|
Delaware
|
|
47-5381253
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
1001 Seventeenth Street, Suite 1800, Denver, Colorado
|
|
80202
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
ý
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
|
|
|
|
Page
|
|
|
||
|
|
||
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
•
|
our business strategy and future drilling plans;
|
•
|
our reserves and our ability to replace the reserves we produce through drilling and property acquisitions;
|
•
|
our drilling prospects, inventories, projects and programs;
|
•
|
our financial strategy, liquidity and capital required for our development program;
|
•
|
our realized oil, natural gas and NGL prices;
|
•
|
the timing and amount of our future production of oil, natural gas and NGLs;
|
•
|
our hedging strategy and results;
|
•
|
our competition and government regulations;
|
•
|
our ability to obtain permits and governmental approvals;
|
•
|
our pending legal or environmental matters;
|
•
|
our marketing of oil, natural gas and NGLs;
|
•
|
our leasehold or business acquisitions;
|
•
|
general economic conditions;
|
•
|
credit markets;
|
•
|
uncertainty regarding our future operating results; and
|
•
|
our plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
38,224
|
|
|
$
|
117,315
|
|
Accounts receivable, net
|
108,431
|
|
|
78,786
|
|
||
Derivative instruments
|
7,148
|
|
|
433
|
|
||
Prepaid and other current assets
|
12,521
|
|
|
6,051
|
|
||
Total current assets
|
166,324
|
|
|
202,585
|
|
||
Oil and natural gas properties, successful efforts method
|
|
|
|
||||
Unproved properties
|
1,881,979
|
|
|
1,952,680
|
|
||
Proved properties
|
1,855,890
|
|
|
1,602,002
|
|
||
Accumulated depreciation, depletion and amortization
|
(238,676
|
)
|
|
(173,906)
|
|
||
Total oil and natural gas properties, net
|
3,499,193
|
|
|
3,380,776
|
|
||
Other property and equipment, net
|
6,251
|
|
|
5,465
|
|
||
Total property and equipment, net
|
3,505,444
|
|
|
3,386,241
|
|
||
Noncurrent assets
|
|
|
|
||||
Derivative instruments
|
1,188
|
|
|
662
|
|
||
Other noncurrent assets
|
19,607
|
|
|
27,081
|
|
||
Total assets
|
$
|
3,692,563
|
|
|
$
|
3,616,569
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
180,048
|
|
|
$
|
199,533
|
|
Derivative instruments
|
—
|
|
|
240
|
|
||
Other current liabilities
|
483
|
|
|
—
|
|
||
Total current liabilities
|
180,531
|
|
|
199,773
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt, net
|
390,921
|
|
|
390,764
|
|
||
Asset retirement obligations
|
12,356
|
|
|
12,161
|
|
||
Deferred tax liability
|
22,367
|
|
|
9,899
|
|
||
Other long-term liabilities
|
670
|
|
|
—
|
|
||
Total liabilities
|
606,845
|
|
|
612,597
|
|
||
Shareholders’ equity
|
|
|
|
||||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized:
|
|
|
|
||||
Series A: 1 share issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value, 620,000,000 shares authorized:
|
|
|
|
||||
Class A: 264,858,498 shares issued and 263,738,776 shares outstanding at March 31, 2018 and 261,337,636 shares issued and 260,327,920 shares outstanding at December 31, 2017
|
27
|
|
|
26
|
|
||
Class C (Convertible): 12,313,691 and 15,661,338 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
|
1
|
|
|
2
|
|
||
Additional paid-in capital
|
2,814,051
|
|
|
2,767,558
|
|
||
Retained earnings
|
132,729
|
|
|
66,639
|
|
||
Total shareholders’ equity
|
2,946,808
|
|
|
2,834,225
|
|
||
Noncontrolling interest
|
138,910
|
|
|
169,747
|
|
||
Total equity
|
3,085,718
|
|
|
3,003,972
|
|
||
Total liabilities and equity
|
$
|
3,692,563
|
|
|
$
|
3,616,569
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating revenues
|
|
|
|
||||
Oil and gas sales
|
215,898
|
|
|
61,097
|
|
||
Operating expenses
|
|
|
|
||||
Lease operating expenses
|
16,276
|
|
|
7,278
|
|
||
Severance and ad valorem taxes
|
14,173
|
|
|
3,187
|
|
||
Gathering, processing and transportation expenses
|
13,828
|
|
|
5,244
|
|
||
Depreciation, depletion and amortization
|
66,010
|
|
|
26,160
|
|
||
Impairment and abandonment expenses
|
—
|
|
|
(29
|
)
|
||
Exploration expense
|
3,447
|
|
|
1,181
|
|
||
General and administrative expenses
|
14,297
|
|
|
10,884
|
|
||
Total operating expenses
|
128,031
|
|
|
53,905
|
|
||
|
|
|
|
||||
Income from operations
|
87,867
|
|
|
7,192
|
|
||
|
|
|
|
||||
Other income (expense)
|
|
|
|
||||
Gain (loss) on sale of oil and natural gas properties
|
15
|
|
|
166
|
|
||
Interest expense
|
(5,813
|
)
|
|
(410
|
)
|
||
Net gain (loss) on derivative instruments
|
7,843
|
|
|
3,759
|
|
||
Other income (expense)
|
(3
|
)
|
|
—
|
|
||
Other income (expense)
|
2,042
|
|
|
3,515
|
|
||
|
|
|
|
||||
Income before income taxes
|
89,909
|
|
|
10,707
|
|
||
Income tax expense
|
19,137
|
|
|
—
|
|
||
Net income
|
70,772
|
|
|
10,707
|
|
||
Less: Net income attributable to noncontrolling interest
|
4,682
|
|
|
884
|
|
||
Net income attributable to Class A Common Stock
|
$
|
66,090
|
|
|
$
|
9,823
|
|
|
|
|
|
||||
Income per share of Class A Common Stock:
|
|
|
|
||||
Basic
|
$
|
0.25
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.04
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
70,772
|
|
|
$
|
10,707
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
66,010
|
|
|
26,160
|
|
||
Stock-based compensation expense
|
4,333
|
|
|
2,610
|
|
||
Exploratory dry hole cost
|
221
|
|
|
—
|
|
||
Deferred tax expense
|
19,137
|
|
|
—
|
|
||
(Gain) loss on sale of oil and natural gas properties
|
(15
|
)
|
|
(166
|
)
|
||
Non-cash portion of derivative (gain) loss
|
(7,482
|
)
|
|
(4,156
|
)
|
||
Amortization of debt issuance costs
|
379
|
|
|
93
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
(Increase) decrease in accounts receivable
|
(29,555
|
)
|
|
(9,143
|
)
|
||
Increase in prepaid and other assets
|
(7
|
)
|
|
(382
|
)
|
||
Increase (decrease) in accounts payable and other liabilities
|
8,033
|
|
|
(6,475
|
)
|
||
Net cash provided by operating activities
|
131,826
|
|
|
19,248
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions of oil and natural gas properties
|
(101,753
|
)
|
|
(38,678
|
)
|
||
Drilling and development capital expenditures
|
(250,548
|
)
|
|
(62,121
|
)
|
||
Purchases of other property and equipment
|
(1,763
|
)
|
|
(1,139
|
)
|
||
Proceeds from sales of oil and natural gas properties
|
135,481
|
|
|
3,518
|
|
||
Net cash used in investing activities
|
(218,583
|
)
|
|
(98,420
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from revolving credit facility
|
85,000
|
|
|
—
|
|
||
Repayment of revolving credit facility
|
(85,000
|
)
|
|
—
|
|
||
Proceeds from stock options exercised
|
164
|
|
|
—
|
|
||
Restricted stock used for tax withholdings
|
(192
|
)
|
|
—
|
|
||
Debt issuance costs
|
(906
|
)
|
|
(37
|
)
|
||
Net cash used in financing activities
|
(934
|
)
|
|
(37
|
)
|
||
Net decrease in cash and cash equivalents and restricted cash
|
(87,691
|
)
|
|
(79,209
|
)
|
||
Cash and cash equivalents and restricted cash, beginning of period
|
125,915
|
|
|
134,083
|
|
||
Cash and cash equivalents, end of period
|
$
|
38,224
|
|
|
$
|
54,874
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Supplemental cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
784
|
|
|
$
|
226
|
|
Supplemental non-cash activity
|
|
|
|
||||
Accrued capital expenditures included in accounts payable and accrued expenses
|
$
|
111,824
|
|
|
$
|
63,978
|
|
Asset retirement obligations incurred, including revisions to estimates
|
243
|
|
|
274
|
|
|
Common Stock
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
|
Class A
|
|
Class C
|
|
Series A
|
|
Series B
|
|
Additional Paid-In Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
Total Shareholder's Equity
|
|
Non-controlling Interest
|
|
Total Equity
|
||||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|||||||||||||||||||||||||||
Balance at December 31, 2016
|
201,092
|
|
|
$
|
20
|
|
|
19,156
|
|
|
$
|
2
|
|
|
—
|
|
|
$
|
—
|
|
|
104
|
|
|
$
|
—
|
|
|
$
|
2,364,049
|
|
|
$
|
(8,929
|
)
|
|
$
|
2,355,142
|
|
|
$
|
197,793
|
|
|
$
|
2,552,935
|
|
Warrants exercised
|
6,233
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Restricted stock issued
|
268
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,610
|
|
|
—
|
|
|
2,610
|
|
|
—
|
|
|
2,610
|
|
|||||||||
Change in equity due to issuance of shares by Centennial Resource Production, LLC
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
—
|
|
|
2,846
|
|
|
(2,846
|
)
|
|
—
|
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,823
|
|
|
9,823
|
|
|
884
|
|
|
10,707
|
|
|||||||||
Balance at March 31, 2017
|
207,593
|
|
|
$
|
21
|
|
|
19,156
|
|
|
$
|
2
|
|
|
—
|
|
|
$
|
—
|
|
|
104
|
|
|
$
|
—
|
|
|
$
|
2,369,504
|
|
|
$
|
894
|
|
|
$
|
2,370,421
|
|
|
$
|
195,831
|
|
|
$
|
2,566,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at December 31, 2017
|
261,338
|
|
|
$
|
26
|
|
|
15,661
|
|
|
$
|
2
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
2,767,558
|
|
|
$
|
66,639
|
|
|
$
|
2,834,225
|
|
|
$
|
169,747
|
|
|
$
|
3,003,972
|
|
Restricted stock issued
|
199
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Restricted stock forfeited
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Restricted stock used for tax withholding
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(192
|
)
|
|
—
|
|
|
(192
|
)
|
|
—
|
|
|
(192
|
)
|
|||||||||
Option Exercises
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
164
|
|
|||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,333
|
|
|
—
|
|
|
4,333
|
|
|
—
|
|
|
4,333
|
|
|||||||||
Conversion of common shares from Class C to Class A, net of tax
|
3,347
|
|
|
1
|
|
|
(3,347
|
)
|
|
(1
|
)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
42,188
|
|
|
—
|
|
|
42,188
|
|
|
(35,519
|
)
|
|
6,669
|
|
||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66,090
|
|
|
66,090
|
|
|
4,682
|
|
|
70,772
|
|
|||||||||
Balance at March 31, 2018
|
264,858
|
|
|
$
|
27
|
|
|
12,314
|
|
|
$
|
1
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
2,814,051
|
|
|
$
|
132,729
|
|
|
$
|
2,946,808
|
|
|
138,910
|
|
|
3,085,718
|
|
(in thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Accrued oil and gas sales receivable
|
$
|
76,545
|
|
|
$
|
52,891
|
|
Joint interest billings
|
22,157
|
|
|
25,256
|
|
||
Receivables for divestitures
|
9,602
|
|
|
—
|
|
||
Other
|
127
|
|
|
639
|
|
||
Accounts receivable, net
|
$
|
108,431
|
|
|
$
|
78,786
|
|
(in thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Accounts payable
|
$
|
37,136
|
|
|
$
|
64,004
|
|
Accrued capital expenditures
|
92,113
|
|
|
90,511
|
|
||
Revenues payable
|
29,523
|
|
|
23,390
|
|
||
Accrued interest
|
7,311
|
|
|
1,936
|
|
||
Accrued employee compensation and benefits
|
2,974
|
|
|
8,350
|
|
||
Accrued expenses and other
|
10,991
|
|
|
11,342
|
|
||
Accounts payable and accrued expenses
|
$
|
180,048
|
|
|
$
|
199,533
|
|
Asset retirement obligations at January 1, 2018
|
$
|
12,161
|
|
Liabilities acquired
|
16
|
|
|
Liabilities incurred
|
253
|
|
|
Liabilities divested
|
(253
|
)
|
|
Accretion expense
|
189
|
|
|
Revisions to estimated cash flows
|
(10
|
)
|
|
Asset retirement obligations at March 31, 2018
|
$
|
12,356
|
|
|
For the Three Months Ended March 31,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Restricted stock awards
|
$
|
1,775
|
|
|
$
|
856
|
|
Stock option awards
|
2,206
|
|
|
1,754
|
|
||
Performance stock units
|
352
|
|
|
—
|
|
||
Total stock-based compensation expense
|
$
|
4,333
|
|
|
$
|
2,610
|
|
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested balance as of December 31, 2017
|
1,009,716
|
|
|
$
|
17.64
|
|
Granted
|
199,320
|
|
|
$
|
19.00
|
|
Vested
|
(63,367
|
)
|
|
$
|
18.50
|
|
Forfeited
|
(25,948
|
)
|
|
$
|
16.85
|
|
Unvested balance as of March 31, 2018
|
1,119,721
|
|
|
$
|
17.85
|
|
|
For the Three Months Ended March 31,
|
|||||
|
2018
|
|
2017
|
|||
Weighted average grant-date fair value per share
|
$
|
7.96
|
|
|
7.21
|
|
Expected term (in years)
|
6
|
|
|
6
|
|
|
Expected stock volatility
|
37
|
%
|
|
38.2
|
%
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
Risk-free interest rate
|
2.3
|
%
|
|
2.0
|
%
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
|||||
Outstanding as of December 31, 2017
|
4,290,001
|
|
|
$
|
16.15
|
|
|
|
|
|
||
Granted
|
37,000
|
|
|
$
|
20.00
|
|
|
|
|
|
||
Exercised
|
(10,000
|
)
|
|
$
|
16.43
|
|
|
|
|
|
||
Forfeited
|
(47,668
|
)
|
|
$
|
14.95
|
|
|
|
|
|
||
Outstanding as of March 31, 2018
|
4,269,333
|
|
|
$
|
16.20
|
|
|
8.78
|
|
$
|
9,417
|
|
Exercisable as of March 31, 2018
|
1,211,612
|
|
|
$
|
15.83
|
|
|
8.69
|
|
$
|
2,911
|
|
Unvested Options at March 31, 2018
|
3,057,721
|
|
|
$
|
16.28
|
|
|
8.81
|
|
$
|
6,506
|
|
|
Period
|
|
Volume (Bbl)
|
|
Weighted Average Differential ($/Bbl)
(1)
|
|||
Crude oil basis swaps
|
April 2018 - June 2018
|
|
455,000
|
|
|
$
|
0.18
|
|
|
April 2018 - December 2018
|
|
1,375,000
|
|
|
$
|
0.00
|
|
|
(1)
|
The oil basis swap contracts are settled based on the difference between the arithmetic average of ARGUS MIDLAND WTI and ARGUS WTI CUSHING settlements during the relevant calculation period.
|
|
Period
|
|
Volume (MMBtu)
|
|
Weighted Average Differential ($/MMBtu)
(1)
|
|||
Natural gas basis swaps
|
April 2018 - December 2018
|
|
1,375,000
|
|
|
$
|
(0.43
|
)
|
|
January 2019 - December 2019
|
|
1,825,000
|
|
|
$
|
(0.43
|
)
|
|
(1)
|
The natural gas basis swap contracts are settled based on the difference between Inside FERC’s West Texas WAHA price of natural gas and the NYMEX price of Natural Gas during the relevant calculation period.
|
|
For the Three Months Ended March 31,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Realized gain (loss) on derivative instruments
|
$
|
361
|
|
|
$
|
(397
|
)
|
Unrealized gain (loss) on derivative instruments
|
7,482
|
|
|
4,156
|
|
||
Net gain (loss) on derivative instruments
|
$
|
7,843
|
|
|
$
|
3,759
|
|
|
|
|
Gross Asset/Liability Amounts
|
||||||
(in thousands)
|
Balance Sheet Classification
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Derivative Assets
|
|
|
|
|
|
||||
Derivative instruments
|
Current assets
|
|
$
|
7,148
|
|
|
$
|
720
|
|
Derivative instruments
|
Noncurrent assets
|
|
1,188
|
|
|
662
|
|
||
Total derivative assets
|
|
|
$
|
8,336
|
|
|
$
|
1,382
|
|
Derivative Liabilities
|
|
|
|
|
|
||||
Derivative instruments
|
Current liabilities
|
|
$
|
—
|
|
|
$
|
527
|
|
•
|
Level 1: Quoted Prices in Active Markets for Identical Assets – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
•
|
Level 2: Significant Other Observable Inputs – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
•
|
Level 3: Significant Unobservable Inputs – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting Adjustments
(1)
|
|
Net Amounts Presented on the Balance Sheets
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity derivative asset - current
|
$
|
—
|
|
|
$
|
7,148
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,148
|
|
Commodity derivative asset - noncurrent
|
—
|
|
|
1,188
|
|
|
—
|
|
|
—
|
|
|
1,188
|
|
|||||
Total financial assets
|
$
|
—
|
|
|
$
|
8,336
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,336
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity derivative asset - current
|
$
|
—
|
|
|
$
|
720
|
|
|
$
|
—
|
|
|
$
|
(287
|
)
|
|
$
|
433
|
|
Commodity derivative asset - noncurrent
|
—
|
|
|
662
|
|
|
—
|
|
|
—
|
|
|
662
|
|
|||||
Total financial assets
|
$
|
—
|
|
|
$
|
1,382
|
|
|
$
|
—
|
|
|
$
|
(287
|
)
|
|
$
|
1,095
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity derivative liability - current
|
$
|
—
|
|
|
$
|
527
|
|
|
$
|
—
|
|
|
$
|
(287
|
)
|
|
$
|
240
|
|
|
(1)
|
The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination.
|
|
For the Three Months Ended March 31,
|
||||||
(in thousands, except per share data)
|
2018
|
|
2017
|
||||
Net income attributable to Class A Common Stock
|
$
|
66,090
|
|
|
$
|
9,823
|
|
Less: Income allocable to participating securities
|
—
|
|
|
1,125
|
|
||
Adjusted net income attributable to Class A Common Stock
|
66,090
|
|
|
8,698
|
|
||
|
|
|
|
||||
Basic net earnings per share of Class A Common Stock
|
$
|
0.25
|
|
|
$
|
0.04
|
|
Diluted net earnings per share of Class A Common Stock
|
$
|
0.25
|
|
|
$
|
0.04
|
|
|
|
|
|
||||
Basic weighted average shares of Class A Common Stock outstanding
|
261,324
|
|
|
201,776
|
|
||
Add: Dilutive effects of equity awards
|
3,859
|
|
|
3,166
|
|
||
Diluted weighted average shares of Class A Common Stock outstanding
|
265,183
|
|
|
204,942
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating revenues (in thousands):
|
|
|
|
||||
Oil sales
|
$
|
174,841
|
|
|
$
|
46,681
|
|
Natural gas sales
|
18,580
|
|
|
8,241
|
|
||
NGL sales
|
22,477
|
|
|
6,175
|
|
||
Oil and gas sales
|
$
|
215,898
|
|
|
$
|
61,097
|
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||||||||||||
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
||||||||||||||||||
Crude oil (per Bbl)
|
$
|
33.49
|
|
|
$
|
45.70
|
|
|
$
|
45.00
|
|
|
$
|
49.27
|
|
|
$
|
51.82
|
|
|
$
|
48.32
|
|
|
$
|
48.17
|
|
|
$
|
55.31
|
|
|
$
|
62.91
|
|
Natural gas (per MMBtu)
|
$
|
1.98
|
|
|
$
|
2.25
|
|
|
$
|
2.80
|
|
|
$
|
3.17
|
|
|
$
|
3.06
|
|
|
$
|
3.14
|
|
|
$
|
2.95
|
|
|
$
|
2.91
|
|
|
$
|
3.08
|
|
|
For the Three Months Ended
|
|
Increase/(Decrease)
|
|||||||||||
|
March 31, 2018
|
|
March 31, 2017
|
|
$
|
|
%
|
|||||||
Operating revenues (in thousands):
|
|
|
|
|
|
|
|
|||||||
Oil sales
|
$
|
174,841
|
|
|
$
|
46,681
|
|
|
$
|
128,160
|
|
|
275
|
%
|
Natural gas sales
|
18,580
|
|
|
8,241
|
|
|
10,339
|
|
|
125
|
%
|
|||
NGL sales
|
22,477
|
|
|
6,175
|
|
|
16,302
|
|
|
264
|
%
|
|||
Oil and gas sales
|
$
|
215,898
|
|
|
$
|
61,097
|
|
|
$
|
154,801
|
|
|
253
|
%
|
|
|
|
|
|
|
|
|
|||||||
Average sales prices:
|
|
|
|
|
|
|
|
|||||||
Oil (per Bbl)
|
$
|
61.53
|
|
|
$
|
49.45
|
|
|
$
|
12.08
|
|
|
24
|
%
|
Effect of derivative settlements on average price (per Bbl)
|
(0.09
|
)
|
|
0.28
|
|
|
(0.37
|
)
|
|
(132
|
)%
|
|||
Oil net of hedging (per Bbl)
|
$
|
61.44
|
|
|
$
|
49.73
|
|
|
$
|
11.71
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|||||||
Average NYMEX price for oil (per Bbl)
|
$
|
62.91
|
|
|
$
|
51.82
|
|
|
$
|
11.09
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|||||||
Natural gas (per Mcf)
|
$
|
2.42
|
|
|
$
|
2.91
|
|
|
$
|
(0.49
|
)
|
|
(17
|
)%
|
Effect of derivative settlements on average price (per Mcf)
|
(0.01
|
)
|
|
0.05
|
|
|
(0.06
|
)
|
|
(120
|
)%
|
|||
Natural gas net of hedging (per Mcf)
|
$
|
2.41
|
|
|
$
|
2.96
|
|
|
$
|
(0.55
|
)
|
|
(19
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Average NYMEX price for natural gas (per Mcf)
|
$
|
3.08
|
|
|
$
|
3.06
|
|
|
$
|
0.02
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|||||||
NGL (per Bbl)
|
$
|
30.21
|
|
|
$
|
25.10
|
|
|
$
|
5.11
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|||||||
Net production:
|
|
|
|
|
|
|
|
|||||||
Oil (MBbls)
|
2,842
|
|
|
944
|
|
|
1,898
|
|
|
201
|
%
|
|||
Natural gas (MMcf)
|
7,683
|
|
|
2,833
|
|
|
4,850
|
|
|
171
|
%
|
|||
NGL (MBbls)
|
744
|
|
|
246
|
|
|
498
|
|
|
202
|
%
|
|||
Total (MBoe)
|
4,866
|
|
|
1,662
|
|
|
3,204
|
|
|
193
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Average daily net production volume:
|
|
|
|
|
|
|
|
|||||||
Oil (Bbls/d)
|
31,573
|
|
|
10,489
|
|
|
21,084
|
|
|
201
|
%
|
|||
Natural gas (Mcf/d)
|
85,372
|
|
|
31,478
|
|
|
53,894
|
|
|
171
|
%
|
|||
NGL (Bbls/d)
|
8,267
|
|
|
2,733
|
|
|
5,534
|
|
|
202
|
%
|
|||
Total (Boe/d)
|
54,069
|
|
|
18,469
|
|
|
35,600
|
|
|
193
|
%
|
|
For the Three Months Ended
|
|
Increase/(Decrease)
|
|||||||||||
|
March 31, 2018
|
|
March 31, 2017
|
|
$
|
|
%
|
|||||||
Operating costs (in thousands):
|
|
|
|
|
|
|
|
|||||||
Lease operating expenses
|
$
|
16,276
|
|
|
$
|
7,278
|
|
|
$
|
8,998
|
|
|
124
|
%
|
Severance and ad valorem taxes
|
14,173
|
|
|
3,187
|
|
|
10,986
|
|
|
345
|
%
|
|||
Gathering, processing and transportation expenses
|
13,828
|
|
|
5,244
|
|
|
8,584
|
|
|
164
|
%
|
|||
Operating costs per Boe:
|
|
|
|
|
|
|
|
|||||||
Lease operating expenses
|
$
|
3.34
|
|
|
$
|
4.38
|
|
|
$
|
(1.04
|
)
|
|
(24
|
)%
|
Severance and ad valorem taxes
|
2.91
|
|
|
1.92
|
|
|
0.99
|
|
|
52
|
%
|
|||
Gathering, processing and transportation expenses
|
2.84
|
|
|
3.16
|
|
|
(0.32
|
)
|
|
(10
|
)%
|
|
For the Three Months Ended
|
||||||
(in thousands)
|
March 31, 2018
|
|
March 31, 2017
|
||||
Depreciation, depletion and amortization
|
$
|
66,010
|
|
|
$
|
26,160
|
|
Depreciation, depletion and amortization per Boe
|
13.57
|
|
|
15.74
|
|
|
For the Three Months Ended
|
||||||
(in thousands)
|
March 31, 2018
|
|
March 31, 2017
|
||||
Stock-based compensation expense
|
$
|
381
|
|
|
$
|
240
|
|
Dry exploratory well costs
|
221
|
|
|
—
|
|
||
Geological and geophysical costs
|
2,845
|
|
|
941
|
|
||
Exploration expense
|
$
|
3,447
|
|
|
$
|
1,181
|
|
|
For the Three Months Ended
|
||||||
(in thousands)
|
March 31, 2018
|
|
March 31, 2017
|
||||
Stock-based compensation expense
|
$
|
3,952
|
|
|
$
|
2,370
|
|
Cash general and administrative expenses
|
10,345
|
|
|
8,514
|
|
||
General and administrative expenses
|
$
|
14,297
|
|
|
$
|
10,884
|
|
|
For the Three Months Ended
|
||||||
(in thousands)
|
March 31, 2018
|
|
March 31, 2017
|
||||
Credit facility
|
$
|
784
|
|
|
$
|
317
|
|
Senior Notes
|
5,374
|
|
|
—
|
|
||
Amortization of debt issuance costs
|
379
|
|
|
93
|
|
||
Interest capitalized
|
(724
|
)
|
|
—
|
|
||
Total
|
$
|
5,813
|
|
|
$
|
410
|
|
(in millions)
|
For the Three Months Ended March 31, 2018
|
||
Drilling and completion capital expenditures
|
$
|
181.8
|
|
Facilities, infrastructure and other
(1)
|
50.2
|
|
|
Land
|
6.3
|
|
|
Total capital expenditures
|
$
|
238.3
|
|
|
(1)
|
Facilities, infrastructure and other includes $38.8 million of well-level facility costs. In previous reporting periods, these costs were presented within drilling and completion capital expenditures. This presentation change was made in order to conform our drilling and completion capital expenditures to that of our peer group and to also present costs consistently with our 2018 capital expenditure budget.
|
|
For the Three Months Ended
|
||||||
(in thousands)
|
March 31, 2018
|
|
March 31, 2017
|
||||
Net cash provided by operating activities
|
$
|
131,826
|
|
|
$
|
19,248
|
|
Net cash used in investing activities
|
(218,583
|
)
|
|
(98,420
|
)
|
||
Net cash used in financing activities
|
(934
|
)
|
|
(37
|
)
|
Description and Production Period
|
Volume (Bbl)
|
|
Weighted Average Differential ($/Bbl)
(1)
|
|||
Crude Oil Basis Swaps:
|
|
|
|
|||
April 2018 - June 2018
|
91,000
|
|
|
$
|
0.10
|
|
April 2018 - June 2018
|
91,000
|
|
|
0.20
|
|
|
April 2018 - June 2018
|
91,000
|
|
|
0.20
|
|
|
April 2018 - June 2018
|
91,000
|
|
|
0.22
|
|
|
April 2018 - June 2018
|
91,000
|
|
|
0.17
|
|
|
April 2018 - December 2018
|
137,500
|
|
|
0.00
|
|
|
April 2018 - December 2018
|
137,500
|
|
|
0.00
|
|
|
April 2018 - December 2018
|
550,000
|
|
|
0.00
|
|
|
April 2018 - December 2018
|
275,000
|
|
|
0.00
|
|
|
April 2018 - December 2018
|
275,000
|
|
|
0.00
|
|
|
May 2018 - March 2019
|
760,000
|
|
|
(5.25)
|
|
|
May 2018 - March 2019
|
190,000
|
|
|
(5.25)
|
|
|
June 2018 - March 2019
|
174,500
|
|
|
(5.50)
|
|
|
June 2018 - March 2019
|
349,000
|
|
|
(5.50)
|
|
|
(1)
|
The oil basis swap transactions are settled based on the difference between the arithmetic average of the ARGUS MIDLAND WTI and ARGUS WTI CUSHING settlements, during the relevant calculation period.
|
Description and Production Period
|
Volume (MMBtu)
|
|
Weighted Average Fixed Price ($/MMBtu)
(1)
|
|||
Natural Gas Swaps:
|
|
|
|
|||
January 2019 - December 2019
|
3,650,000
|
|
|
$
|
2.78
|
|
January 2019 - December 2019
|
3,650,000
|
|
|
2.78
|
|
|
January 2019 - December 2019
|
3,650,000
|
|
|
2.78
|
|
|
|
|
|
|
|||
Description and Production Period
|
Volume (MMBtu)
|
|
Weighted Average Differential ($/MMBtu)
(2)
|
|||
Natural Gas Basis Swaps:
|
|
|
|
|||
April 2018 - December 2018
|
1,375,000
|
|
|
$
|
(0.43
|
)
|
January 2019 - December 2019
|
1,825,000
|
|
|
$
|
(0.43
|
)
|
January 2019 - December 2019
|
3,650,000
|
|
|
$
|
(1.46
|
)
|
January 2019 - December 2019
|
3,650,000
|
|
|
$
|
(1.46
|
)
|
January 2019 - December 2019
|
3,650,000
|
|
|
$
|
(1.47
|
)
|
|
(1)
|
The natural gas swap contracts are settled based on the month’s average daily NYMEX price of Henry Hub Natural Gas.
|
(2)
|
The natural gas basis swap contracts are settled based on the difference between Inside FERC’s West Texas WAHA price of natural gas and the NYMEX price of Natural Gas during the relevant calculation period.
|
(in thousands)
|
|
Commodity derivative contracts
|
||
Net fair value of oil and gas derivative contracts outstanding as of December 31, 2017
|
|
$
|
855
|
|
Contracts settled
|
|
(399
|
)
|
|
Change in the futures curve of forecasted commodity prices
|
|
7,880
|
|
|
Contracts added
|
|
—
|
|
|
Net fair value of oil and gas derivative contracts outstanding as of March 31, 2018
|
|
$
|
8,336
|
|
Exhibit
Number |
|
Description of Exhibit
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
10.1
|
|
|
10.2*#
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
101.INS*
|
|
XBRL Instance Document.
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
CENTENNIAL RESOURCE DEVELOPMENT, INC.
|
|
|
|
|
|
By:
|
/s/ GEORGE S. GLYPHIS
|
|
|
George S. Glyphis
Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer)
|
|
|
|
|
Date:
|
May 8, 2018
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Centennial Resource Development, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer 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)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
CENTENNIAL RESOURCE DEVELOPMENT, INC.
|
|
|
|
|
|
By:
|
/s/ MARK G. PAPA
|
|
|
Mark G. Papa
Chief Executive Officer (Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Centennial Resource Development, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer 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)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
CENTENNIAL RESOURCE DEVELOPMENT, INC.
|
|
|
|
|
|
By:
|
/s/ GEORGE S. GLYPHIS
|
|
|
George S. Glyphis
Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer)
|
|
CENTENNIAL RESOURCE DEVELOPMENT, INC.
|
|
|
|
|
|
By:
|
/s/ MARK G. PAPA
|
|
|
Mark G. Papa
Chief Executive Officer (Principal Executive Officer)
|
|
CENTENNIAL RESOURCE DEVELOPMENT, INC.
|
|
|
|
|
|
By:
|
/s/ GEORGE S. GLYPHIS
|
|
|
George S. Glyphis
Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer)
|