|
|
|
|
Delaware
|
46-3472728
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
1001 Louisiana Street
Houston, Texas
|
77002
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
|
|
Caption
|
Page
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
/d
|
=
|
per day
|
Bbl
|
=
|
barrel
|
Boe
|
=
|
barrel of oil equivalent
|
Gal
|
=
|
gallons
|
LLS
|
=
|
light Louisiana sweet crude oil
|
MBoe
|
=
|
thousand barrels of oil equivalent
|
MBbls
|
=
|
thousand barrels
|
Mcf
|
=
|
thousand cubic feet
|
MMBtu
|
=
|
million British thermal units
|
MMBbls
|
=
|
million barrels
|
MMcf
|
=
|
million cubic feet
|
MMGal
|
=
|
million gallons
|
Mt. Belvieu
|
=
|
Mont Belvieu natural gas liquids pricing index
|
NGLs
|
=
|
natural gas liquids
|
NYMEX
|
=
|
New York Mercantile Exchange
|
TBtu
|
=
|
trillion British thermal units
|
WTI
|
=
|
West Texas intermediate
|
|
Quarter ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil
|
$
|
281
|
|
|
$
|
202
|
|
|
$
|
533
|
|
|
$
|
406
|
|
Natural gas
|
18
|
|
|
27
|
|
|
40
|
|
|
57
|
|
||||
NGLs
|
30
|
|
|
22
|
|
|
56
|
|
|
45
|
|
||||
Financial derivatives
|
(64
|
)
|
|
45
|
|
|
(78
|
)
|
|
115
|
|
||||
Total operating revenues
|
265
|
|
|
296
|
|
|
551
|
|
|
623
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil and natural gas purchases
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
Transportation costs
|
26
|
|
|
28
|
|
|
51
|
|
|
57
|
|
||||
Lease operating expense
|
38
|
|
|
39
|
|
|
77
|
|
|
79
|
|
||||
General and administrative
|
28
|
|
|
26
|
|
|
47
|
|
|
46
|
|
||||
Depreciation, depletion and amortization
|
129
|
|
|
124
|
|
|
249
|
|
|
250
|
|
||||
Impairment charges
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Exploration and other expense
|
—
|
|
|
1
|
|
|
1
|
|
|
4
|
|
||||
Taxes, other than income taxes
|
21
|
|
|
15
|
|
|
41
|
|
|
34
|
|
||||
Total operating expenses
|
242
|
|
|
235
|
|
|
466
|
|
|
473
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
23
|
|
|
61
|
|
|
85
|
|
|
150
|
|
||||
Gain (loss) on extinguishment/modification of debt
|
7
|
|
|
13
|
|
|
48
|
|
|
(40
|
)
|
||||
Interest expense
|
(88
|
)
|
|
(82
|
)
|
|
(173
|
)
|
|
(165
|
)
|
||||
Loss before income taxes
|
(58
|
)
|
|
(8
|
)
|
|
(40
|
)
|
|
(55
|
)
|
||||
Income tax benefit
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Net loss
|
$
|
(58
|
)
|
|
$
|
(3
|
)
|
|
$
|
(40
|
)
|
|
$
|
(50
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss
|
$
|
(0.23
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.20
|
)
|
Basic and diluted weighted average common shares outstanding
|
248
|
|
|
246
|
|
|
247
|
|
|
246
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
98
|
|
|
$
|
27
|
|
Restricted cash
|
1
|
|
|
18
|
|
||
Accounts receivable
|
|
|
|
|
|
||
Customer, net of allowance of less than $1 in 2018 and 2017
|
171
|
|
|
158
|
|
||
Other, net of allowance of $1 in 2018 and 2017
|
27
|
|
|
13
|
|
||
Income tax receivable
|
5
|
|
|
9
|
|
||
Materials and supplies
|
17
|
|
|
16
|
|
||
Derivative instruments
|
6
|
|
|
18
|
|
||
Assets held for sale
|
—
|
|
|
172
|
|
||
Prepaid assets
|
4
|
|
|
35
|
|
||
Total current assets
|
329
|
|
|
466
|
|
||
Property, plant and equipment, at cost
|
|
|
|
|
|
||
Oil and natural gas properties
|
8,191
|
|
|
7,532
|
|
||
Other property, plant and equipment
|
65
|
|
|
69
|
|
||
|
8,256
|
|
|
7,601
|
|
||
Less accumulated depreciation, depletion and amortization
|
3,424
|
|
|
3,179
|
|
||
Total property, plant and equipment, net
|
4,832
|
|
|
4,422
|
|
||
Other assets
|
|
|
|
|
|
||
Derivative instruments
|
3
|
|
|
4
|
|
||
Unamortized debt issue costs - revolving credit facility
|
9
|
|
|
6
|
|
||
Other
|
1
|
|
|
2
|
|
||
|
13
|
|
|
12
|
|
||
Total assets
|
$
|
5,174
|
|
|
$
|
4,900
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
|
|
|
|
|
||
Trade
|
$
|
103
|
|
|
$
|
88
|
|
Other
|
160
|
|
|
158
|
|
||
Derivative instruments
|
52
|
|
|
17
|
|
||
Accrued interest
|
69
|
|
|
62
|
|
||
Liabilities related to assets held for sale
|
—
|
|
|
2
|
|
||
Short-term debt, net of debt issue costs
|
8
|
|
|
21
|
|
||
Other accrued liabilities
|
87
|
|
|
100
|
|
||
Total current liabilities
|
479
|
|
|
448
|
|
||
|
|
|
|
||||
Long-term debt, net of debt issue costs
|
4,291
|
|
|
4,022
|
|
||
Other long-term liabilities
|
|
|
|
|
|
||
Derivative instruments
|
9
|
|
|
—
|
|
||
Asset retirement obligations
|
35
|
|
|
33
|
|
||
Other
|
5
|
|
|
5
|
|
||
Total non-current liabilities
|
4,340
|
|
|
4,060
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
|
|
||
Class A shares, $0.01 par value; 550 million shares authorized; 257 million shares issued and outstanding at June 30, 2018; 252 million shares issued and outstanding at December 31, 2017
|
3
|
|
|
3
|
|
||
Class B shares, $0.01 par value; 0.3 million shares authorized, issued and outstanding at June 30, 2018 and December 31, 2017
|
—
|
|
|
—
|
|
||
Preferred stock, $0.01 par value; 50 million shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Treasury stock (at cost), less than one million shares at June 30, 2018 and December 31, 2017
|
—
|
|
|
(3
|
)
|
||
Additional paid-in capital
|
3,526
|
|
|
3,526
|
|
||
Accumulated deficit
|
(3,174
|
)
|
|
(3,134
|
)
|
||
Total stockholders’ equity
|
355
|
|
|
392
|
|
||
Total liabilities and equity
|
$
|
5,174
|
|
|
$
|
4,900
|
|
|
Six months ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
|
|
||
Net loss
|
$
|
(40
|
)
|
|
$
|
(50
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities
|
|
|
|
|
|
||
Depreciation, depletion and amortization
|
249
|
|
|
250
|
|
||
Impairment charges
|
—
|
|
|
1
|
|
||
(Gain) loss on extinguishment/modification of debt
|
(48
|
)
|
|
40
|
|
||
Other non-cash income items
|
13
|
|
|
14
|
|
||
Asset and liability changes
|
|
|
|
|
|
||
Accounts receivable
|
(28
|
)
|
|
(17
|
)
|
||
Accounts payable
|
(8
|
)
|
|
(7
|
)
|
||
Derivative instruments
|
57
|
|
|
(57
|
)
|
||
Accrued interest
|
7
|
|
|
22
|
|
||
Other asset changes
|
11
|
|
|
(3
|
)
|
||
Other liability changes
|
4
|
|
|
(12
|
)
|
||
Net cash provided by operating activities
|
217
|
|
|
181
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
||
Cash paid for capital expenditures
|
(384
|
)
|
|
(266
|
)
|
||
Proceeds from the sale of assets
|
169
|
|
|
—
|
|
||
Cash paid for acquisitions
|
(239
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(454
|
)
|
|
(266
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
1,665
|
|
|
1,385
|
|
||
Repayments and repurchases of long-term debt
|
(1,291
|
)
|
|
(1,253
|
)
|
||
Fees/costs on debt exchange
|
(62
|
)
|
|
—
|
|
||
Debt issue costs
|
(20
|
)
|
|
(20
|
)
|
||
Other
|
(1
|
)
|
|
(3
|
)
|
||
Net cash provided by financing activities
|
291
|
|
|
109
|
|
||
|
|
|
|
||||
Change in cash, cash equivalents and restricted cash
|
54
|
|
|
24
|
|
||
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash - beginning of period
|
45
|
|
|
20
|
|
||
Cash, cash equivalents and restricted cash - end of period
|
$
|
99
|
|
|
$
|
44
|
|
|
Class A Stock
|
|
Class B Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
|||||||||||||||||
Balance at December 31, 2017
|
252
|
|
|
$
|
3
|
|
|
0.3
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
3,526
|
|
|
$
|
(3,134
|
)
|
|
$
|
392
|
|
Share-based compensation
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
(40
|
)
|
||||||
Balance at June 30, 2018
|
257
|
|
|
$
|
3
|
|
|
0.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,526
|
|
|
$
|
(3,174
|
)
|
|
$
|
355
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Short-term debt
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
21
|
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt (see Note 7)
|
$
|
4,395
|
|
|
$
|
3,816
|
|
|
$
|
4,072
|
|
|
$
|
3,248
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
(52
|
)
|
|
$
|
(52
|
)
|
|
$
|
5
|
|
|
$
|
5
|
|
|
Level 2
|
||||||||||||||||||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||||
|
Gross
Fair Value
|
|
|
|
Balance Sheet Location
|
|
Gross
Fair Value
|
|
|
|
Balance Sheet Location
|
||||||||||||||||||||
|
|
Impact of
Netting
|
|
Current
|
|
Non-
current
|
|
|
Impact of
Netting
|
|
Current
|
|
Non-
current
|
||||||||||||||||||
|
(in millions)
|
|
(in millions)
|
||||||||||||||||||||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
37
|
|
|
$
|
(28
|
)
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
(89
|
)
|
|
$
|
28
|
|
|
$
|
(52
|
)
|
|
$
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
33
|
|
|
$
|
(11
|
)
|
|
$
|
18
|
|
|
$
|
4
|
|
|
$
|
(28
|
)
|
|
$
|
11
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|||||
|
(in millions)
|
|||||||
Proved
|
|
|
|
|||||
Eagle Ford
|
$
|
3,734
|
|
|
$
|
3,219
|
|
|
Permian
|
2,799
|
|
|
2,705
|
|
|||
Altamont
|
1,599
|
|
|
1,542
|
|
|||
Total Proved
|
8,132
|
|
|
7,466
|
|
|||
Unproved
|
|
|
|
|||||
Permian
|
59
|
|
|
66
|
|
|||
Less accumulated depletion
|
(3,384
|
)
|
|
(3,137
|
)
|
|||
Net capitalized costs for oil and natural gas properties
|
$
|
4,807
|
|
|
$
|
4,395
|
|
|
2018
|
||
|
(in millions)
|
||
Net asset retirement liability at January 1
|
$
|
35
|
|
Accretion expense
|
1
|
|
|
Changes in estimate
|
1
|
|
|
Net asset retirement liability at June 30
|
$
|
37
|
|
|
Interest Rate
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
|
(in millions)
|
||||||
RBL credit facility - due November 23, 2021
(1)
|
Variable
|
|
$
|
—
|
|
|
$
|
595
|
|
Senior secured term loans:
|
|
|
|
|
|
||||
Due May 24, 2018
(2)(3)
|
Variable
|
|
—
|
|
|
21
|
|
||
Due April 30, 2019
(4)
|
Variable
|
|
8
|
|
|
8
|
|
||
Senior secured notes:
|
|
|
|
|
|
||||
Due May 1, 2024
|
9.375%
|
|
1,092
|
|
|
—
|
|
||
Due November 29, 2024
|
8.00%
|
|
500
|
|
|
500
|
|
||
Due February 15, 2025
|
8.00%
|
|
1,000
|
|
|
1,000
|
|
||
Due May 15, 2026
|
7.75%
|
|
1,000
|
|
|
—
|
|
||
Senior unsecured notes:
|
|
|
|
|
|
||||
Due May 1, 2020
|
9.375%
|
|
246
|
|
|
1,200
|
|
||
Due September 1, 2022
|
7.75%
|
|
195
|
|
|
250
|
|
||
Due June 15, 2023
|
6.375%
|
|
362
|
|
|
519
|
|
||
Total debt
|
|
|
4,403
|
|
|
4,093
|
|
||
Less short-term debt, net of debt issue costs of less than $1 million
|
|
|
(8
|
)
|
|
(21
|
)
|
||
Total long-term debt
|
|
|
4,395
|
|
|
4,072
|
|
||
Less debt discount and non-current portion of unamortized debt issue costs
|
|
|
(104
|
)
|
|
(50
|
)
|
||
Total long-term debt, net
|
|
|
$
|
4,291
|
|
|
$
|
4,022
|
|
|
(1)
|
Carries interest at a specified margin over
LIBOR
of
2.50%
to
3.50%
, based on borrowing utilization.
|
(3)
|
In April 2018, we retired the term loan in full.
|
|
|
Number of Shares
|
|
Weighted Average
Grant Date Fair Value
per Share
|
|||
Non-vested at December 31, 2017
|
|
5,283,986
|
|
|
$
|
4.93
|
|
Granted
|
|
6,905,525
|
|
|
$
|
1.94
|
|
Vested
|
|
(1,881,894
|
)
|
|
$
|
5.66
|
|
Forfeited
|
|
(1,125,898
|
)
|
|
$
|
4.62
|
|
Non-vested at June 30, 2018
|
|
9,181,719
|
|
|
$
|
2.57
|
|
|
|
2018
|
|
2019
|
||||||||||
|
|
Volumes
(1)
|
|
Average
Price
(1)
|
|
Volumes
(1)
|
|
Average
Price
(1)
|
||||||
Oil
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed Price Swaps
|
|
|
|
|
|
|
|
|
|
|
||||
WTI
|
|
2,576
|
|
|
$
|
56.49
|
|
|
730
|
|
|
$
|
55.88
|
|
Collars
|
|
|
|
|
|
|
|
|
||||||
Ceiling - WTI
|
|
552
|
|
|
$
|
64.98
|
|
|
1,275
|
|
|
$
|
65.80
|
|
Floors - WTI
|
|
552
|
|
|
$
|
55.00
|
|
|
1,275
|
|
|
$
|
55.00
|
|
Three Way Collars
|
|
|
|
|
|
|
|
|
||||||
Ceiling - WTI
|
|
4,466
|
|
|
$
|
68.15
|
|
|
6,205
|
|
|
$
|
67.77
|
|
Floors - WTI
|
|
4,466
|
|
|
$
|
60.00
|
|
|
6,205
|
|
|
$
|
58.24
|
|
Sub-Floor - WTI
|
|
4,466
|
|
|
$
|
50.00
|
|
|
6,205
|
|
|
$
|
45.00
|
|
Basis Swaps
|
|
|
|
|
|
|
|
|
||||||
LLS vs. WTI
(2)
|
|
2,576
|
|
|
$
|
2.84
|
|
|
—
|
|
|
$
|
—
|
|
Midland vs. Cushing
(3)
|
|
1,902
|
|
|
$
|
(1.02
|
)
|
|
—
|
|
|
$
|
—
|
|
NYMEX Roll
(4)
|
|
1,840
|
|
|
$
|
0.09
|
|
|
—
|
|
|
$
|
—
|
|
Natural Gas
|
|
|
|
|
|
|
|
|
||||||
Fixed Price Swaps
|
|
13
|
|
|
$
|
3.04
|
|
|
7
|
|
|
$
|
2.97
|
|
Basis Swaps
|
|
|
|
|
|
|
|
|
||||||
WAHA vs. Henry Hub
(5)
|
|
7
|
|
|
$
|
(0.46
|
)
|
|
7
|
|
|
$
|
(0.39
|
)
|
NGLs
|
|
|
|
|
|
|
|
|
||||||
Fixed Price Swaps - Ethane
|
|
31
|
|
|
$
|
0.30
|
|
|
—
|
|
|
$
|
—
|
|
Fixed Price Swaps - Propane
|
|
15
|
|
|
$
|
0.75
|
|
|
—
|
|
|
$
|
—
|
|
|
(1)
|
Volumes presented are MBbls for oil, TBtu for natural gas and MMGal for NGLs. Prices presented are per Bbl of oil, MMBtu of natural gas and Gal for NGLs.
|
(2)
|
EP Energy receives WTI plus the basis spread listed and pays LLS.
|
(3)
|
EP Energy receives Cushing plus the basis spread listed and pays Midland. These positions do not include 306 MBbls of oil at an average price of $1.06 per barrel of oil, which offset our 2.2 MBbls Midland vs. Cushing basis swaps positions.
|
(4)
|
These positions hedge the timing risk associated with our physical sales. We generally sell oil for the delivery month at a sales price based on the average NYMEX WTI
|
(5)
|
EP Energy receives Henry Hub plus the basis spread listed and pays WAHA.
|
|
2018
|
|
2017
|
||
Equivalent Volumes (MBoe/d)
|
|
|
|
|
|
Eagle Ford Shale
|
37.6
|
|
|
39.6
|
|
Permian
|
26.7
|
|
|
26.4
|
|
Altamont
|
17.0
|
|
|
17.7
|
|
Total
|
81.3
|
|
|
83.7
|
|
|
|
|
|
||
Oil (MBbls/d)
|
46.3
|
|
|
48.0
|
|
Natural Gas (MMcf/d)
|
125
|
|
|
126
|
|
NGLs (MBbls/d)
|
14.2
|
|
|
14.8
|
|
•
|
Eagle Ford Shale
—Our Eagle Ford Shale equivalent volumes
decreased
2.0
MBoe/d (approximately
5%
) and oil production
decreased
by
0.3
MBbls/d (approximately
1%
) for the
six
months ended
June 30, 2018
compared to the same period in
2017
. During the six months ended
June 30, 2018
, we frac’d (wells fracture stimulated) 41 gross wells, of which
35
wells were completed for a total of 763 net operated wells.
|
•
|
Permian
—Our Permian basin equivalent volumes
increased
0.3
MBoe/d (approximately
1%
) and oil production
decreased
by
0.8
MBbls/d (approximately
8%
) for the
six
months ended
June 30, 2018
compared to the same period in
2017
. During the
six
months ended
June 30, 2018
, we frac’d 21 gross wells, all of which were completed for a total of 349 net operated wells.
|
•
|
Altamont
—Our Altamont equivalent volumes
decreased
0.7
MBoe/d (approximately
4%
) and oil production
decreased
by
0.6
MBbls/d (approximately
5%
) for the
six
months ended
June 30, 2018
compared to the same period in
2017
. During the
six
months ended
June 30, 2018
, we frac’d 16 gross wells, all of which were completed for a total of 336 net operated wells. We also recompleted 52 gross wells during 2018.
|
|
Quarter ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil
|
$
|
281
|
|
|
$
|
202
|
|
|
$
|
533
|
|
|
$
|
406
|
|
Natural gas
|
18
|
|
|
27
|
|
|
40
|
|
|
57
|
|
||||
NGLs
|
30
|
|
|
22
|
|
|
56
|
|
|
45
|
|
||||
Total physical sales
|
329
|
|
|
251
|
|
|
629
|
|
|
508
|
|
||||
Financial derivatives
|
(64
|
)
|
|
45
|
|
|
(78
|
)
|
|
115
|
|
||||
Total operating revenues
|
265
|
|
|
296
|
|
|
551
|
|
|
623
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil and natural gas purchases
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
Transportation costs
|
26
|
|
|
28
|
|
|
51
|
|
|
57
|
|
||||
Lease operating expense
|
38
|
|
|
39
|
|
|
77
|
|
|
79
|
|
||||
General and administrative
|
28
|
|
|
26
|
|
|
47
|
|
|
46
|
|
||||
Depreciation, depletion and amortization
|
129
|
|
|
124
|
|
|
249
|
|
|
250
|
|
||||
Impairment charges
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Exploration and other expense
|
—
|
|
|
1
|
|
|
1
|
|
|
4
|
|
||||
Taxes, other than income taxes
|
21
|
|
|
15
|
|
|
41
|
|
|
34
|
|
||||
Total operating expenses
|
242
|
|
|
235
|
|
|
466
|
|
|
473
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
23
|
|
|
61
|
|
|
85
|
|
|
150
|
|
||||
Gain (loss) on extinguishment/modification of debt
|
7
|
|
|
13
|
|
|
48
|
|
|
(40
|
)
|
||||
Interest expense
|
(88
|
)
|
|
(82
|
)
|
|
(173
|
)
|
|
(165
|
)
|
||||
Loss before income taxes
|
(58
|
)
|
|
(8
|
)
|
|
(40
|
)
|
|
(55
|
)
|
||||
Income tax benefit
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Net loss
|
$
|
(58
|
)
|
|
$
|
(3
|
)
|
|
$
|
(40
|
)
|
|
$
|
(50
|
)
|
|
Quarter ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil
|
$
|
281
|
|
|
$
|
202
|
|
|
$
|
533
|
|
|
$
|
406
|
|
Natural gas
|
18
|
|
|
27
|
|
|
40
|
|
|
57
|
|
||||
NGLs
|
30
|
|
|
22
|
|
|
56
|
|
|
45
|
|
||||
Total physical sales
|
329
|
|
|
251
|
|
|
629
|
|
|
508
|
|
||||
Financial derivatives
|
(64
|
)
|
|
45
|
|
|
(78
|
)
|
|
115
|
|
||||
Total operating revenues
|
$
|
265
|
|
|
$
|
296
|
|
|
$
|
551
|
|
|
$
|
623
|
|
|
|
|
|
|
|
|
|
||||||||
Volumes:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil (MBbls)
|
4,299
|
|
|
4,452
|
|
|
8,386
|
|
|
8,671
|
|
||||
Natural gas (MMcf)
|
11,274
|
|
|
11,353
|
|
|
22,609
|
|
|
22,818
|
|
||||
NGLs (MBbls)
|
1,334
|
|
|
1,386
|
|
|
2,566
|
|
|
2,682
|
|
||||
Equivalent volumes (MBoe)
|
7,512
|
|
|
7,730
|
|
|
14,720
|
|
|
15,156
|
|
||||
Total MBoe/d
|
82.5
|
|
|
84.9
|
|
|
81.3
|
|
|
83.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Prices per unit
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average realized price on physical sales ($/Bbl)
(2)
|
$
|
65.53
|
|
|
$
|
45.27
|
|
|
$
|
63.60
|
|
|
$
|
46.81
|
|
Average realized price, including financial derivatives ($/Bbl)
(2)(3)
|
$
|
62.30
|
|
|
$
|
51.83
|
|
|
$
|
60.62
|
|
|
$
|
53.33
|
|
Natural gas
|
|
|
|
|
|
|
|
||||||||
Average realized price on physical sales ($/Mcf)
(2)
|
$
|
1.58
|
|
|
$
|
2.40
|
|
|
$
|
1.76
|
|
|
$
|
2.45
|
|
Average realized price, including financial derivatives ($/Mcf)
(2)(3)
|
$
|
1.96
|
|
|
$
|
2.49
|
|
|
$
|
2.00
|
|
|
$
|
2.48
|
|
NGLs
|
|
|
|
|
|
|
|
||||||||
Average realized price on physical sales ($/Bbl)
|
$
|
22.65
|
|
|
$
|
16.00
|
|
|
$
|
21.82
|
|
|
$
|
16.79
|
|
Average realized price, including financial derivatives ($/Bbl)
(3)
|
$
|
22.07
|
|
|
$
|
16.56
|
|
|
$
|
21.51
|
|
|
$
|
17.14
|
|
|
(1)
|
For both of the quarters and
six
months ended
June 30, 2018
and 2017, there were no oil purchases associated with managing our physical oil sales. Natural gas prices for both of the quarter and
six
months ended
June 30, 2018
reflect operating revenues for natural gas reduced by less than $1 million for natural gas purchases associated with managing our physical sales. Natural gas prices for the quarter and
six
months ended June 30,
2017
reflect operating revenues for natural gas reduced by approximately $1 million and $2 million, respectively, for natural gas purchases associated with managing our physical sales.
|
(2)
|
Changes in realized oil and natural gas prices reflect the effects of unhedged locational or basis differentials, unhedged volumes and contractual deductions between the commodity price index and the actual price at which we sold our oil and natural gas.
|
(3)
|
The quarters ended
June 30, 2018
and
2017
, include cash paid of approximately $14 million and cash received of approximately $30 million, respectively, for the settlement of crude oil derivative contracts and approximately $4 million and $1 million of cash received, respectively, for the settlement of natural gas financial derivatives. The
six
months ended
June 30, 2018
and
2017
, include cash paid of approximately $25 million and cash received of approximately $57 million, respectively, for the settlement of crude oil derivative contracts and approximately $5 million and $1 million of cash received, respectively, for the settlement of natural gas financial derivatives. The quarters ended
June 30, 2018
and
2017
also include cash paid of approximately $1 million and cash received of less than $1 million, respectively, for the settlement of NGLs derivative contracts. The
six
months ended
June 30, 2018
and
2017
, include cash paid of approximately $1 million and cash received of approximately $1 million, respectively, for the settlement of NGLs derivative contracts.
|
|
Quarter ended
|
||||||||||||||
|
Oil
|
|
Natural gas
|
|
NGLs
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
June 30, 2017 sales
|
$
|
202
|
|
|
$
|
27
|
|
|
$
|
22
|
|
|
$
|
251
|
|
Change due to prices
|
86
|
|
|
(9
|
)
|
|
9
|
|
|
86
|
|
||||
Change due to volumes
|
(7
|
)
|
|
—
|
|
|
(1
|
)
|
|
(8
|
)
|
||||
June 30, 2018 sales
|
$
|
281
|
|
|
$
|
18
|
|
|
$
|
30
|
|
|
$
|
329
|
|
|
Six months ended
|
||||||||||||||
|
Oil
|
|
Natural gas
|
|
NGLs
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
June 30, 2017 sales
|
$
|
406
|
|
|
$
|
57
|
|
|
$
|
45
|
|
|
$
|
508
|
|
Change due to prices
|
140
|
|
|
(17
|
)
|
|
13
|
|
|
136
|
|
||||
Change due to volumes
|
(13
|
)
|
|
—
|
|
|
(2
|
)
|
|
(15
|
)
|
||||
June 30, 2018 sales
|
$
|
533
|
|
|
$
|
40
|
|
|
$
|
56
|
|
|
$
|
629
|
|
|
Quarter ended June 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Oil
(Bbl)
|
|
Natural gas
(MMBtu)
|
|
Oil
(Bbl)
|
|
Natural gas
(MMBtu)
|
||||||||
Differentials and deducts
|
$
|
(2.27
|
)
|
|
$
|
(1.10
|
)
|
|
$
|
(3.16
|
)
|
|
$
|
(0.79
|
)
|
NYMEX
|
$
|
67.88
|
|
|
$
|
2.80
|
|
|
$
|
48.29
|
|
|
$
|
3.19
|
|
Net back realization %
|
96.7
|
%
|
|
60.7
|
%
|
|
93.5
|
%
|
|
75.2
|
%
|
|
Six months ended June 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Oil
(Bbl)
|
|
Natural gas
(MMBtu)
|
|
Oil
(Bbl)
|
|
Natural gas
(MMBtu)
|
||||||||
Differentials and deducts
|
$
|
(1.67
|
)
|
|
$
|
(1.07
|
)
|
|
$
|
(3.52
|
)
|
|
$
|
(0.80
|
)
|
NYMEX
|
$
|
65.37
|
|
|
$
|
2.90
|
|
|
$
|
50.10
|
|
|
$
|
3.25
|
|
Net back realization %
|
97.4
|
%
|
|
63.1
|
%
|
|
93.0
|
%
|
|
75.4
|
%
|
|
Quarter ended June 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Total
|
|
Per Unit
(1)
|
|
Total
|
|
Per Unit
(1)
|
||||||||
|
(in millions, except per unit costs)
|
||||||||||||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Oil and natural gas purchases
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
0.09
|
|
Transportation costs
|
26
|
|
|
3.49
|
|
|
28
|
|
|
3.66
|
|
||||
Lease operating expense
|
38
|
|
|
4.95
|
|
|
39
|
|
|
5.07
|
|
||||
General and administrative
(2)
|
28
|
|
|
3.74
|
|
|
26
|
|
|
3.43
|
|
||||
Depreciation, depletion and amortization
|
129
|
|
|
17.20
|
|
|
124
|
|
|
15.99
|
|
||||
Impairment charges
|
—
|
|
|
—
|
|
|
1
|
|
|
0.05
|
|
||||
Exploration and other expense
|
—
|
|
|
—
|
|
|
1
|
|
|
0.20
|
|
||||
Taxes, other than income taxes
|
21
|
|
|
2.82
|
|
|
15
|
|
|
1.97
|
|
||||
Total operating expenses
|
$
|
242
|
|
|
$
|
32.20
|
|
|
$
|
235
|
|
|
$
|
30.46
|
|
|
|
|
|
|
|
|
|
||||||||
Total equivalent volumes (MBoe)
|
7,512
|
|
|
|
|
|
7,730
|
|
|
|
|
|
Six months ended June 30,
|
|||||||||||||||
|
2018
|
|
2017
|
|||||||||||||
|
Total
|
|
Per Unit
(1)
|
|
Total
|
|
Per Unit
(1)
|
|||||||||
|
(in millions, except per unit costs)
|
|||||||||||||||
Operating expenses
|
|
|
|
|
|
|
|
|||||||||
Oil and natural gas purchases
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
|
0.12
|
|
$
|
0.12
|
|
|
Transportation costs
|
51
|
|
|
3.46
|
|
|
57
|
|
3.75
|
|
3.75
|
|
||||
Lease operating expense
|
77
|
|
|
5.21
|
|
|
79
|
|
5.21
|
|
5.21
|
|
||||
General and administrative
(2)
|
47
|
|
|
3.17
|
|
|
46
|
|
3.05
|
|
3.05
|
|
||||
Depreciation, depletion and amortization
|
249
|
|
|
16.95
|
|
|
250
|
|
16.48
|
|
16.48
|
|
||||
Impairment charges
|
—
|
|
|
—
|
|
|
1
|
|
|
0.04
|
|
|||||
Exploration and other expense
|
1
|
|
|
0.09
|
|
|
4
|
|
|
0.29
|
|
|||||
Taxes, other than income taxes
|
41
|
|
|
2.78
|
|
|
34
|
|
|
2.28
|
|
|||||
Total operating expenses
|
$
|
466
|
|
|
$
|
31.66
|
|
|
$
|
473
|
|
|
$
|
31.22
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total equivalent volumes (MBoe)
|
14,720
|
|
|
|
|
15,156
|
|
|
|
|
|
(1)
|
Per unit costs are based on actual amounts rather than the rounded totals presented.
|
(2)
|
For the
quarter and six
months ended
June 30, 2018
, amount includes approximately
$2 million
or
$0.38
per Boe and
$4 million
or
$0.30
per Boe, respectively, of non-cash compensation expense. The
quarter and six
months ended
June 30, 2018
also include approximately
$6 million
or
$0.77
per Boe and
$6 million
or
$0.40
per Boe, respectively, of transition and severance costs related to workforce reductions. For the
quarter and six
months ended
June 30, 2017
, amount includes approximately
$6 million
or
$0.80
per Boe and
$2 million
or
$0.14
per Boe, respectively, of non-cash compensation expense.
|
|
Quarter ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation, depletion and amortization ($/Boe)
|
$
|
17.20
|
|
|
$
|
15.99
|
|
|
$
|
16.95
|
|
|
$
|
16.48
|
|
|
Quarter ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net loss
|
$
|
(58
|
)
|
|
$
|
(3
|
)
|
|
$
|
(40
|
)
|
|
$
|
(50
|
)
|
Income tax benefit
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||
Interest expense, net of capitalized interest
|
88
|
|
|
82
|
|
|
173
|
|
|
165
|
|
||||
Depreciation, depletion and amortization
|
129
|
|
|
124
|
|
|
249
|
|
|
250
|
|
||||
Exploration expense
|
1
|
|
|
1
|
|
|
2
|
|
|
4
|
|
||||
EBITDAX
|
160
|
|
|
199
|
|
|
384
|
|
|
364
|
|
||||
Mark-to-market on financial derivatives
(1)
|
64
|
|
|
(45
|
)
|
|
78
|
|
|
(115
|
)
|
||||
Cash settlements and cash premiums on financial derivatives
(2)
|
(10
|
)
|
|
31
|
|
|
(20
|
)
|
|
59
|
|
||||
Non-cash portion of compensation expense
(3)
|
2
|
|
|
6
|
|
|
4
|
|
|
2
|
|
||||
Transition, severance and other costs
(4)
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
(Gain) loss on extinguishment/modification of debt
|
(7
|
)
|
|
(13
|
)
|
|
(48
|
)
|
|
40
|
|
||||
Impairment charges
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Adjusted EBITDAX
|
$
|
215
|
|
|
$
|
179
|
|
|
$
|
404
|
|
|
$
|
351
|
|
|
(1)
|
Represents the income statement impact of financial derivatives.
|
(2)
|
Represents actual cash settlements related to financial derivatives. No cash premiums were received or paid for the quarters and
six
months ended
June 30, 2018
and 2017.
|
(3)
|
There were no cash payments for the quarters ended
June 30, 2018
and 2017 and none for the
six
months ended
June 30, 2018
. For the
six
months ended
June 30, 2017
, cash payments were approximately $4 million.
|
(4)
|
Reflects transition and severance costs related to workforce reductions.
|
|
Capital
Expenditures
(1)
(in millions)
|
|
Average Drilling
Rigs
|
|||
Eagle Ford Shale
|
$
|
257
|
|
|
3.0
|
|
Permian
|
91
|
|
|
0.6
|
|
|
Altamont
|
63
|
|
|
2.0
|
|
|
Total
|
$
|
411
|
|
|
5.6
|
|
Acquisition capital
(2)
|
$
|
264
|
|
|
|
|
Total Capital Expenditures
|
$
|
675
|
|
|
|
|
(1)
|
Represents accrual-based capital expenditures.
|
(2)
|
Includes a deposit made in December 2017.
|
|
Six months ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash Inflows
|
|
|
|
|
|
||
Operating activities
|
|
|
|
|
|
||
Net loss
|
$
|
(40
|
)
|
|
$
|
(50
|
)
|
(Gain) loss on extinguishment/modification of debt
|
(48
|
)
|
|
40
|
|
||
Other income adjustments
|
262
|
|
|
265
|
|
||
Changes in assets and liabilities
|
43
|
|
|
(74
|
)
|
||
Total cash flow from operations
|
217
|
|
|
181
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
|
|
||
Proceeds from the sale of assets
|
169
|
|
|
—
|
|
||
Cash inflows from investing activities
|
169
|
|
|
—
|
|
||
|
|
|
|
|
|
||
Financing activities
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
1,665
|
|
|
1,385
|
|
||
Cash inflows from financing activities
|
1,665
|
|
|
1,385
|
|
||
|
|
|
|
||||
Total cash inflows
|
$
|
2,051
|
|
|
$
|
1,566
|
|
|
|
|
|
||||
Cash Outflows
|
|
|
|
|
|
||
Investing activities
|
|
|
|
|
|
||
Capital expenditures
|
$
|
384
|
|
|
$
|
266
|
|
Cash paid for acquisitions
|
239
|
|
|
—
|
|
||
Cash outflows from investing activities
|
623
|
|
|
266
|
|
||
|
|
|
|
|
|
||
Financing activities
|
|
|
|
|
|
||
Repayments and repurchases of long-term debt
|
1,291
|
|
|
1,253
|
|
||
Fees/costs on debt exchange
|
62
|
|
|
—
|
|
||
Debt issue costs
|
20
|
|
|
20
|
|
||
Other
|
1
|
|
|
3
|
|
||
Cash outflows from financing activities
|
1,374
|
|
|
1,276
|
|
||
|
|
|
|
||||
Total cash outflows
|
$
|
1,997
|
|
|
$
|
1,542
|
|
|
|
|
|
||||
Net change in cash, cash equivalents and restricted cash
|
$
|
54
|
|
|
$
|
24
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021 - 2022
|
|
Thereafter
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Financing obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Principal
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
246
|
|
|
$
|
195
|
|
|
$
|
3,954
|
|
|
$
|
4,403
|
|
Interest
|
182
|
|
|
364
|
|
|
348
|
|
|
671
|
|
|
653
|
|
|
2,218
|
|
||||||
Liabilities from derivatives
|
48
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
||||||
Operating leases
|
5
|
|
|
4
|
|
|
4
|
|
|
8
|
|
|
13
|
|
|
34
|
|
||||||
Other contractual commitments and purchase obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Volume and transportation commitments
|
31
|
|
|
62
|
|
|
57
|
|
|
92
|
|
|
7
|
|
|
249
|
|
||||||
Other obligations
|
28
|
|
|
21
|
|
|
8
|
|
|
14
|
|
|
3
|
|
|
74
|
|
||||||
Total contractual obligations
|
$
|
294
|
|
|
$
|
472
|
|
|
$
|
663
|
|
|
$
|
980
|
|
|
$
|
4,630
|
|
|
$
|
7,039
|
|
•
|
Volume and Transportation Commitments.
Included in these amounts are commitments for demand charges for firm access to natural gas transportation, volume deficiency contracts and firm oil capacity contracts.
|
•
|
Other Obligations.
Included in these amounts are commitments for drilling, completion and seismic
|
|
|
|
Oil, Natural Gas and NGLs Derivatives
|
||||||||||||||||
|
|
|
10 Percent Increase
|
|
10 Percent Decrease
|
||||||||||||||
|
Fair Value
|
|
Fair Value
|
|
Change
|
|
Fair Value
|
|
Change
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Price impact
(1)
|
$
|
(52
|
)
|
|
$
|
(146
|
)
|
|
$
|
(94
|
)
|
|
$
|
30
|
|
|
$
|
82
|
|
|
|
|
Oil, Natural Gas and NGLs Derivatives
|
||||||||||||||||
|
|
|
1 Percent Increase
|
|
1 Percent Decrease
|
||||||||||||||
|
Fair Value
|
|
Fair Value
|
|
Change
|
|
Fair
Value
|
|
Change
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Discount rate
(2)
|
$
|
(52
|
)
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
(53
|
)
|
|
$
|
(1
|
)
|
Credit rate
(3)
|
$
|
(52
|
)
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
(53
|
)
|
|
$
|
(1
|
)
|
|
(1)
|
Presents the hypothetical sensitivity of our commodity-based derivatives to changes in fair values arising from changes in oil, natural gas and NGLs prices.
|
(2)
|
Presents the hypothetical sensitivity of our commodity-based derivatives to changes in the discount rates we used to determine the fair value of our derivatives.
|
(3)
|
Presents the hypothetical sensitivity of our commodity-based derivatives to changes in credit risk of our counterparties.
|
•
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
•
|
may apply standards of materiality in a way that is different from what may be viewed as material to certain investors; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
*101.INS
|
|
XBRL Instance Document.
|
|
|
|
*101.SCH
|
|
XBRL Schema Document.
|
|
|
|
*101.CAL
|
|
XBRL Calculation Linkbase Document.
|
|
|
|
*101.DEF
|
|
XBRL Definition Linkbase Document.
|
|
|
|
*101.LAB
|
|
XBRL Labels Linkbase Document.
|
|
|
|
*101.PRE
|
|
XBRL Presentation Linkbase Document.
|
|
EP ENERGY CORPORATION
|
|
|
|
|
Date: August 9, 2018
|
/s/ Kyle A. McCuen
|
|
Kyle A. McCuen
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer)
|
Employee:
|
[___________________________________]
|
||
Date of Grant:
|
[___________]
|
||
Threshold PSUs:
|
[___________] PSUs
|
||
Performance Period:
|
November 1, 2017 (the “
Performance Period Commencement Date
”) through October 31, 2021 (the “
Performance Period End Date
”)
|
||
Vesting Schedule:
|
Except as expressly provided in Section 3(b) of the Agreement, the PSUs shall become vested in accordance with the schedule set forth in the following table, so long as you remain continuously employed by the Company from the Date of Grant through each vesting date set forth below:
|
||
|
Vesting Date
|
|
Portion of PSUs That Become Vested
|
|
First Anniversary of the Performance Period Commencement Date
|
|
20%
|
|
Second Anniversary of the Performance Period Commencement Date
|
|
20%
|
|
Third Anniversary of the Performance Period Commencement Date
|
|
20%
|
|
Fourth Anniversary of the Performance Period Commencement Date
|
|
20%
|
|
Second Anniversary of the Performance Period End Date
|
|
20%
|
|
|
|
|
Earning of PSUs:
|
Subject to the Agreement, the Plan and the other terms and conditions set forth herein, the PSUs shall become earned in the manner set forth below. The number of PSUs, if any, that become earned in the Performance Period will be determined in accordance with the following table (the “
Performance Goals
”):
|
||
|
Average Stock Price
|
|
PSUs Earned
|
Below Threshold
|
Less than $5.00
|
|
—
|
Threshold
|
At least $5.00, but less than $6.00
|
|
100.00%
|
|
At least $6.00, but less than $7.00
|
|
125.00%
|
|
At least $7.00, but less than $8.00
|
|
178.57%
|
|
At least $8.00, but less than $9.00
|
|
312.50%
|
|
At least $9.00, but less than $10.00
|
|
416.67%
|
|
At least $10.00, but less than $12.00
|
|
500.00%
|
|
EP Energy Corporation
|
(A)
|
if Employee is involuntarily terminated by the Company without Cause, the Prohibited Period shall end on the date that is six months following Employee’s termination date (or such earlier date as corresponds with the number of months of severance pay received by Employee from the Company); and
|
(B)
|
if Employee voluntarily resigns or is terminated for Cause, the Prohibited Period shall end on the date that is twelve months following Employee’s termination date.
|
Name of Grantee:
|
|
Number of Shares of Restricted Stock Granted:
|
|
Effective Date of Grant:
|
|
Restriction Period:
|
Subject to the terms of the Plan and the Restricted Stock Award Agreement attached hereto, the Restriction Period shall lapse, and the Shares shall vest and become free of the forfeiture and transfer restrictions contained in the Restricted Stock Award Agreement on the date the Plan Administrator certifies the results of the 2018 Scorecard for incentive purposes, with such Shares vesting in an amount equal to the 2018 Scorecard achievement level percentage.
For example, if the Plan Administrator certifies a 2018 Scorecard achievement level of 100% or above, then 100% of the Shares shall vest in full as of the date of such certification. If the Plan Administrator certifies a 2018 Scorecard achievement level of 75%, then 75% of the Shares shall vest in full as of such date, with the remaining 25% of Shares forfeited.
For avoidance of doubt, any Shares that do not vest based upon the 2018 Scorecard achievement level shall be forfeited immediately.
|
|
EP Energy Corporation
|
|
Six months ended
June 30, |
|
Years Ended December 31,
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Loss) income from continuing operations before income taxes
|
$
|
(40
|
)
|
|
$
|
(55
|
)
|
|
$
|
(203
|
)
|
|
$
|
(26
|
)
|
|
$
|
(4,326
|
)
|
|
$
|
1,159
|
|
|
$
|
8
|
|
Loss from equity investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
(Loss) income before income taxes before adjustment for loss from equity investees
|
(40
|
)
|
|
(55
|
)
|
|
(203
|
)
|
|
(26
|
)
|
|
(4,326
|
)
|
|
1,159
|
|
|
20
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed charges
|
177
|
|
|
167
|
|
|
331
|
|
|
318
|
|
|
346
|
|
|
341
|
|
|
375
|
|
|||||||
Distributed income of equity investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||||
Capitalized interest
|
(3
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(14
|
)
|
|
(21
|
)
|
|
(19
|
)
|
|||||||
Total earnings available for fixed charges
|
$
|
134
|
|
|
$
|
110
|
|
|
$
|
124
|
|
|
$
|
288
|
|
|
$
|
(3,994
|
)
|
|
$
|
1,479
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest and debt expense
|
$
|
176
|
|
|
$
|
167
|
|
|
$
|
330
|
|
|
$
|
316
|
|
|
$
|
344
|
|
|
$
|
339
|
|
|
$
|
373
|
|
Interest component of rent
|
1
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|||||||
Total fixed charges
|
$
|
177
|
|
|
$
|
167
|
|
|
$
|
331
|
|
|
$
|
318
|
|
|
$
|
346
|
|
|
$
|
341
|
|
|
$
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ratio of earnings to fixed charges
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.35x
|
|
|
1.07x
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Earnings for the six months ended June 30, 2018 and 2017 were inadequate to cover fixed charges by $43 million and $57 million, respectively.
Earnings for the years ended December 31, 2017 and 2016 were inadequate to cover fixed charges by $207 million and $30 million, respectively. Earnings for the year ended December 31, 2015 were inadequate to cover fixed charges by $4,340 million, primarily due to non-cash impairment charges of approximately $4.3 billion associated with proved and unproved oil and natural gas properties related to a decline in commodity prices.
|
|
/s/ Russell E. Parker
|
|
Russell E. Parker
|
|
President and Chief Executive Officer
|
|
EP Energy Corporation
|
|
/s/ Kyle A. McCuen
|
|
Kyle A. McCuen
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
EP Energy Corporation
|
|
/s/ Russell E. Parker
|
|
Russell E. Parker
|
|
President and Chief Executive Officer
|
|
EP Energy Corporation
|
|
|
|
Date: August 9, 2018
|
|
/s/ Kyle A. McCuen
|
|
Kyle A. McCuen
|
|
Senior Vice President, Chief Financial
|
|
Officer and Treasurer
|
|
EP Energy Corporation
|
|
|
|
Date: August 9, 2018
|