
2014
|
||||||||||||||
|
|
|
Per
|
|
|
Per
|
||||||||||
|
Income
|
Shares
|
Share
|
Income
|
Shares
|
Share
|
||||||||||
|
|
|
|
|
|
|
||||||||||
|
(in thousands, except per share amounts)
|
|||||||||||||||
Basic:
|
|
|
|
|
|
|
||||||||||
Net income attributable to common stock
|
$
|
(156,781
|
)
|
65,251
|
|
$
|
(2.40
|
)
|
$
|
43,739
|
|
55,152
|
|
$
|
0.79
|
|
Effect of Dilutive Securities:
|
|
|
|
|
|
|
||||||||||
Dilutive effect of potential common shares issuable
|
$
|
—
|
|
—
|
|
|
(53
|
)
|
290
|
|
|
|||||
Diluted:
|
|
|
|
|
|
|
||||||||||
Net income attributable to common stock
|
$
|
(156,781
|
)
|
65,251
|
|
$
|
(2.40
|
)
|
$
|
43,686
|
|
55,442
|
|
$
|
0.79
|
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2015
|
2014
|
||||||||||||||
|
|
|
Per
|
|
|
Per
|
||||||||||
|
Income
|
Shares
|
Share
|
Income
|
Shares
|
Share
|
||||||||||
|
|
|
|
|
|
|
||||||||||
|
(in thousands, except per share amounts)
|
|||||||||||||||
Basic:
|
|
|
|
|
|
|
||||||||||
Net income attributable to common stock
|
$
|
(363,219
|
)
|
61,727
|
|
$
|
(5.88
|
)
|
$
|
95,081
|
|
51,489
|
|
$
|
1.85
|
|
Effect of Dilutive Securities:
|
|
|
|
|
|
|
||||||||||
Dilutive effect of potential common shares issuable
|
$
|
—
|
|
—
|
|
|
16
|
|
399
|
|
|
|||||
Diluted:
|
|
|
|
|
|
|
||||||||||
Net income attributable to common stock
|
$
|
(363,219
|
)
|
61,727
|
|
$
|
(5.88
|
)
|
$
|
95,097
|
|
51,888
|
|
$
|
1.83
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2015
|
2014
|
|
2015
|
2014
|
||||||||
General and administrative expenses
|
$
|
4,402
|
|
$
|
2,069
|
|
|
$
|
13,659
|
|
$
|
5,387
|
|
Equity-based compensation capitalized pursuant to full cost method of accounting for oil and natural gas properties
|
1,534
|
|
2,043
|
|
|
5,125
|
|
4,758
|
|
|
|
Weighted Average
|
|
||||||
|
|
Exercise
|
Remaining
|
Intrinsic
|
|||||
|
Options
|
Price
|
Term
|
Value
|
|||||
|
|
|
(in years)
|
(in thousands)
|
|||||
Outstanding at December 31, 2014
|
313,105
|
|
$
|
18.29
|
|
|
|
||
Exercised
|
(150,605
|
)
|
$
|
18.05
|
|
|
|
||
Outstanding at September 30, 2015
|
162,500
|
|
$
|
18.51
|
|
1.29
|
$
|
7,489
|
|
Vested and Expected to Vest at September 30, 2015
|
162,500
|
|
$
|
18.51
|
|
1.29
|
$
|
7,489
|
|
Exercisable at September 30, 2015
|
118,500
|
|
$
|
17.50
|
|
1.03
|
$
|
5,581
|
|
|
|
Weighted Average
|
|||
|
Restricted Stock
|
Grant-Date
|
|||
|
Units
|
Fair Value
|
|||
Unvested at December 31, 2014
|
167,291
|
|
$
|
49.99
|
|
Granted
|
98,664
|
|
$
|
68.46
|
|
Vested
|
(139,671
|
)
|
$
|
43.32
|
|
Forfeited
|
(1,954
|
)
|
$
|
74.57
|
|
Unvested at September 30, 2015
|
124,330
|
|
$
|
61.74
|
|
|
|
2015
|
2014
|
||||
Grant-date fair value
|
$
|
137.14
|
|
$
|
125.63
|
|
|
Risk-free rate
|
0.49
|
%
|
0.30
|
%
|
|||
Company volatility
|
43.36
|
%
|
39.60
|
%
|
|
|
Performance
|
Weighted Average
|
|||
|
|
Restricted Stock
|
Grant-Date
|
|||
|
|
Units
|
Fair Value
|
|||
Unvested at December 31, 2014
|
79,150
|
|
$
|
125.63
|
|
|
Granted
|
90,249
|
|
$
|
137.14
|
|
|
Unvested at September 30, 2015
(1)
|
169,399
|
|
$
|
131.76
|
|
(1)
|
A maximum of
338,798
units could be awarded based upon the Company’s final TSR ranking.
|
|
2014
|
||
Grant-date fair value
|
$
|
4.24
|
|
Expected volatility
|
36.0
|
%
|
|
Expected dividend yield
|
5.9
|
%
|
|
Expected term (in years)
|
3.0
|
|
|
Risk-free rate
|
0.99
|
%
|
|
|
Weighted Average
|
|
||||||
|
Unit
|
Exercise
|
Remaining
|
Intrinsic
|
|||||
|
Options
|
Price
|
Term
|
Value
|
|||||
|
|
|
(in years)
|
(in thousands)
|
|||||
Outstanding at December 31, 2014
|
2,500,000
|
|
$
|
26.00
|
|
|
|
||
Granted
|
—
|
|
$
|
—
|
|
|
|
||
Outstanding at September 30, 2015
|
2,500,000
|
|
$
|
—
|
|
1.75
|
$
|
—
|
|
Vested and Expected to Vest at September 30, 2015
|
2,500,000
|
|
$
|
—
|
|
1.75
|
$
|
—
|
|
Exercisable at September 30, 2015
|
—
|
|
$
|
—
|
|
0
|
$
|
—
|
|
|
|
Weighted Average
|
|||
|
Phantom
|
Grant-Date
|
|||
|
Units
|
Fair Value
|
|||
Unvested at December 31, 2014
|
17,776
|
|
$
|
19.51
|
|
Granted
|
24,690
|
|
$
|
15.48
|
|
Vested
|
(17,118
|
)
|
$
|
17.57
|
|
Unvested at September 30, 2015
|
25,348
|
|
$
|
16.89
|
|
Date of Amendment
|
Reason for Amendment
|
Current Monthly Base Rent
|
New Monthly Base Rent or Rent for Additional Space
|
Approx. Annual Increase of Monthly Base Rent
|
Second quarter 2014
|
Lease additional space
|
$25,000
|
$27,000
|
N/A
|
Fourth quarter 2014
(1)
|
Lease additional space
|
$27,000
|
$53,000
|
4%
|
November 2014
(2)(3)
|
Extend the term
|
N/A
|
N/A
|
N/A
|
April 2015
|
Lease additional space
|
N/A
|
$23,000
|
N/A
|
June 2015
|
Lease additional space
|
N/A
|
$22,000
|
2%
|
(1)
|
The monthly rent will continue to increase approximately
4%
annually on June 1 of each year during the remainder of the lease term.
|
(2)
|
The lease was amended to extend the term of the lease for an additional
10
-year period.
|
(3)
|
Upon commencement of the extension in June 2016, the monthly base rent will increase to
$94,000
, with an increase of approximately
2%
annually.
|
Crude Oil—Argus Louisiana Light Sweet Fixed Price Swap
|
||||
Production Period
|
Volume (Bbls)
|
Fixed Swap Price
|
||
October - December 2015
|
276,000
|
|
90.99
|
|
|
|
|
||
Crude Oil—NYMEX West Texas Intermediate Fixed Price Swap
|
||||
Production Period
|
Volume (Bbls)
|
Fixed Swap Price
|
||
October - December 2015
|
460,000
|
|
84.10
|
|
|
|
|
||
Crude Oil—Inter–Continental Exchange Brent Fixed Price Swap
|
||||
Production Period
|
Volume (Bbls)
|
Fixed Swap Price
|
||
October - December 2015
|
184,000
|
|
88.78
|
|
January - February 2016
|
91,000
|
|
88.72
|
|
|
September 30, 2015
|
December 31, 2014
|
||||
|
(in thousands)
|
|||||
Gross amounts of recognized assets
|
$
|
40,009
|
|
$
|
117,541
|
|
Gross amounts offset in the Consolidated Balance Sheet
|
—
|
|
—
|
|
||
Net amounts of assets presented in the Consolidated Balance Sheet
|
$
|
40,009
|
|
$
|
117,541
|
|
|
September 30,
|
December 31,
|
||||
|
2015
|
2014
|
||||
|
(in thousands)
|
|||||
Current Assets: Derivative instruments
|
$
|
40,009
|
|
$
|
115,607
|
|
Noncurrent Assets: Derivative instruments
|
—
|
|
1,934
|
|
||
Total Assets
|
$
|
40,009
|
|
$
|
117,541
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2015
|
2014
|
|
2015
|
2014
|
||||||||
|
(in thousands)
|
||||||||||||
Change in fair value of open non-hedge derivative instruments
|
$
|
(7,901
|
)
|
$
|
16,440
|
|
|
$
|
(77,532
|
)
|
$
|
5,630
|
|
Gain (loss) on settlement of non-hedge derivative instruments
|
35,504
|
|
(1,531
|
)
|
|
104,366
|
|
(6,207
|
)
|
||||
Gain (loss) on derivative instruments
|
$
|
27,603
|
|
$
|
14,909
|
|
|
$
|
26,834
|
|
$
|
(577
|
)
|
|
September 30, 2015
|
December 31, 2014
|
||||
|
(in thousands)
|
|||||
Fixed price swaps:
|
|
|
||||
Quoted prices in active markets level 1
|
$
|
—
|
|
$
|
—
|
|
Significant other observable inputs level 2
|
40,009
|
|
117,541
|
|
||
Significant unobservable inputs level 3
|
—
|
|
—
|
|
||
Total
|
$
|
40,009
|
|
$
|
117,541
|
|
|
September 30, 2015
|
December 31, 2014
|
||||||||||
|
Carrying
|
|
Carrying
|
|
||||||||
|
Amount
|
Fair Value
|
Amount
|
Fair Value
|
||||||||
|
(in thousands)
|
|||||||||||
Debt:
|
|
|
|
|
||||||||
Revolving credit facility
|
$
|
10,000
|
|
$
|
10,000
|
|
$
|
223,500
|
|
$
|
223,500
|
|
7.625% Senior Notes due 2021
|
450,000
|
|
474,750
|
|
450,000
|
|
440,438
|
|
||||
Partnership revolving credit facility
|
29,000
|
|
29,000
|
|
—
|
|
—
|
|
Year Ending December 31,
|
Drilling Rig Commitments
|
Office and Equipment Leases
|
|||||
|
(in thousands)
|
||||||
2016
|
$
|
27,317
|
|
$
|
1,743
|
|
|
2017
|
19,892
|
|
2,012
|
|
|||
2018
|
13,031
|
|
1,932
|
|
|||
2019
|
—
|
|
1,797
|
|
|||
2020
|
—
|
|
1,618
|
|
|||
Thereafter
|
—
|
|
9,337
|
|
|||
Total
|
$
|
60,240
|
|
$
|
18,439
|
|
Condensed Consolidated Balance Sheet
|
|||||||||||||||||||
September 30, 2015
|
|||||||||||||||||||
(In thousands)
|
|||||||||||||||||||
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
227
|
|
|
$
|
38,649
|
|
|
$
|
4,951
|
|
|
$
|
—
|
|
|
$
|
43,827
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
500
|
|
|||||
Accounts receivable
|
9
|
|
|
72,635
|
|
|
10,596
|
|
|
2
|
|
|
83,242
|
|
|||||
Intercompany receivable
|
2,248,015
|
|
|
2,980,548
|
|
|
—
|
|
|
(5,228,563
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
2,602
|
|
|
—
|
|
|
—
|
|
|
2,602
|
|
|||||
Other current assets
|
497
|
|
|
42,318
|
|
|
453
|
|
|
—
|
|
|
43,268
|
|
|||||
Total current assets
|
2,248,748
|
|
|
3,136,752
|
|
|
16,500
|
|
|
(5,228,561
|
)
|
|
173,439
|
|
|||||
Property and equipment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas properties, at cost, based on the full cost method of accounting
|
—
|
|
|
3,306,760
|
|
|
543,304
|
|
|
—
|
|
|
3,850,064
|
|
|||||
Pipeline and gas gathering assets
|
—
|
|
|
7,176
|
|
|
—
|
|
|
—
|
|
|
7,176
|
|
|||||
Other property and equipment
|
—
|
|
|
48,913
|
|
|
—
|
|
|
—
|
|
|
48,913
|
|
|||||
Accumulated depletion, depreciation, amortization and impairment
|
—
|
|
|
(1,089,767
|
)
|
|
(59,386
|
)
|
|
1,217
|
|
|
(1,147,936
|
)
|
|||||
Net property and equipment
|
—
|
|
|
2,273,082
|
|
|
483,918
|
|
|
1,217
|
|
|
2,758,217
|
|
|||||
Investment in subsidiaries
|
274,184
|
|
|
—
|
|
|
—
|
|
|
(274,184
|
)
|
|
—
|
|
|||||
Other assets
|
13,773
|
|
|
10,259
|
|
|
35,866
|
|
|
—
|
|
|
59,898
|
|
|||||
Total assets
|
$
|
2,536,705
|
|
|
$
|
5,420,093
|
|
|
$
|
536,284
|
|
|
$
|
(5,501,528
|
)
|
|
$
|
2,991,554
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable-trade
|
$
|
—
|
|
|
$
|
32,010
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,010
|
|
Intercompany payable
|
2
|
|
|
5,228,559
|
|
|
—
|
|
|
(5,228,561
|
)
|
|
—
|
|
|||||
Other current liabilities
|
30,292
|
|
|
135,766
|
|
|
2,104
|
|
|
—
|
|
|
168,162
|
|
|||||
Total current liabilities
|
30,294
|
|
|
5,396,335
|
|
|
2,104
|
|
|
(5,228,561
|
)
|
|
200,172
|
|
|||||
Long-term debt
|
450,000
|
|
|
10,000
|
|
|
29,000
|
|
|
—
|
|
|
489,000
|
|
|||||
Asset retirement obligations
|
—
|
|
|
12,662
|
|
|
—
|
|
|
—
|
|
|
12,662
|
|
|||||
Total liabilities
|
480,294
|
|
|
5,418,997
|
|
|
31,104
|
|
|
(5,228,561
|
)
|
|
701,834
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Stockholders’ equity:
|
2,056,411
|
|
|
1,096
|
|
|
505,180
|
|
|
(506,276
|
)
|
|
2,056,411
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
233,309
|
|
|
233,309
|
|
|||||
Total equity
|
2,056,411
|
|
|
1,096
|
|
|
505,180
|
|
|
(272,967
|
)
|
|
2,289,720
|
|
|||||
Total liabilities and equity
|
$
|
2,536,705
|
|
|
$
|
5,420,093
|
|
|
$
|
536,284
|
|
|
$
|
(5,501,528
|
)
|
|
$
|
2,991,554
|
|
Condensed Consolidated Balance Sheet
|
||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
6
|
|
|
$
|
15,067
|
|
|
$
|
15,110
|
|
|
$
|
—
|
|
|
$
|
30,183
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
500
|
|
|||||
Accounts receivable
|
|
—
|
|
|
85,752
|
|
|
8,239
|
|
|
2
|
|
|
93,993
|
|
|||||
Accounts receivable - related party
|
|
—
|
|
|
4,001
|
|
|
—
|
|
|
—
|
|
|
4,001
|
|
|||||
Intercompany receivable
|
|
1,658,215
|
|
|
2,167,434
|
|
|
—
|
|
|
(3,825,649
|
)
|
|
—
|
|
|||||
Inventories
|
|
—
|
|
|
2,827
|
|
|
—
|
|
|
—
|
|
|
2,827
|
|
|||||
Other current assets
|
|
562
|
|
|
119,392
|
|
|
253
|
|
|
—
|
|
|
120,207
|
|
|||||
Total current assets
|
|
1,658,783
|
|
|
2,394,473
|
|
|
24,102
|
|
|
(3,825,647
|
)
|
|
251,711
|
|
|||||
Property and equipment
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas properties, at cost, based on the full cost method of accounting
|
|
—
|
|
|
2,607,513
|
|
|
511,084
|
|
|
—
|
|
|
3,118,597
|
|
|||||
Pipeline and gas gathering assets
|
|
—
|
|
|
7,174
|
|
|
—
|
|
|
—
|
|
|
7,174
|
|
|||||
Other property and equipment
|
|
—
|
|
|
48,180
|
|
|
—
|
|
|
—
|
|
|
48,180
|
|
|||||
Accumulated depletion, depreciation, amortization and impairment
|
|
—
|
|
|
(351,200
|
)
|
|
(32,799
|
)
|
|
1,855
|
|
|
(382,144
|
)
|
|||||
|
|
—
|
|
|
2,311,667
|
|
|
478,285
|
|
|
1,855
|
|
|
2,791,807
|
|
|||||
Investment in subsidiaries
|
|
839,217
|
|
|
—
|
|
|
—
|
|
|
(839,217
|
)
|
|
—
|
|
|||||
Other assets
|
|
9,155
|
|
|
7,793
|
|
|
35,015
|
|
|
—
|
|
|
51,963
|
|
|||||
Total assets
|
|
$
|
2,507,155
|
|
|
$
|
4,713,933
|
|
|
$
|
537,402
|
|
|
$
|
(4,663,009
|
)
|
|
$
|
3,095,481
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable-trade
|
|
$
|
—
|
|
|
$
|
26,224
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
26,230
|
|
Intercompany payable
|
|
95,362
|
|
|
3,730,287
|
|
|
—
|
|
|
(3,825,649
|
)
|
|
—
|
|
|||||
Other current liabilities
|
|
49,190
|
|
|
189,264
|
|
|
2,045
|
|
|
—
|
|
|
240,499
|
|
|||||
Total current liabilities
|
|
144,552
|
|
|
3,945,775
|
|
|
2,051
|
|
|
(3,825,649
|
)
|
|
266,729
|
|
|||||
Long-term debt
|
|
450,000
|
|
|
223,500
|
|
|
—
|
|
|
—
|
|
|
673,500
|
|
|||||
Asset retirement obligations
|
|
—
|
|
|
8,447
|
|
|
—
|
|
|
—
|
|
|
8,447
|
|
|||||
Deferred income taxes
|
|
161,592
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
161,592
|
|
|||||
Total liabilities
|
|
756,144
|
|
|
4,177,722
|
|
|
2,051
|
|
|
(3,825,649
|
)
|
|
1,110,268
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Stockholders’ equity:
|
|
1,751,011
|
|
|
536,211
|
|
|
535,351
|
|
|
(1,071,562
|
)
|
|
1,751,011
|
|
|||||
Noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
234,202
|
|
|
234,202
|
|
|||||
Total equity
|
|
1,751,011
|
|
|
536,211
|
|
|
535,351
|
|
|
(837,360
|
)
|
|
1,985,213
|
|
|||||
Total liabilities and equity
|
|
$
|
2,507,155
|
|
|
$
|
4,713,933
|
|
|
$
|
537,402
|
|
|
$
|
(4,663,009
|
)
|
|
$
|
3,095,481
|
|
Condensed Consolidated Statement of Operations
|
||||||||||||||||||||
Three Months Ended September 30, 2015
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil sales
|
|
$
|
—
|
|
|
$
|
84,002
|
|
|
$
|
—
|
|
|
$
|
17,305
|
|
|
$
|
101,307
|
|
Natural gas sales
|
|
—
|
|
|
4,905
|
|
|
—
|
|
|
768
|
|
|
5,673
|
|
|||||
Natural gas liquid sales
|
|
—
|
|
|
4,262
|
|
|
—
|
|
|
704
|
|
|
4,966
|
|
|||||
Royalty income
|
|
—
|
|
|
—
|
|
|
18,777
|
|
|
(18,777
|
)
|
|
—
|
|
|||||
Total revenues
|
|
—
|
|
|
93,169
|
|
|
18,777
|
|
|
—
|
|
|
111,946
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating expenses
|
|
—
|
|
|
22,189
|
|
|
—
|
|
|
—
|
|
|
22,189
|
|
|||||
Production and ad valorem taxes
|
|
—
|
|
|
7,280
|
|
|
1,686
|
|
|
—
|
|
|
8,966
|
|
|||||
Gathering and transportation
|
|
—
|
|
|
1,521
|
|
|
167
|
|
|
—
|
|
|
1,688
|
|
|||||
Depreciation, depletion and amortization
|
|
—
|
|
|
43,655
|
|
|
8,737
|
|
|
(17
|
)
|
|
52,375
|
|
|||||
Impairment expense
|
|
—
|
|
|
273,737
|
|
|
—
|
|
|
—
|
|
|
273,737
|
|
|||||
General and administrative expenses
|
|
4,020
|
|
|
1,864
|
|
|
1,642
|
|
|
—
|
|
|
7,526
|
|
|||||
Asset retirement obligation accretion expense
|
|
—
|
|
|
238
|
|
|
—
|
|
|
—
|
|
|
238
|
|
|||||
Total costs and expenses
|
|
4,020
|
|
|
350,484
|
|
|
12,232
|
|
|
(17
|
)
|
|
366,719
|
|
|||||
Income (loss) from operations
|
|
(4,020
|
)
|
|
(257,315
|
)
|
|
6,545
|
|
|
17
|
|
|
(254,773
|
)
|
|||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(8,914
|
)
|
|
(1,361
|
)
|
|
(358
|
)
|
|
—
|
|
|
(10,633
|
)
|
|||||
Other income
|
|
—
|
|
|
92
|
|
|
168
|
|
|
—
|
|
|
260
|
|
|||||
Other income - related party
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||
Gain on derivative instruments, net
|
|
—
|
|
|
27,603
|
|
|
—
|
|
|
—
|
|
|
27,603
|
|
|||||
Total other income (expense), net
|
|
(8,914
|
)
|
|
26,374
|
|
|
(190
|
)
|
|
—
|
|
|
17,270
|
|
|||||
Income (loss) before income taxes
|
|
(12,934
|
)
|
|
(230,941
|
)
|
|
6,355
|
|
|
17
|
|
|
(237,503
|
)
|
|||||
Benefit from income taxes
|
|
(81,461
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(81,461
|
)
|
|||||
Net income (loss)
|
|
68,527
|
|
|
(230,941
|
)
|
|
6,355
|
|
|
17
|
|
|
(156,042
|
)
|
|||||
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
739
|
|
|
739
|
|
|||||
Net income (loss) attributable to Diamondback Energy, Inc.
|
|
$
|
68,527
|
|
|
$
|
(230,941
|
)
|
|
$
|
6,355
|
|
|
$
|
(722
|
)
|
|
$
|
(156,781
|
)
|
Condensed Consolidated Statement of Operations
|
||||||||||||||||||||
Three Months Ended September 30, 2014
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil sales
|
|
$
|
—
|
|
|
$
|
105,202
|
|
|
$
|
—
|
|
|
$
|
21,204
|
|
|
$
|
126,406
|
|
Natural gas sales
|
|
—
|
|
|
3,824
|
|
|
—
|
|
|
888
|
|
|
4,712
|
|
|||||
Natural gas liquid sales
|
|
—
|
|
|
6,880
|
|
|
—
|
|
|
1,129
|
|
|
8,009
|
|
|||||
Royalty income
|
|
—
|
|
|
—
|
|
|
22,767
|
|
|
(22,767
|
)
|
|
—
|
|
|||||
Total revenues
|
|
—
|
|
|
115,906
|
|
|
22,767
|
|
|
454
|
|
|
139,127
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating expenses
|
|
—
|
|
|
13,805
|
|
|
—
|
|
|
—
|
|
|
13,805
|
|
|||||
Production and ad valorem taxes
|
|
—
|
|
|
7,475
|
|
|
1,460
|
|
|
19
|
|
|
8,954
|
|
|||||
Gathering and transportation
|
|
—
|
|
|
866
|
|
|
—
|
|
|
(6
|
)
|
|
860
|
|
|||||
Depreciation, depletion and amortization
|
|
—
|
|
|
38,028
|
|
|
9,025
|
|
|
(1,683
|
)
|
|
45,370
|
|
|||||
General and administrative expenses
|
|
4,063
|
|
|
1,039
|
|
|
2,143
|
|
|
(750
|
)
|
|
6,495
|
|
|||||
Asset retirement obligation accretion expense
|
|
—
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|||||
Total costs and expenses
|
|
4,063
|
|
|
61,340
|
|
|
12,628
|
|
|
(2,420
|
)
|
|
75,611
|
|
|||||
Income (loss) from operations
|
|
(4,063
|
)
|
|
54,566
|
|
|
10,139
|
|
|
2,874
|
|
|
63,516
|
|
|||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(8,821
|
)
|
|
(708
|
)
|
|
(317
|
)
|
|
—
|
|
|
(9,846
|
)
|
|||||
Other income
|
|
6
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
17
|
|
|||||
Other income - intercompany
|
|
—
|
|
|
781
|
|
|
—
|
|
|
(750
|
)
|
|
31
|
|
|||||
Other expense
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Other expense - intercompany
|
|
—
|
|
|
—
|
|
|
(750
|
)
|
|
750
|
|
|
—
|
|
|||||
Gain on derivative instruments, net
|
|
—
|
|
|
14,909
|
|
|
—
|
|
|
—
|
|
|
14,909
|
|
|||||
Total other income (expense), net
|
|
(8,815
|
)
|
|
14,974
|
|
|
(1,056
|
)
|
|
—
|
|
|
5,103
|
|
|||||
Income (loss) before income taxes
|
|
(12,878
|
)
|
|
69,540
|
|
|
9,083
|
|
|
2,874
|
|
|
68,619
|
|
|||||
Provision for income taxes
|
|
23,978
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,978
|
|
|||||
Net income (loss)
|
|
(36,856
|
)
|
|
69,540
|
|
|
9,083
|
|
|
2,874
|
|
|
44,641
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
902
|
|
|
902
|
|
|||||
Net income (loss) attributable to Diamondback Energy, Inc.
|
|
$
|
(36,856
|
)
|
|
$
|
69,540
|
|
|
$
|
9,083
|
|
|
$
|
1,972
|
|
|
$
|
43,739
|
|
Condensed Consolidated Statement of Operations
|
||||||||||||||||||||
Nine Months Ended September 30, 2015
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil sales
|
|
$
|
—
|
|
|
$
|
250,704
|
|
|
$
|
—
|
|
|
$
|
51,146
|
|
|
$
|
301,850
|
|
Natural gas sales
|
|
—
|
|
|
12,580
|
|
|
—
|
|
|
1,851
|
|
|
14,431
|
|
|||||
Natural gas liquid sales
|
|
—
|
|
|
14,185
|
|
|
—
|
|
|
1,944
|
|
|
16,129
|
|
|||||
Royalty income
|
|
—
|
|
|
—
|
|
|
54,941
|
|
|
(54,941
|
)
|
|
—
|
|
|||||
Total revenues
|
|
—
|
|
|
277,469
|
|
|
54,941
|
|
|
—
|
|
|
332,410
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating expenses
|
|
—
|
|
|
65,117
|
|
|
—
|
|
|
—
|
|
|
65,117
|
|
|||||
Production and ad valorem taxes
|
|
—
|
|
|
20,605
|
|
|
4,431
|
|
|
—
|
|
|
25,036
|
|
|||||
Gathering and transportation
|
|
—
|
|
|
4,176
|
|
|
167
|
|
|
—
|
|
|
4,343
|
|
|||||
Depreciation, depletion and amortization
|
|
—
|
|
|
141,923
|
|
|
26,587
|
|
|
638
|
|
|
169,148
|
|
|||||
Impairment expense
|
|
—
|
|
|
597,188
|
|
|
—
|
|
|
—
|
|
|
597,188
|
|
|||||
General and administrative expenses
|
|
12,773
|
|
|
6,172
|
|
|
4,501
|
|
|
—
|
|
|
23,446
|
|
|||||
Asset retirement obligation accretion expense
|
|
—
|
|
|
588
|
|
|
—
|
|
|
—
|
|
|
588
|
|
|||||
Total costs and expenses
|
|
12,773
|
|
|
835,769
|
|
|
35,686
|
|
|
638
|
|
|
884,866
|
|
|||||
Income (loss) from operations
|
|
(12,773
|
)
|
|
(558,300
|
)
|
|
19,255
|
|
|
(638
|
)
|
|
(552,456
|
)
|
|||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(26,735
|
)
|
|
(3,936
|
)
|
|
(733
|
)
|
|
—
|
|
|
(31,404
|
)
|
|||||
Other income
|
|
1
|
|
|
169
|
|
|
960
|
|
|
—
|
|
|
1,130
|
|
|||||
Other income - related party
|
|
—
|
|
|
118
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|||||
Gain on derivative instruments, net
|
|
—
|
|
|
26,834
|
|
|
—
|
|
|
—
|
|
|
26,834
|
|
|||||
Total other income (expense), net
|
|
(26,734
|
)
|
|
23,185
|
|
|
227
|
|
|
—
|
|
|
(3,322
|
)
|
|||||
Income (loss) before income taxes
|
|
(39,507
|
)
|
|
(535,115
|
)
|
|
19,482
|
|
|
(638
|
)
|
|
(555,778
|
)
|
|||||
Benefit from income taxes
|
|
(194,823
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(194,823
|
)
|
|||||
Net income (loss)
|
|
155,316
|
|
|
(535,115
|
)
|
|
19,482
|
|
|
(638
|
)
|
|
(360,955
|
)
|
|||||
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,264
|
|
|
2,264
|
|
|||||
Net income (loss) attributable to Diamondback Energy, Inc.
|
|
$
|
155,316
|
|
|
$
|
(535,115
|
)
|
|
$
|
19,482
|
|
|
$
|
(2,902
|
)
|
|
$
|
(363,219
|
)
|
Condensed Consolidated Statement of Operations
|
||||||||||||||||||||
Nine Months Ended September 30, 2014
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil sales
|
|
$
|
—
|
|
|
$
|
280,024
|
|
|
$
|
—
|
|
|
$
|
51,422
|
|
|
$
|
331,446
|
|
Natural gas sales
|
|
—
|
|
|
10,394
|
|
|
—
|
|
|
1,982
|
|
|
12,376
|
|
|||||
Natural gas liquid sales
|
|
—
|
|
|
17,394
|
|
|
—
|
|
|
2,919
|
|
|
20,313
|
|
|||||
Royalty income
|
|
—
|
|
|
—
|
|
|
55,869
|
|
|
(55,869
|
)
|
|
—
|
|
|||||
Total revenues
|
|
—
|
|
|
307,812
|
|
|
55,869
|
|
|
454
|
|
|
364,135
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating expenses
|
|
—
|
|
|
32,216
|
|
|
—
|
|
|
—
|
|
|
32,216
|
|
|||||
Production and ad valorem taxes
|
|
—
|
|
|
19,540
|
|
|
3,791
|
|
|
19
|
|
|
23,350
|
|
|||||
Gathering and transportation
|
|
—
|
|
|
2,151
|
|
|
—
|
|
|
(6
|
)
|
|
2,145
|
|
|||||
Depreciation, depletion and amortization
|
|
—
|
|
|
98,445
|
|
|
19,602
|
|
|
(1,683
|
)
|
|
116,364
|
|
|||||
General and administrative expenses
|
|
11,476
|
|
|
1,832
|
|
|
2,584
|
|
|
(906
|
)
|
|
14,986
|
|
|||||
Asset retirement obligation accretion expense
|
|
—
|
|
|
303
|
|
|
—
|
|
|
—
|
|
|
303
|
|
|||||
Total costs and expenses
|
|
11,476
|
|
|
154,487
|
|
|
25,977
|
|
|
(2,576
|
)
|
|
189,364
|
|
|||||
Income (loss) from operations
|
|
(11,476
|
)
|
|
153,325
|
|
|
29,892
|
|
|
3,030
|
|
|
174,771
|
|
|||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income - intercompany
|
|
10,755
|
|
|
—
|
|
|
—
|
|
|
(10,755
|
)
|
|
—
|
|
|||||
Interest expense
|
|
(21,365
|
)
|
|
(2,408
|
)
|
|
(317
|
)
|
|
—
|
|
|
(24,090
|
)
|
|||||
Interest expense - intercompany
|
|
—
|
|
|
—
|
|
|
(10,755
|
)
|
|
10,755
|
|
|
—
|
|
|||||
Other income
|
|
6
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
17
|
|
|||||
Other income - related party
|
|
—
|
|
|
997
|
|
|
—
|
|
|
(906
|
)
|
|
91
|
|
|||||
Other expense
|
|
—
|
|
|
(1,416
|
)
|
|
—
|
|
|
—
|
|
|
(1,416
|
)
|
|||||
Other expense - intercompany
|
|
—
|
|
|
—
|
|
|
(906
|
)
|
|
906
|
|
|
—
|
|
|||||
Loss on derivative instruments, net
|
|
—
|
|
|
(577
|
)
|
|
—
|
|
|
—
|
|
|
(577
|
)
|
|||||
Total other income (expense), net
|
|
(10,604
|
)
|
|
(3,404
|
)
|
|
(11,967
|
)
|
|
—
|
|
|
(25,975
|
)
|
|||||
Income (loss) before income taxes
|
|
(22,080
|
)
|
|
149,921
|
|
|
17,925
|
|
|
3,030
|
|
|
148,796
|
|
|||||
Provision for income taxes
|
|
52,742
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,742
|
|
|||||
Net income (loss)
|
|
(74,822
|
)
|
|
149,921
|
|
|
17,925
|
|
|
3,030
|
|
|
96,054
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
973
|
|
|
973
|
|
|||||
Net income (loss) attributable to Diamondback Energy, Inc.
|
|
$
|
(74,822
|
)
|
|
$
|
149,921
|
|
|
$
|
17,925
|
|
|
$
|
2,057
|
|
|
$
|
95,081
|
|
Condensed Consolidated Statement of Cash Flows
|
||||||||||||||||||||
Nine Months Ended September 30, 2015
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided (used in) by operating activities
|
|
$
|
(19,081
|
)
|
|
$
|
312,712
|
|
|
$
|
45,973
|
|
|
$
|
—
|
|
|
$
|
339,604
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to oil and natural gas properties
|
|
—
|
|
|
(326,538
|
)
|
|
71
|
|
|
—
|
|
|
(326,467
|
)
|
|||||
Acquisition of leasehold interests
|
|
—
|
|
|
(425,507
|
)
|
|
—
|
|
|
—
|
|
|
(425,507
|
)
|
|||||
Acquisition of mineral interests
|
|
—
|
|
|
—
|
|
|
(32,291
|
)
|
|
—
|
|
|
(32,291
|
)
|
|||||
Purchase of other property and equipment
|
|
—
|
|
|
(992
|
)
|
|
—
|
|
|
—
|
|
|
(992
|
)
|
|||||
Proceeds from sale of property and equipment
|
|
—
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|||||
Equity investments
|
|
—
|
|
|
(2,702
|
)
|
|
—
|
|
|
—
|
|
|
(2,702
|
)
|
|||||
Intercompany transfers
|
|
(147,214
|
)
|
|
147,214
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other investing activities
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Net cash provided by (used in) investing activities
|
|
(147,214
|
)
|
|
(608,430
|
)
|
|
(32,220
|
)
|
|
—
|
|
|
(787,864
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from borrowing on credit facility
|
|
—
|
|
|
363,501
|
|
|
29,000
|
|
|
—
|
|
|
392,501
|
|
|||||
Repayment on credit facility
|
|
—
|
|
|
(577,001
|
)
|
|
—
|
|
|
—
|
|
|
(577,001
|
)
|
|||||
Proceeds from public offerings
|
|
650,688
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
650,688
|
|
|||||
Distribution from subsidiary
|
|
46,496
|
|
|
—
|
|
|
—
|
|
|
(46,496
|
)
|
|
—
|
|
|||||
Distribution to non-controlling interest
|
|
—
|
|
|
—
|
|
|
(52,609
|
)
|
|
46,496
|
|
|
(6,113
|
)
|
|||||
Intercompany transfers
|
|
(532,800
|
)
|
|
532,800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other financing activities
|
|
2,132
|
|
|
—
|
|
|
(303
|
)
|
|
—
|
|
|
1,829
|
|
|||||
Net cash provided by (used in) financing activities
|
|
166,516
|
|
|
319,300
|
|
|
(23,912
|
)
|
|
—
|
|
|
461,904
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
|
221
|
|
|
23,582
|
|
|
(10,159
|
)
|
|
—
|
|
|
13,644
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
6
|
|
|
15,067
|
|
|
15,110
|
|
|
—
|
|
|
30,183
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
227
|
|
|
$
|
38,649
|
|
|
$
|
4,951
|
|
|
$
|
—
|
|
|
$
|
43,827
|
|
Condensed Consolidated Statement of Cash Flows
|
||||||||||||||||||||
Nine Months Ended September 30, 2014
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
Non–
|
|
|
|
|
||||||||||
|
|
|
|
Guarantor
|
|
Guarantor
|
|
|
|
|
||||||||||
|
|
Parent
|
|
Subsidiaries
|
|
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by operating activities
|
|
$
|
1,915
|
|
|
$
|
220,447
|
|
|
$
|
29,633
|
|
|
$
|
—
|
|
|
$
|
251,995
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to oil and natural gas properties
|
|
—
|
|
|
(307,144
|
)
|
|
(5,275
|
)
|
|
—
|
|
|
(312,419
|
)
|
|||||
Acquisition of leasehold interests
|
|
—
|
|
|
(840,482
|
)
|
|
—
|
|
|
—
|
|
|
(840,482
|
)
|
|||||
Acquisition of mineral interests
|
|
—
|
|
|
—
|
|
|
(57,688
|
)
|
|
—
|
|
|
(57,688
|
)
|
|||||
Purchase of other property and equipment
|
|
—
|
|
|
(43,215
|
)
|
|
—
|
|
|
—
|
|
|
(43,215
|
)
|
|||||
Cost method investment
|
|
—
|
|
|
—
|
|
|
(33,851
|
)
|
|
—
|
|
|
(33,851
|
)
|
|||||
Intercompany transfers
|
|
(631,100
|
)
|
|
631,100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other investing activities
|
|
—
|
|
|
(1,426
|
)
|
|
—
|
|
|
—
|
|
|
(1,426
|
)
|
|||||
Net cash used in investing activities
|
|
(631,100
|
)
|
|
(561,167
|
)
|
|
(96,814
|
)
|
|
—
|
|
|
(1,289,081
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from borrowing on credit facility
|
|
—
|
|
|
347,900
|
|
|
78,000
|
|
|
—
|
|
|
425,900
|
|
|||||
Repayment on credit facility
|
|
—
|
|
|
(217,900
|
)
|
|
(78,000
|
)
|
|
—
|
|
|
(295,900
|
)
|
|||||
Proceeds from public offerings
|
|
693,886
|
|
|
—
|
|
|
234,546
|
|
|
—
|
|
|
928,432
|
|
|||||
Distribution to parent
|
|
—
|
|
|
—
|
|
|
(148,760
|
)
|
|
—
|
|
|
(148,760
|
)
|
|||||
Distribution to subsidiary
|
|
148,760
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148,760
|
|
|||||
Intercompany transfers
|
|
(217,900
|
)
|
|
217,900
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other financing activities
|
|
10,431
|
|
|
(825
|
)
|
|
(5,863
|
)
|
|
—
|
|
|
3,743
|
|
|||||
Net cash provided by (used in) financing activities
|
|
635,177
|
|
|
347,075
|
|
|
79,923
|
|
|
—
|
|
|
1,062,175
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
|
5,992
|
|
|
6,355
|
|
|
12,742
|
|
|
—
|
|
|
25,089
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
526
|
|
|
14,267
|
|
|
762
|
|
|
—
|
|
|
15,555
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
6,518
|
|
|
$
|
20,622
|
|
|
$
|
13,504
|
|
|
$
|
—
|
|
|
$
|
40,644
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2015
|
2014
|
|
2015
|
2014
|
||||||||
|
(in thousands, except Bbl, Mcf and BOE amounts)
|
||||||||||||
Revenues:
|
|
|
|
|
|
||||||||
Oil, natural gas and natural gas liquids revenues
|
$
|
111,946
|
|
$
|
139,127
|
|
|
$
|
332,410
|
|
$
|
364,135
|
|
Operating Expenses:
|
|
|
|
|
|
||||||||
Lease operating expenses
|
22,189
|
|
13,805
|
|
|
65,117
|
|
32,216
|
|
||||
Production and ad valorem taxes
|
8,966
|
|
8,954
|
|
|
25,036
|
|
23,350
|
|
||||
Gathering and transportation expense
|
1,688
|
|
860
|
|
|
4,343
|
|
2,145
|
|
||||
Depreciation, depletion and amortization
|
52,375
|
|
45,370
|
|
|
169,148
|
|
116,364
|
|
||||
Impairment of oil and gas properties
|
273,737
|
|
—
|
|
|
597,188
|
|
—
|
|
||||
General and administrative
|
7,526
|
|
6,495
|
|
|
23,446
|
|
14,986
|
|
||||
Asset retirement obligation accretion expense
|
238
|
|
127
|
|
|
588
|
|
303
|
|
||||
Total expenses
|
366,719
|
|
75,611
|
|
|
884,866
|
|
189,364
|
|
||||
Income (loss) from operations
|
(254,773
|
)
|
63,516
|
|
|
(552,456
|
)
|
174,771
|
|
||||
Net interest expense
|
(10,633
|
)
|
(9,846
|
)
|
|
(31,404
|
)
|
(24,090
|
)
|
||||
Other income
|
300
|
|
48
|
|
|
1,248
|
|
108
|
|
||||
Other expense
|
—
|
|
(8
|
)
|
|
—
|
|
(1,416
|
)
|
||||
Gain (loss) on derivative instruments, net
|
27,603
|
|
14,909
|
|
|
26,834
|
|
(577
|
)
|
||||
Total other income (expense), net
|
17,270
|
|
5,103
|
|
|
(3,322
|
)
|
(25,975
|
)
|
||||
Income (loss) before income taxes
|
(237,503
|
)
|
68,619
|
|
|
(555,778
|
)
|
148,796
|
|
||||
Income tax provision (benefit)
|
(81,461
|
)
|
23,978
|
|
|
(194,823
|
)
|
52,742
|
|
||||
Net income (loss)
|
(156,042
|
)
|
44,641
|
|
|
(360,955
|
)
|
96,054
|
|
||||
Less: Net income attributable to noncontrolling interest
|
739
|
|
902
|
|
|
2,264
|
|
973
|
|
||||
Net income (loss) attributable to Diamondback Energy, Inc.
|
$
|
(156,781
|
)
|
$
|
43,739
|
|
|
(363,219
|
)
|
95,081
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2015
|
2014
|
|
2015
|
2014
|
||||||||
|
(in thousands, except Bbl, Mcf and BOE amounts)
|
||||||||||||
Production Data:
|
|
|
|
|
|
||||||||
Oil (Bbls)
|
2,295,940
|
|
1,426,271
|
|
|
6,439,699
|
|
3,596,983
|
|
||||
Natural gas (Mcf)
|
2,122,248
|
|
1,201,296
|
|
|
5,524,138
|
|
2,899,097
|
|
||||
Natural gas liquids (Bbls)
|
485,871
|
|
272,013
|
|
|
1,259,777
|
|
661,160
|
|
||||
Combined volumes (BOE)
|
3,135,519
|
|
1,898,500
|
|
|
8,620,166
|
|
4,741,326
|
|
||||
Daily combined volumes (BOE/d)
|
34,082
|
|
20,636
|
|
|
31,576
|
|
17,367
|
|
||||
|
|
|
|
|
|
||||||||
Average Prices:
|
|
|
|
|
|
||||||||
Oil (per Bbl)
|
$
|
44.12
|
|
$
|
88.63
|
|
|
$
|
46.87
|
|
$
|
92.15
|
|
Natural gas (per Mcf)
|
2.67
|
|
3.92
|
|
|
2.61
|
|
4.27
|
|
||||
Natural gas liquids (per Bbl)
|
10.22
|
|
29.44
|
|
|
12.80
|
|
30.72
|
|
||||
Combined (per BOE)
|
35.70
|
|
73.28
|
|
|
38.56
|
|
76.80
|
|
||||
Oil, hedged($/Bbl)
(1)
|
59.59
|
|
87.55
|
|
|
63.08
|
|
90.42
|
|
||||
Average price, hedged($/BOE)
(1)
|
47.03
|
|
72.48
|
|
|
50.67
|
|
75.49
|
|
||||
|
|
|
|
|
|
||||||||
Average Costs (per BOE)
|
|
|
|
|
|
||||||||
Lease operating expense
|
$
|
7.08
|
|
$
|
7.27
|
|
|
$
|
7.55
|
|
$
|
6.79
|
|
Gathering and transportation expense
|
0.54
|
|
0.45
|
|
|
0.50
|
|
0.45
|
|
||||
Production and ad valorem taxes
|
2.86
|
|
4.72
|
|
|
2.90
|
|
4.92
|
|
||||
Production and ad valorem taxes as a % of sales
|
8.0
|
%
|
6.4
|
%
|
|
7.5
|
%
|
6.4
|
%
|
||||
Depreciation, depletion, and amortization
|
$
|
16.70
|
|
$
|
23.90
|
|
|
$
|
19.62
|
|
$
|
24.54
|
|
General and administrative
|
2.40
|
|
3.42
|
|
|
2.72
|
|
3.16
|
|
||||
Interest expense
|
3.39
|
|
5.19
|
|
|
3.64
|
|
5.08
|
|
||||
|
|
|
|
|
|
||||||||
Components of general and administrative expense:
|
|
|
|
|
|
||||||||
Non-cash stock based compensation, net of capitalized amounts
|
$
|
4,402
|
|
$
|
2,069
|
|
|
$
|
13,659
|
|
$
|
5,387
|
|
General and administrative cost per BOE excluding non-cash stock based compensation, net of capitalized amounts
|
$
|
1.00
|
|
$
|
2.33
|
|
|
$
|
1.14
|
|
$
|
2.03
|
|
(1)
|
Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices. Our calculation of such effects include realized gains and losses on cash settlements for commodity derivatives, which we do not designate for hedge accounting.
|
|
Change in prices
|
Production volumes
(1)
|
Total net dollar effect of change
|
||||||
|
|
|
(in thousands)
|
||||||
Effect of changes in price:
|
|
|
|
||||||
Oil
|
$
|
(44.51
|
)
|
2,295,940
|
|
$
|
(102,192
|
)
|
|
Natural gas liquids
|
(19.22
|
)
|
485,871
|
|
(9,338
|
)
|
|||
Natural gas
|
(1.25
|
)
|
2,122,248
|
|
(2,653
|
)
|
|||
Total revenues due to change in price
|
|
|
$
|
(114,183
|
)
|
||||
|
|
|
|
||||||
|
Change in production volumes
(1)
|
Prior period average prices
|
Total net dollar effect of change
|
||||||
|
|
|
(in thousands)
|
||||||
Effect of changes in production volumes:
|
|
|
|
||||||
Oil
|
869,669
|
|
$
|
88.63
|
|
$
|
77,096
|
|
|
Natural gas liquids
|
213,858
|
|
29.44
|
|
6,296
|
|
|||
Natural gas
|
920,952
|
|
3.92
|
|
3,610
|
|
|||
Total revenues due to change in production volumes
|
|
|
87,002
|
|
|||||
Total change in revenues
|
|
|
$
|
(27,181
|
)
|
(1)
|
Production volumes are presented in Bbls for oil and natural gas liquids and Mcf for natural gas
|
|
Three Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands, except BOE amounts)
|
|||||
Depletion of proved oil and natural gas properties
|
$
|
51,996
|
|
$
|
45,010
|
|
Depreciation of other property and equipment
|
379
|
|
360
|
|
||
Depreciation, depletion and amortization
|
$
|
52,375
|
|
$
|
45,370
|
|
|
|
|
||||
Oil and natural gas properties depreciation, depletion and amortization per BOE
|
$
|
16.58
|
|
$
|
23.71
|
|
Total depreciation, depletion and amortization per BOE
|
$
|
16.70
|
|
$
|
23.90
|
|
|
Change in prices
|
Production volumes
(1)
|
Total net dollar effect of change
|
||||||
|
|
|
(in thousands)
|
||||||
Effect of changes in price:
|
|
|
|
||||||
Oil
|
$
|
(45.28
|
)
|
6,439,699
|
|
$
|
(291,590
|
)
|
|
Natural gas liquids
|
$
|
(17.92
|
)
|
1,259,777
|
|
$
|
(22,575
|
)
|
|
Natural gas
|
$
|
(1.66
|
)
|
5,524,138
|
|
$
|
(9,170
|
)
|
|
Total revenues due to change in price
|
|
|
$
|
(323,335
|
)
|
||||
|
|
|
|
||||||
|
Change in production volumes
(1)
|
Prior period average prices
|
Total net dollar effect of change
|
||||||
|
|
|
(in thousands)
|
||||||
Effect of changes in production volumes:
|
|
|
|
||||||
Oil
|
2,842,716
|
|
$
|
92.15
|
|
$
|
262,011
|
|
|
Natural gas liquids
|
598,617
|
|
$
|
30.72
|
|
$
|
18,390
|
|
|
Natural gas
|
2,625,041
|
|
$
|
4.27
|
|
$
|
11,209
|
|
|
Total revenues due to change in production volumes
|
|
|
$
|
291,610
|
|
||||
Total change in revenues
|
|
|
$
|
(31,725
|
)
|
(1)
|
Production volumes are presented in Bbls for oil and natural gas liquids and Mcf for natural gas
|
|
Nine Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands, except BOE amounts)
|
|||||
Depletion of proved oil and natural gas properties
|
$
|
167,928
|
|
$
|
115,437
|
|
Depreciation of other property and equipment
|
1,220
|
|
927
|
|
||
Depreciation, depletion and amortization
|
$
|
169,148
|
|
$
|
116,364
|
|
|
|
|
||||
Oil and natural gas properties depreciation, depletion and amortization per BOE
|
$
|
19.50
|
|
$
|
24.39
|
|
Total depreciation, depletion and amortization per BOE
|
$
|
19.62
|
|
$
|
24.54
|
|
|
|
|
|
Nine Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands)
|
|||||
Net cash provided by operating activities
|
$
|
339,604
|
|
$
|
251,995
|
|
Net cash used in investing activities
|
(787,864
|
)
|
(1,289,081
|
)
|
||
Net cash provided by financing activities
|
461,904
|
|
1,062,175
|
|
||
Net change in cash
|
$
|
13,644
|
|
$
|
25,089
|
|
|
Nine Months Ended September 30,
|
|||||
|
2015
|
2014
|
||||
|
|
|
||||
|
(in thousands)
|
|||||
Drilling, completion and infrastructure
|
$
|
(326,469
|
)
|
$
|
(313,856
|
)
|
Acquisition of leasehold interests
|
(425,507
|
)
|
(840,482
|
)
|
||
Acquisition of mineral interests
|
(32,291
|
)
|
(57,688
|
)
|
||
Purchase of other property and equipment
|
(992
|
)
|
(43,215
|
)
|
||
Proceeds from sale of property and equipment
|
97
|
|
11
|
|
||
Equity investments
|
(2,702
|
)
|
(33,851
|
)
|
||
Net cash used in investing activities
|
$
|
(787,864
|
)
|
$
|
(1,289,081
|
)
|
Financial Covenant
|
|
Required Ratio
|
Ratio of total debt to EBITDAX
|
Not greater than 4.0 to 1.0
|
|
Ratio of current assets to liabilities, as defined in the credit agreement
|
Not less than 1.0 to 1.0
|
Financial Covenant
|
|
Required Ratio
|
Ratio of total debt to EBITDAX
(1)
|
Not greater than 4.0 to 1.0
|
|
Ratio of current assets to liabilities, as defined in the credit agreement
|
Not less than 1.0 to 1.0
|
(1)
|
EBITDAX is annualized for the four fiscal quarters ending on the last day of the fiscal quarter for which financial statements are available, beginning with the quarter ended September 30, 2014.
|
•
|
$285.0 million to $315.0 million will be spent on drilling and completing 60 to 70 gross (49 to 57 net) operated horizontal wells focused in Midland, Andrews, Upton, Martin and Dawson Counties;
|
•
|
$20.0 million to $30.0 million will be spent on infrastructure;
|
•
|
$20.0 million to $30.0 million will be spent on non-operated activity and other expenditures; and
|
•
|
an estimated $75.0 million for expenditures related to 2014 activity (net of expenditures from 2015 expected to be carried into 2016).
|
Exhibit Number
|
Description
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on November 16, 2012).
|
3.2
|
Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on November 16, 2012).
|
4.1
|
Specimen certificate for shares of common stock, par value $0.01 per share, of the Company (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Registration Statement on Form S-1, File No. 333-179502, filed by the Company with the SEC on August 20, 2012).
|
4.2
|
Registration Rights Agreement, dated as of October 11, 2012, by and between the Company and DB Energy Holdings LLC (incorporated by reference to Exhibit 4.2 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on November 16, 2012).
|
4.3
|
Investor Rights Agreement, dated as of October 11, 2012, by and between the Company and Gulfport Energy Corporation (incorporated by reference to Exhibit 4.3 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on November 16, 2012).
|
10.1*
|
Lease Amendment No. 11 effective July 31, 2014 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
10.2*
|
Lease Amendment No. 12 effective October 23, 2014 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
10.3*
|
Lease Amendment No. 13 effective October 30, 2014 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
10.4*
|
Lease Amendment No. 14 effective November 10, 2014 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
10.5*
|
Lease Amendment No. 15 effective November 10, 2014 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
10.6*
|
Lease Amendment No. 16 effective April 1, 2015 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
10.7*
|
Lease Amendment No. 17 effective June 1, 2015 to Lease Agreement dated as of April 19, 2011, as amended, by and between Fasken Midland, LLC and Diamondback E&P LLC.
|
31.1*
|
Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
|
31.2*
|
Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
|
32.1**
|
Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
32.2**
|
Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
101.INS*
|
XBRL Instance Document.
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase.
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB*
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith.
|
**
|
The certifications attached as Exhibit 32.1 and Exhibit 32.2 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
|
|
DIAMONDBACK ENERGY, INC.
|
|
|
|
Date:
|
November 5, 2015
|
/s/ Travis D. Stice
|
|
|
Travis D. Stice
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
Date:
|
November 5, 2015
|
/s/ Teresa L. Dick
|
|
|
Teresa L. Dick
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
1.
|
LEASED PREMISES
.
Effective August 1, 2014, Section 1.5 "
Leased Premises
" of the Lease Agreement shall be amended to add approximately 475 square feet of Net Rentable Area located on the twelfth (12
th
) floor of One Fasken Center as more fully diagramed on the floor plans attached hereto and made a part hereof as
Exhibit "B-2"
; ("Suite 1235 Expansion Space"). The term "Leased Premises" shall hereinafter mean and include the Suite 1235 Expansion Space. The Leased Premises, with the Suite 1235 Expansion Space, will then consist of a total of approximately 14,391 square feet of Net Rentable Area, which represents 3.41% of the total Net Rentable Area of the Building, such total Net Rentable Area of the Building being 421,546 square feet. Lessor and Lessee acknowledge and agree that the aforesaid description of the size and square footage of the Leased Premises and the Building are an approximation, which the parties agree is reasonable and payments made thereupon are not subject to dispute.
|
2.
|
LEASE TERM
.
The Lease Term for the Suite 1235 Expansion Space shall be for a period commencing on August 1, 2014, and expiring on May 31, 2016.
|
3.
|
BASE YEAR
.
The Base Year for Operating Expenses and Tax Expenses for the Suite 1235 Expansion Space shall be the calendar year 2014.
|
4.
|
RENT
.
The Base Rent for the Suite 1235 Expansion Space is as follows:
|
PERIOD
|
ANNUAL RATE PER SQ. FT.
|
MONTHLY BASE RENT
|
||||
8/1/2014 - 5/31/2015
|
$
|
29.00
|
|
$
|
1,147.92
|
|
6/1/2015 - 5/31/2016
|
$
|
29.75
|
|
$
|
1,177.60
|
|
5.
|
TENANT IMPROVEMENTS
. Lessee accepts the Suite 1235 Expansion Space on an "AS IS" basis, without any finish out allowance from Lessor to refurbish the Suite 1235 Expansion Space. Any alterations to the Suite 1235 Expansion Space shall be at Lessee's sole expense and responsibility.
|
6.
|
PARKING
. Effective August 1, 2014, Lessor agrees to provide one (1) additional parking spaces with respect to the Suite 1235 Expansion Space during the Term, in the designated areas, at the following rate per space per month plus applicable sales tax:
|
1
|
@$195.00 per space per month for Officer Reserved (Basement & Level One) -
|
space may be limited, if available
|
|
|
|
0
|
@ $150.00 per space per month for Preferred Reserved (Level Two and above) -
|
space may be limited, if available
|
|
|
|
0
|
@ $115.00 per space per month for General Unreserved
|
7.
|
ADDITIONAL RENT
. Section 2.3 "
Operating Expenses
" of the Original Lease Agreement is hereby deleted and the following substituted in lieu thereof:
|
8.
|
OPERATING EXPENSES
. Section 2.4 "
Definition of Operating Expenses
" of the Original Lease Agreement is hereby deleted and the following substituted in lieu thereof:
|
9.
|
SUBORDINATION
. The following statement is hereby added at the end of Section 9.5(a) "
Subordination
" in the Original Lease Agreement:
|
10.
|
ESTOPPEL CERTIFICATES
. Section 9.6 "
Estoppel Certificates
" in the Original Lease Agreement is hereby amended as follows:
|
11.
|
AMENDMENT
. Section 16.2 "
Amendment
" of the Original Lease Agreement is hereby deleted and the following substituted in lieu thereof:
|
12.
|
RATIFICATION
. Except as amended by this Lease Amendment #11, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
|
LESSOR
|
|
LESSEE
|
||
|
|
|
|
|
FASKEN MIDLAND, LLC
|
|
DIAMONDBACK E&P LLC
|
||
By:
|
Haley-NWC Property
|
|
|
|
|
Management Co., LLC
|
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendell L. Brown
|
|
By:
|
/s/ Travis D. Stice
|
Name
|
Wendell L. Brown
|
|
Name
|
Travis D. Stice
|
Title
|
V.P.
|
|
Title
|
President & CEO
|
1.
|
LEASED PREMISES
.
As of the 14
th
Floor Commencement Date (as defined below) and subject to the terms and condition of this Lease Amendment # 12, Section 1.5 "
Leased Premises
" of the Lease Agreement shall be amended to add approximately 7,030 square feet of Net Rentable Area located on the fourteenth (14
th
) floor of One Fasken Center as more fully diagrammed on the floor plans attached hereto and made a part hereof as
Exhibit "B-3"
("14
th
Floor Expansion Space"). Said 14
th
Floor Expansion Space is comprised of approximately 469 square feet of Net Rentable Area ("Suite 1435"), approximately 1,543 square feet of Net Rentable Area ("Suite 1450"), approximately 2,277 square feet of Net Rentable Area ("Suite 1460"), and approximately 2,741 square feet of Net Rentable Area ("Suite 1485"). The term "Leased Premises" shall hereinafter mean and include the 14
th
Floor Expansion Space. The Leased Premises, with the 14
th
Floor Expansion Space, will then consist of a total of approximately 21,421 square feet of Net Rentable Area, which represents 5.08% of the total Net Rentable Area of the Building, such total Net Rentable Area of the Building being 421,546 square feet. Lessor and Lessee acknowledge and agree that the aforesaid description of the size and square footage of the Leased Premises and the Building are an approximation, which the parties agree is reasonable and payments made thereupon are not subject to dispute.
|
2.
|
SUBJECT TO VACATING
.
Lessor's obligation to tender possession of the 14
th
Floor Expansion Space hereunder is subject to the current tenant, Arabella Petroleum Company, LLC, vacating the entire 14
th
Floor Expansion Space on or before October 31, 2014; provided, however, that if the current tenant, Arabella Petroleum Company, LLC, does not vacate all of the 14
th
Floor Expansion Space within six (6) months from the Effective Date, Lessee or Lessor shall have the right to terminate this Lease Amendment #12 by delivery of written notice to the other within thirty (30) days after the aforesaid six (6) month period but prior to the date of actual delivery of the 14
th
Floor Expansion Space to Lessee.
|
3.
|
LEASE TERM
.
The Lease Term for the 14th Floor Expansion Space shall be for a period commencing on the
later
of (a) the date that the entire 14
th
Floor Expansion Space is vacant and delivered to Lessee, or (b) November 1, 2014 (the "14
th
Floor Commencement Date"), and expiring on May 31, 2016.
|
4.
|
BASE YEAR
.
The Base Year for Operating Expenses and Tax Expenses for the 14
th
Floor Expansion Space shall be the calendar year 2014.
|
5.
|
RENT
.
The Base Rent for the 14
th
Floor Expansion Space is as follows:
|
PERIOD
|
ANNUAL RATE PER SQ. FT.
|
MONTHLY BASE RENT
|
||||
14
th
Floor Commencement Date - 5/31/2015
|
$
|
34.00
|
|
$
|
19,918.33
|
|
6/1/2015 - 5/31/2016
|
$
|
34.75
|
|
$
|
20,357.71
|
|
6.
|
TENANT IMPROVEMENTS
. Lessee accepts the 14
th
Floor Expansion Space on an "AS IS" basis, without any finish out allowance from Lessor to refurbish the 14
th
Floor Expansion Space. Any alterations to the 14
th
Floor Expansion Space shall be at Lessee's sole expense and responsibility.
|
7.
|
PARKING
. Effective as of the 14
th
Floor Commencement Date, Lessor agrees to provide sixteen (16) additional parking spaces with respect to the 14
th
Floor Expansion Space during the Term, in the designated areas, at the following rate per space per month plus applicable sales tax:
|
1
|
@$195.00 per space per month for Officer Reserved (Basement & Level One) -
|
space may be limited, if available
|
|
|
|
0
|
@ $150.00 per space per month for Preferred Reserved (Level Two and above) -
|
space may be limited, if available
|
|
|
|
15
|
@ $115.00 per space per month for General Unreserved
|
8.
|
RATIFICATION
. Except as amended by this Lease Amendment # 12, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
|
LESSOR
|
|
LESSEE
|
||
|
|
|
|
|
FASKEN MIDLAND, LLC
|
|
DIAMONDBACK E&P LLC
|
||
By:
|
Haley-NWC Property
|
|
|
|
|
Management Co., LLC
|
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendell L. Brown, Jr.
|
|
By:
|
/s/ Travis D. Stice
|
Name
|
Wendell L. Brown, Jr.
|
|
Name
|
Travis D. Stice
|
Title
|
V.P.
|
|
Title
|
President & CEO
|
1.
|
LEASED PREMISES
.
As of the Suite 1420 Commencement Date (as defined below) and subject to the terms and condition of this Lease Amendment # 13, Section 1.5 "
Leased Premises
" of the Lease Agreement shall be amended to add approximately 2,729 square feet of Net Rentable Area located on the fourteenth (14
th
) floor of One Fasken Center as more fully diagrammed on the floor plans attached hereto and made a part hereof as
Exhibit "B-4"
("Suite 1420 Expansion Space"). The term "Leased Premises" shall hereinafter mean and include the Suite 1420 Expansion Suite. The Leased Premises, with the Suite 1420 Expansion Space, will then consist of a total of approximately 24,150 square feet of Net Rentable Area which represents 5.73% of the total Net Rentable Area of the Building, such total Net Rentable Area of the Building being 421,546 square feet. Lessor and Lessee acknowledge and agree that the aforesaid description of the size and square footage of the Leased Premises and the Building are an approximation, which the parties agree is reasonable and payments made thereupon are not subject to dispute.
|
2.
|
SUBJECT TO VACATING
.
Lessor's obligation to tender possession of the Suite 1420 Expansion Space hereunder is subject to the current tenant, Arabella Petroleum Company, LLC, vacating the Suite 1420 Expansion Space on or before November 30, 2014; provided, however, that if the current tenant, Arabella Petroleum Company, LLC, does not vacate the Suite 1420 Expansion Space within six (6) months from the Effective Date, Lessee or Lessor shall have the right to terminate this Lease Amendment #13 by delivery of written notice to the other within thirty (30) days after the aforesaid six (6) month period but prior to the date of actual delivery of the Suite 1420 Expansion Space.
|
3.
|
LEASE TERM
.
The Lease Term for the Suite 1420 Expansion Space shall be for a period commencing on the
later
of (a) the date that the Suite 1420 Expansion Space is vacant and delivered to Lessee, or (b) December 1, 2014 (the "Suite 1420 Commencement Date"), and expiring on May 31, 2016.
|
4.
|
BASE YEAR
.
The Base Year for Operating Expenses and Tax Expenses for the Suite 1420 Expansion Space shall be the calendar year 2014.
|
5.
|
RENT
.
The Base Rent for the Suite 1420 Expansion Space is as follows:
|
PERIOD
|
ANNUAL RATE PER SQ. FT.
|
MONTHLY BASE RENT
|
||||
Suite 1420 Commencement Date - 5/31/2015
|
$
|
34.00
|
|
$
|
7,732.17
|
|
6/1/2015 - 5/31/2016
|
$
|
34.75
|
|
$
|
7,902.73
|
|
6.
|
TENANT IMPROVEMENTS
. Lessee accepts the Suite 1420 Expansion Space on an "AS IS" basis, without any finish out allowance from Lessor to refurbish the Suite 1420 Expansion Space. Any alterations to the Suite 1420 Expansion Space shall be at Lessee's sole expense and responsibility.
|
7.
|
RATIFICATION
. Except as amended by this Lease Amendment # 13, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
|
LESSOR
|
|
LESSEE
|
||
|
|
|
|
|
FASKEN MIDLAND, LLC
|
|
DIAMONDBACK E&P LLC
|
||
By:
|
Haley-NWC Property
|
|
|
|
|
Management Co., LLC
|
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendell L. Brown, Jr.
|
|
By:
|
/s/ Travis D. Stice
|
Name
|
Wendell L. Brown, Jr.
|
|
Name
|
Travis D. Stice
|
Title
|
V.P.
|
|
Title
|
President & CEO
|
1.
|
LEASE TERM.
The Lease Term for the Entire Premises is hereby extended for a period of ten (10) years to expire at 11:59pm, May 31, 2026, rather than its current expiration date of May 31, 2016. The ten (10) year Lease Term extension period from June 1, 2016, until May 31, 2026, is hereafter referred to as the "Lease Term Extension Period".
|
2.
|
BASE YEAR.
During the Lease Term Extension Period, the Base Year for Operating Expenses and Tax Expenses for the Entire Premises shall be the calendar year 2016.
|
3.
|
RENT.
|
(a)
|
The Base Rent for the Entire Premises during the Lease Term Extension Period is as follows:
|
PERIOD
|
ANNUAL RATE PER SQ. FT.
|
MONTHLY BASE RENT
|
||||
6/1/2016 - 5/31/2017
|
$
|
35.50
|
|
$
|
71,443.75
|
|
6/1/2017 - 5/31/2018
|
$
|
36.25
|
|
$
|
72,953.13
|
|
6/1/2018 - 5/31/2019
|
$
|
37.00
|
|
$
|
74,462.50
|
|
6/1/2019 - 5/31/2020
|
$
|
37.75
|
|
$
|
75,971.87
|
|
6/1/2020 - 5/31/2021
|
$
|
38.50
|
|
$
|
77,481.25
|
|
6/1/2021 - 5/31/2022
|
$
|
39.25
|
|
$
|
78,990.62
|
|
6/1/2022 - 5/31/2023
|
$
|
40.00
|
|
$
|
80,500.00
|
|
6/1/2023 - 5/31/2024
|
$
|
40.75
|
|
$
|
82,009.37
|
|
6/1/2024 - 5/31/2025
|
$
|
41.50
|
|
$
|
83,518.75
|
|
6/1/2025 - 5/31/2026
|
$
|
42.25
|
|
$
|
85,028.13
|
|
(b)
|
All monthly Base Rent shall be paid to Lessor in advance and without demand, counterclaim or offset, on or before the first day of each calendar month.
|
4.
|
SECONDARY RIGHT OF FIRST REFUSAL
.
Provided (i) there is no Lessee Event of Default under
Section11.1
of the Lease Agreement at the time Refusal Space is Available (as hereinafter defined), and (ii) Lessee has not subleased or assigned all or any part of the Leased Premises at the time Refusal Space is Available (as hereinafter defined), Lessee shall have a secondary and subordinate right of refusal to 7,300 rentable square feet on the l3
th
floor of One Fasken Center, also known as Suite 1300, currently leased by Parsley Energy, L.P. (''Refusal Space"), if Available, as hereinafter defined. As used herein, the Refusal Space is "Available" at the time in question if (a) Parsley Energy; L.P. is
not
leasing or occupying the Refusal Space, under any current or renewal term of the lease or any other agreement,
|
5.
|
RIGHT OF FIRST OFFER
.
Provided (i) there is no Lessee Event of Default under
Section 11.1
of the Lease Agreement at the time Offer Space is Available (as hereinafter defined), and (ii) Lessee has not subleased or assigned all or any part of the Leased Premises at the time Offer Space is Available (as hereinafter defined), Lessee shall have a right of first offer to 7,714 rentable square feet on the 13
th
floor of One Fasken Center, also known as Suite 1320, currently leased by Gulf Coast Oil & Gas Company ("Offer Space"), if Available, as hereinafter defined. As used herein, the Offer Space is "Available" at the time in question if Gulf Coast Oil & Gas Company is
not
leasing or occupying the Offer Space, under any current or renewal term of the lease or any other agreement.
|
6.
|
RATIFICATION
. Except as amended by this Lease Amendment #14, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
|
LESSOR
|
|
LESSEE
|
||
|
|
|
|
|
FASKEN MIDLAND, LLC
|
|
DIAMONDBACK E&P LLC
|
||
By:
|
Haley-NWC Property
|
|
|
|
|
Management Co., LLC
|
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendell L. Brown, Jr.
|
|
By:
|
/s/ Travis D. Stice
|
Name:
|
Wendell L. Brown, Jr.
|
|
Name:
|
Travis D. Stice
|
Title:
|
V.P.
|
|
Title:
|
President & CEO
|
Date:
|
12-5-14
|
|
Date:
|
12-5-14
|
1.
|
PARKING
. Effective June 1, 2016, the provisions of Section 1.14 "Parking" in the Original Lease Agreement, and all the related references to "Parking" in the Lease Amendments thereof, shall be deleted in their entirety and the following substituted in lieu thereof:
|
4
|
@$195.00 per space per month for Executive Reserved (Basement) -
|
space may be limited, if available
|
|
|
|
3
|
@$195.00 per space per month for Officer Reserved (Level One) -
|
space may be limited, if available
|
|
|
|
6
|
@ $150.00 per space per month for Preferred Reserved (Level Two and above) -
|
space may be limited, if available
|
|
|
|
50
|
@ $115.00 per space per month for General Unreserved
|
2.
|
RATIFICATION
. Except as amended by this Lease Amendment # 15, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
|
LESSOR
|
|
LESSEE
|
||
|
|
|
|
|
FASKEN MIDLAND, LLC
|
|
DIAMONDBACK E&P LLC
|
||
By:
|
Haley-NWC Property
|
|
|
|
|
Management Co., LLC
|
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendell L. Brown, Jr.
|
|
By:
|
/s/ Travis D. Stice
|
Name:
|
Wendell L. Brown, Jr.
|
|
Name:
|
Travis D. Stice
|
Title:
|
Vice President
|
|
Title:
|
President & CEO
|
Date:
|
2-3-15
|
|
Date:
|
1/30/15
|
1.
|
LEASED PREMISES
.
Commencing on the Suite 1300/Suite1490 Commencement Date (as defined in Section 2 below), Section 1.5
"Leased Premises"
of the Lease Agreement shall be amended to add (i) approximately 7,300 square feet of Net Rentable Area located on Level Thirteen (13) of One Fasken Center as more fully diagramed on the floor plans attached hereto and made a part hereof as
Exhibit "B-5''
(the
"Suite 1300 Expansion Space"
); and (ii) approximately 691 square feet of Net Rentable Area located on Level Fourteen (14) of One Fasken Center as more fully diagramed on the floor plans attached hereto and made a part hereof as
Exhibit "B-6"
(the
"Suite 1490 Expansion Space"
). Accordingly, as of the Suite 1300/Suitel490 Commencement Date, the term "Leased Premises" shall hereinafter mean and include the Suite 1300 Expansion Space and the Suite 1490 Expansion Space. The Leased Premises, with the Suite 1300 Expansion Space and the Suite 1490 Expansion Space, will then consist of a total of approximately 32,141 square feet of Net Rentable Area, which represents 7.62% of the total Net Rentable Area of the Buildings (
"Lessee's Ratable Share"
), such total Net Rentable Area of the Buildings being 421,546 square feet. Lessee's Ratable Share may be adjusted during the Lease Term to reflect any increases or decreases in the Total Net Rentable Area of the Buildings. Lessor and Lessee acknowledge and agree that the aforesaid description of the size and square footage of the Leased Premises and the Buildings are an approximation, which the parties agree is reasonable and payments made thereupon are not subject to dispute.
|
2.
|
LEASE TERM
.
The Lease Term for the Suite 1300 Expansion Space and the Suite 1490 Expansion Space shall be for a period commencing on the
later
of: (i) April 1, 2015, or (ii) the date that the Suite 1300 Expansion Space and the Suite 1490 Expansion Space are vacated and delivered to Lessee by the current Lessee, PARSLEY ENERGY, L.P. (the
"Suite 1300/Suite1490 Commencement Date"
),
and expiring on May 31, 2026.
|
3.
|
SUBJECT TO VACATING
.
Lessor's obligation to tender possession of the Suite 1300 Expansion Space and the Suite 1490 Expansion Space hereunder is subject to the current Lessee, PARSLEY ENERGY, L.P., vacating the Suite 1300 Expansion Space and the Suite 1490 Expansion Space on or before the Suite 1300/Suitel490 Commencement Date; provided, however, that if the current Lessee, PARSLEY ENERGY, L.P., does not vacate the Suite 1300 Expansion Space and the Suite 1490 Expansion Space within six (6) months of the Effective Date, either Lessee or Lessor shall have the right to terminate this Lease Amendment # 16 by delivery of written notice to the other within thirty (30) days after the aforesaid six (6) month period but prior to the date of actual delivery of the Suite 1300 Expansion Space and/or the Suite 1490 Expansion Space to Lessee.
|
4.
|
BASE YEAR
.
The Base Year for Operating Expenses and Tax Expenses for the Suite 1300 Expansion Space and the Suite 1490 Expansion Space shall be the calendar year 2015.
|
5.
|
BASE RENT
.
The Base Rent for the Suite 1300 Expansion Space and the Suite 1490 Expansion Space is as follows:
|
PERIOD
|
ANNUAL RATE PER SQ. FT.
|
MONTHLY BASE RENT
|
||||
Suite 1300/Suite 1490 Commencement Date - 5/31/2015
|
$
|
34.00
|
|
$
|
22,641.17
|
|
6/1/2015 - 5/31/2016
|
$
|
34.75
|
|
$
|
23,140.60
|
|
6/1/2016 - 5/31/2017
|
$
|
35.50
|
|
$
|
23,640.04
|
|
6/1/2017 - 5/31/2018
|
$
|
36.25
|
|
$
|
24,139.48
|
|
6/1/2018 - 5/31/2019
|
$
|
37.00
|
|
$
|
24,638.92
|
|
6/1/2019 - 5/31/2020
|
$
|
37.75
|
|
$
|
25,138.35
|
|
6/1/2020 - 5/31/2021
|
$
|
38.50
|
|
$
|
25,637.79
|
|
6/1/2021 - 5/31/2022
|
$
|
39.25
|
|
$
|
26,137.23
|
|
6/1/2022 - 5/31/2023
|
$
|
40.00
|
|
$
|
26,636.67
|
|
6/1/2023 - 5/31/2024
|
$
|
40.75
|
|
$
|
27,136.10
|
|
6/1/2024 - 5/31/2025
|
$
|
41.50
|
|
$
|
27,635.54
|
|
6/1/2025 - 5/31/2026
|
$
|
42.25
|
|
$
|
28,134.98
|
|
6.
|
PARKING
. Lessor shall provide seventeen (17) additional parking space(s) with respect to the Suite 1300 Expansion Space and the Suite 1490 Expansion Space during the Lease Term, in the designated area(s), at the following rate per space per month plus applicable sales tax:
|
2
|
@ $195.00 per space per month for Executive Reserved (Basement) -
|
space may be limited, if available
|
|
|
|
|
@ $195.00 per space per month for Officer Reserved (Level One) -
|
space may be limited, if available
|
|
|
|
|
@ $150.00 per space per month for Preferred Reserved (Level Two and above) -
|
space may be limited, if available
|
|
|
|
15
|
@ $115.00 per space per month for General Unreserved
|
7.
|
LESSEE IMPROVEMENTS
. Lessee accepts the Suite 1300 Expansion Space and the Suite 1490 Expansion Space on an "AS IS" basis, without any obligation of Lessor to construct any improvements in the Suite 1300 Expansion Space and the Suite 1490 Expansion Space; however, Lessor will provide Lessee a construction allowance in the amount of One Hundred Nineteen Thousand Eight Hundred Sixty Five and 00/100 Dollars ($119,865.00) to refurbish the Suite 1300 Expansion Space and the Suite 1490 Expansion Space to Lessee's specifications in accordance with the provisions of the Leasehold Improvements Agreement, which is attached hereto as
Exhibit "D-1"
and incorporated herein.
|
8.
|
RATIFICATION
. Except as amended by this Lease Amendment # 16, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
|
LESSOR
|
|
LESSEE
|
||
|
|
|
|
|
FASKEN MIDLAND, LLC
|
|
DIAMONDBACK E&P LLC
|
||
By:
|
Haley-NWC Property
|
|
|
|
|
Management Co., LLC
|
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendell L. Brown Jr.
|
|
By:
|
/s/ Travis D. Stice
|
Name
|
Wendell L. Brown Jr.
|
|
Name
|
Travis D. Stice
|
Title
|
Vice President
|
|
Title
|
President & CEO
|
(a)
|
Lessee shall cause the Lessee Improvements to be constructed in accordance with the approved plans and all applicable laws, rules, regulations, ordinances and restrictive covenants and otherwise in a good and workmanlike manner.
|
(b)
|
Lessee and each of Lessee's contractors shall comply with all rules and regulations for the Buildings.
|
(c)
|
Prior to commencement of construction of Lessee Improvements, Lessee shall submit to Lessor a list setting forth the name of each of Lessee's contractors and the work that will be performed by each such contractor. Any approval by Lessor of any of Lessee's contractors shall not in any way be construed as or constitute a representation by or warranty of Lessor as to the abilities of the contractor.
|
(d)
|
Lessee shall cause each of Lessee's contractors to deliver Lessor sufficient evidence (which shall include, without limitation, certificates of insurance naming Lessor and Manager as additional insureds) that such contractor is covered under such workmen's compensation, (or statutorily permitted waiver thereof), commercial general liability and property damage insurance as Lessor may reasonably request for its protection. All such evidence of insurance must be submitted to and approved by Lessor prior to commencement of construction of Lessee Improvements.
|
(e)
|
Prior to the execution of the construction contract for the construction of Lessee Improvements, Lessee shall submit the proposed form thereof to Lessor for Lessor's review and acceptance. Such contract shall, without in any way limiting Lessor's right to approve the form of such contract, (i) require the contractor to waive all contractual, statutory and constitutional liens against the Leased Premises, the Buildings and the Property as a condition to receipt of any payments thereunder, (ii) require the contractor to conform to the Building Rules and Agreed Regulations and any Building rules applicable to contractors performing work in the Buildings, (iii) require the contractor to deliver the certificates of insurance (and such other evidence of insurance as is required by Lessor) referred to above, (iv) recognize that Lessor is a third party beneficiary with respect to all warranties (implied or expressed) under the contract or otherwise applicable to Lessee Improvements at law or in equity, and as a third party beneficiary, Lessor shall have the absolute right (but not the
obligation) to enforce each and every such warranty, (v) require the contractor to complete construction of Lessee Improvements on or prior to the Suite 1300/Suite1490 Commencement Date, and (vi) require the contractor to work in harmony and cooperate with each other contractor performing work in the Suite 1300 Expansion Space and the Suite 1490 Expansion Space.
|
(f)
|
Prior to commencement of construction of Lessee Improvements (including, without limitation, demolition of any existing improvements to allow for the construction of Lessee Improvements), the final plans will, if required by applicable laws, be approved by the appropriate governmental agency and all notices required to be given to any governmental agency shall have been given in a timely manner. In addition to obtaining all required approvals and permits, the final plans for any portion of the Lessee Improvements which may affect the structural integrity of the Buildings, must be stamped by a structural engineer approved by Lessor, and such final plans must contain a certification that such alterations will not adversely affect the structural integrity of the Buildings.
|
(g)
|
All materials used in the construction of Lessee Improvements shall be new and first-class quality (other than materials located in the Suite 1300 Expansion Space and the Suite 1490 Expansion Space on the Effective Date of Lease Amendment # 16). All doors, light fixtures, ceiling tiles and other improvements in the Suite 1300 Expansion Space and the Suite 1490 Expansion Space having building standard specifications shall comply with such specifications.
|
(h)
|
Lessee shall maintain the Suite 1300 Expansion Space and the Suite 1490 Expansion Space and the surrounding areas in a clean and orderly condition during construction. Lessee will cause Lessee's
|
(i)
|
Lessor shall not be liable for any injury, loss or damage to any of Lessee Improvements or other installations.
|
(j)
|
Lessee shall indemnify and hold harmless Lessor from and against any and all costs, expenses, claims, liabilities and causes of action arising out of or in connection with work performed by or on behalf of Lessee or Lessee's contractors.
|
(k)
|
Notwithstanding the fact that Lessor shall be a third party beneficiary of any and all warranties under the contract for construction of Lessee Improvements and any and all warranties applicable to Lessee Improvements at law or in equity, Lessor shall in no way be responsible for the function and/or maintenance of Lessee Improvements.
|
(l)
|
Lessee's general contractor shall obtain a payment and performance bond reasonably acceptable to Lessor covering the construction of Lessee Improvements.
|
1.
|
LEASED PREMISES
.
Commencing on the Suite 1320 Commencement Date (as defined in Section 2 below), Section 1.5 "
Leased Premises
" of the Lease Agreement shall be amended to add (i) approximately 7,714 square feet of Net Rentable Area located on Level Thirteen (13) of One Fasken Center as more fully diagramed on the floor plans attached hereto and made a part hereof as
Exhibit "B-7''
(the "
Suite 1320 Expansion Space
"). Accordingly, as of the Suite 1320 Commencement Date, the term "Leased Premises" shall hereinafter mean and include the Suite 1320 Expansion Space. The Leased Premises, with the Suite 1320 Expansion Space, will then consist of a total of approximately 39,855 square feet of Net Rentable Area, which represents 9.45% of the total Net Rentable Area of the Buildings ("
Lessee's Ratable Share
"), such total Net Rentable Area of the Buildings being 421,546 square feet. Lessee's Ratable Share may be adjusted during the Lease Term to reflect any increases or decreases in the Total Net Rentable Area of the Buildings. Lessor and Lessee acknowledge and agree that the aforesaid description of the size and square footage of the Leased Premises and the Buildings are an approximation, which the parties agree is reasonable and payments made thereupon are not subject to dispute.
|
2.
|
LEASE TERM
.
The Lease Term for the Suite 1320 Expansion Space shall be for a period commencing on the
later
of: (i) October 1, 2015, or (ii) the date that the Suite 1320 Expansion Space is vacated and delivered to Lessee by the current Lessee, Gulf Coast Oil & Gas Co. (the
"Suite 1320 Commencement Date"
),
and expiring on May 31, 2026.
|
3.
|
SUBJECT TO VACATING
.
Lessor
'
s obligation to tender possession of the Suite 1320 Expansion Space hereunder is subject to the current Lessee
,
Gulf Coast Oil & Gas Co
.
, vacating and delivering the Suite 1320 Expansion Space. Accordingly, if the current Lessee, Gulf Coast Oil & Gas Co. does not vacate and deliver the Suite 1320 Expansion Space prior to April 1, 2016, either Lessee or Lessor shall have the right to terminate this Lease Amendment # 17 by delivery of written notice to the other party prior to April 30, 2016
,
but in no event later than the date of actual delivery of the Suite 1320 Expansion Space to Lessee
.
|
4.
|
BASE YEAR
.
The Base Year for Operating Expenses and Tax Expenses for the Suite 1320 Expansion Space shall be the calendar year 2015.
|
5.
|
BASE RENT
.
The Base Rent for the Suite 1320 Expansion Space is as follows:
|
PERIOD
|
ANNUAL RATE PER SQ. FT.
|
MONTHLY BASE RENT
|
||||
Suite 1320 Commencement Date - 5/31/2016
|
$
|
34.75
|
|
$
|
22,338.46
|
|
6/1/2016 - 5/31/2017
|
$
|
35.50
|
|
$
|
22,820.58
|
|
6/1/2017 - 5/31/2018
|
$
|
36.25
|
|
$
|
23,302.71
|
|
6/1/2018 - 5/31/2019
|
$
|
37.00
|
|
$
|
23,784.83
|
|
6/1/2019 - 5/31/2020
|
$
|
37.75
|
|
$
|
24,266.96
|
|
6/1/2020 - 5/31/2021
|
$
|
38.50
|
|
$
|
24,749.08
|
|
6/1/2021 - 5/31/2022
|
$
|
39.25
|
|
$
|
25,231.21
|
|
6/1/2022 - 5/31/2023
|
$
|
40.00
|
|
$
|
25,713.33
|
|
6/1/2023 - 5/31/2024
|
$
|
40.75
|
|
$
|
26,195.46
|
|
6/1/2024 - 5/31/2025
|
$
|
41.50
|
|
$
|
26,677.58
|
|
6/1/2025 - 5/31/2026
|
$
|
42.25
|
|
$
|
27,159.71
|
|
6.
|
PARKING
. Lessor shall provide up to six (6) additional parking space(s) with respect to the Suite 1320 Expansion Space during the Lease Term, in the designated area(s), at the following rate per space per month plus applicable sales tax:
|
2
|
@ $195.00 per space per month for Executive Reserved (Basement) -
|
space may be limited, if available
|
|
|
|
2
|
@ $195.00 per space per month for Officer Reserved (Level One) -
|
space may be limited, if available
|
|
|
|
2
|
@ $150.00 per space per month for Preferred Reserved (Level Two and above) -
|
space may be limited, if available
|
|
|
|
2
|
@ $115.00 per space per month for General Unreserved
|
7.
|
LESSEE IMPROVEMENTS
.
Lessee accepts the Suite 1320 Expansion Space on
an "AS
IS" basis, without any obligation of Lessor to construct any improvements in the Suite 1320 Expansion Space; however, Lessor will provide Lessee a Construction Allowance in the amount of One Hundred Fifteen Thousand Seven Hundred Ten and 00/100 Dollars ($115,710.00) to refurbish the Suite 1320 Expansion Space to Lessee's specifications in accordance with the provisions of the Leasehold Improvements Agreement, which is attached hereto as
Exhibit
"D-2"
and incorporated herein.
|
8.
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RATIFICATION
. Except as amended by this Lease Amendment # 17, Lessor and Lessee do hereby ratify and affirm all of the terms, conditions and covenants of the Lease Agreement, as amended herein.
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LESSOR
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LESSEE
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FASKEN MIDLAND, LLC
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DIAMONDBACK E&P LLC
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By:
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Haley-NWC Property
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Management Co., LLC
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Its Authorized Agent
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By:
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/s/ Wendell L. Brown Jr.
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By:
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/s/ Travis D. Stice
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Name
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Wendell L. Brown Jr.
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Name
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Travis D. Stice
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Title
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Vice President
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Title
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President & CEO
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4.
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Lessee shall be responsible for all applicable state sales or use taxes, if any, payable in connection with the Lessee Improvements and/or Construction Allowance.
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5.
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In performing construction of Lessee Improvements, Lessee shall, with regard to the construction of Lessee Improvements, be bound by each and every term of the Lease Agreement. Without in any way limiting the foregoing provisions of this Paragraph 5, the following provisions shall be applicable to Lessee's obligation to construct Lessee Improvements:
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(a)
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Lessee shall cause the Lessee Improvements to be constructed in accordance with the approved plans and all applicable laws, rules, regulations, ordinances and restrictive covenants and otherwise in a good and workmanlike manner.
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(b)
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Lessee and each of Lessee's contractors shall comply with all rules and regulations for the Buildings.
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(c)
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Prior to commencement of construction of Lessee Improvements, Lessee shall submit to Lessor a list setting forth the name of each of Lessee's contractors and the work that will be performed by each such contractor. Any approval by Lessor of any of Lessee's contractors shall not in any way be construed as or constitute a representation by or warranty of Lessor as to the abilities of the contractor.
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(d)
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Lessee shall cause each of Lessee's contractors to deliver Lessor sufficient evidence (which shall include, without limitation, certificates of insurance naming Lessor and Manager as additional insureds) that such contractor is covered under such workmen's compensation, (or statutorily permitted waiver thereof), commercial general liability and property damage insurance as Lessor may reasonably request for its protection. All such evidence of insurance must be submitted to and approved by Lessor prior to commencement of construction of Lessee Improvements.
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(e)
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Prior to the execution of the construction contract for the construction of Lessee Improvements, Lessee shall submit the proposed form thereof to Lessor for Lessor's review and acceptance. Such contract shall, without in any way limiting Lessor's right to approve the form of such contract, (i)require the contractor to waive all contractual, statutory and constitutional liens against the Leased Premises, the Buildings and the Property as a condition to receipt of any payments thereunder, (ii) require the contractor to conform to the Building Rules and Agreed Regulations and any Building rules applicable to contractors performing work in the Buildings, (iii) require the contractor to deliver the certificates of insurance (and such other evidence of insurance as is required by Lessor) referred to above, (iv) recognize that Lessor is a third party beneficiary with respect to all warranties (implied or expressed) under the contract or otherwise applicable to Lessee Improvements at law or in equity, and as
a third party beneficiary, Lessor shall have the absolute right (but not the obligation) to enforce each and every such warranty, (v) require the contractor to complete construction of Lessee Improvements on or prior to the Suite 1320 Commencement Date, and (vi) require the contractor to work in harmony and cooperate with each other contractor performing work in the Suite 1320 Expansion Space.
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(f)
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Prior to commencement of construction of Lessee Improvements (including
,
without limitation
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demolition of any existing improvements to allow for the construction of Lessee Improvements), the final plans will, if required by applicable laws, be approved by the appropriate governmental agency and all notices r
e
quired to be given to any governmental agency shall have been g
i
ven in a timely manner
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In addition to obtaining all required approvals and permits
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the final plans for any portion of the Lessee Improvements which may affect the structural integrity of the Buildings
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must be stamped by a structural engineer approved by Lessor, and such final plans must contain a certification that such alterations will not adversely affect the structural integrity of the Buildings.
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(g)
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All materials used in the construction of Lessee Improvements shall be new and first class quality (other than materials located in the Suite 1320 Expansion Space on the Effective Date of Lease Amendment # 17)
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All doors
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light fixtures
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ceiling tiles and other improvements in the Suit
e
1320 Expansion Space having building standard specifications shall comply with such specifications.
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(h)
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Lessee shall maintain the Suite 1320 Expansion Space and the surrounding areas in a clean and orderly condition during construction
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Lessee will cause Lessee
'
s contractors to promptly remove from the Buildings, by use of their own trash containers
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all rubbish
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dirt
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debris and flammable waste, as well as all unused construction materials
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equipment, shipping containers and packaging generated by Le
s
see Improvements
;
neither Lessee nor Lessee's contra
c
tors shall be permitted to deposit any such materials in L
e
ssor
'
s trash
c
ontainer
s
or elsewhere in the Buildings storage of construction materials, tools
,
equipment and debris shall be confined within the Suite 1320 E
x
pan
s
ion Space.
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(i)
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Lessor shall not be liable for any injury
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loss or damage to any of Le
ss
ee Improvements or other installations.
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(j)
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Lessee shall indemnify and hold harmless Lessor from and against an
y
and all costs
,
expenses, claims, liabilities and causes of action arising out of or in connection with work performed by or on behalf of Le
s
see or Lessee's contractors.
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(k)
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Notwithstanding the fact that Lessor shall be a third party beneficiary of any and all warranties under the contract for construction of Lessee Improv
e
ments and any and all warranties applicable to Lessee Improvemen
t
s at law or in equity
,
Lessor shall in no way be
r
espon
s
ible for the function and/or maintenance of Lessee Improvements
.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Diamondback Energy, Inc.
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer 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 Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 5, 2015
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/s/ Travis D. Stice
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Travis D. Stice
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Diamondback Energy, Inc.
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer 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 Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 5, 2015
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/s/ Teresa L. Dick
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Teresa L. Dick
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Chief Financial Officer
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Date:
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November 5, 2015
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/s/ Travis D. Stice
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Travis D. Stice
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Chief Executive Officer
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Date:
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November 5, 2015
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/s/ Teresa L. Dick
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Teresa L. Dick
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Chief Financial Officer
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