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Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||
Basic weighted average common shares outstanding | 388,572 | 350,052 | 368,863 | 349,787 | ||||||||
Potentially dilutive securities | ||||||||||||
Restricted stock, SARs and performance-based equity awards | — | — | — | — | ||||||||
Diluted weighted average common shares outstanding | 388,572 | 350,052 | 368,863 | 349,787 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||
SARs | 6,091 | 9,118 | 6,590 | 9,858 | ||||||||
Restricted stock and performance-based equity awards | 9,178 | 4,988 | 6,053 | 3,392 |
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September 30, | December 31, | |||||||
In thousands | 2016 | 2015 | ||||||
Senior Secured Bank Credit Agreement | $ | 260,000 | $ | 175,000 | ||||
9% Senior Secured Second Lien Notes due 2021 | 614,919 | — | ||||||
6⅜% Senior Subordinated Notes due 2021 | 215,144 | 400,000 | ||||||
5½% Senior Subordinated Notes due 2022 | 772,912 | 1,250,000 | ||||||
4⅝% Senior Subordinated Notes due 2023 | 622,297 | 1,200,000 | ||||||
Other Subordinated Notes, including premium of $4 and $7, respectively | 2,254 | 2,257 | ||||||
Pipeline financings | 205,208 | 211,766 | ||||||
Capital lease obligations | 55,189 | 71,324 | ||||||
Total debt principal balance | 2,747,923 | 3,310,347 | ||||||
Future interest payable on 9% Senior Secured Second Lien Notes due 2021 (1) | 254,660 | — | ||||||
Issuance costs on senior subordinated notes | (16,332 | ) | (32,752 | ) | ||||
Total debt, net of debt issuance costs on senior subordinated notes | 2,986,251 | 3,277,595 | ||||||
Less: current maturities of long-term debt (1) | (83,200 | ) | (32,481 | ) | ||||
Long-term debt and capital lease obligations | $ | 2,903,051 | $ | 3,245,114 |
(1) | Future interest payable on our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”) represents most of the interest due over the term of this obligation, which has been accounted for as debt in accordance with Financial Accounting Standards Board Codification (“FASC”) 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of September 30, 2016 include $51.0 million of future interest payable related to the 2021 Senior Secured Notes that is due within the next twelve months. See 2016 Senior Subordinated Notes Exchange below for further discussion. |
• | for 2016 and 2017, the maximum permitted ratio of consolidated total net debt to consolidated EBITDAX covenant has been suspended and replaced by a maximum permitted ratio of consolidated senior secured debt to consolidated EBITDAX covenant of 3.0 to 1.0 (only debt under our Bank Credit Agreement is considered consolidated senior secured debt for purposes of this ratio); |
• | for 2016 and 2017, a new covenant has been added to require a minimum permitted ratio of consolidated EBITDAX to consolidated interest charges of 1.25 to 1.0; |
• | beginning in the first quarter of 2018, the ratio of consolidated total net debt to consolidated EBITDAX covenant will be reinstated, utilizing an annualized EBITDAX amount for the first, second, and third quarters of 2018 and building to a trailing four quarters by the end of 2018, with the maximum permitted ratios being 6.0 to 1.0 for the first quarter ending March 31, 2018, 5.5 to 1.0 for the second quarter ending June 30, 2018, and 5.0 to 1.0 for the third and fourth quarters ending September 30 and December 31, 2018, and returning to 4.25 to 1.0 for the first quarter ending March 31, 2019; |
• | allows for the incurrence of up to $1.0 billion of junior lien debt (subject to customary requirements), with $385.1 million of future incurrence available as of September 30, 2016; |
• | limits unrestricted cash and cash equivalents to $225 million if more than $250 million of borrowings are outstanding under the Bank Credit Agreement; and |
• | limits the amount spent on repurchases or other redemptions of our senior subordinated notes to $225 million, with up to $148.3 million of this capacity remaining available as of September 30, 2016. |
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Months | Index Price | Volume (Barrels per day) | Contract Prices ($/Bbl) | |||||||||||||||||||||||
Range (1) | Weighted Average Price | |||||||||||||||||||||||||
Swap | Sold Put | Floor | Ceiling | |||||||||||||||||||||||
Oil Contracts: | ||||||||||||||||||||||||||
2016 Fixed-Price Swaps | ||||||||||||||||||||||||||
Oct – Dec | NYMEX | 26,000 | $ | 36.25 | – | 45.40 | $ | 38.70 | $ | — | $ | — | $ | — | ||||||||||||
Oct – Dec | LLS | 7,000 | 37.24 | – | 41.00 | 39.16 | — | — | — | |||||||||||||||||
2016 Collars | ||||||||||||||||||||||||||
Oct – Dec | NYMEX | 4,000 | $ | 40.00 | – | 54.00 | $ | — | $ | — | $ | 40.00 | $ | 53.48 | ||||||||||||
Oct – Dec | LLS | 4,000 | 40.00 | – | 56.00 | — | — | 40.00 | 55.79 | |||||||||||||||||
2017 Fixed-Price Swaps | ||||||||||||||||||||||||||
Jan – Mar | NYMEX | 22,000 | $ | 41.15 | – | 45.45 | $ | 42.67 | $ | — | $ | — | $ | — | ||||||||||||
Jan – Mar | LLS | 10,000 | 42.35 | – | 46.15 | 43.77 | — | — | — | |||||||||||||||||
Apr – June | NYMEX | 22,000 | 41.20 | – | 46.50 | 43.99 | — | — | — | |||||||||||||||||
Apr – June | LLS | 7,000 | 42.65 | – | 46.65 | 45.35 | — | — | — | |||||||||||||||||
2017 Collars | ||||||||||||||||||||||||||
Jan – Mar | NYMEX | 4,000 | $ | 40.00 | – | 55.40 | $ | — | $ | — | $ | 40.00 | $ | 54.80 | ||||||||||||
Jan – Mar | LLS | 3,000 | 40.00 | – | 57.35 | — | — | 40.00 | 57.23 | |||||||||||||||||
2017 Three-Way Collars (2) | ||||||||||||||||||||||||||
July – Sept | NYMEX | 7,500 | $ | 40.00 | – | 70.25 | $ | — | $ | 30.00 | $ | 40.00 | $ | 69.77 | ||||||||||||
July – Sept | LLS | 1,000 | 41.00 | – | 69.25 | — | 31.00 | 41.00 | 69.25 |
(1) | Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For collars and three-way collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. |
(2) | A three-way collar is a costless collar contract combined with a sold put feature (at a lower price) with the same counterparty. The value received for the sold put is used to enhance the contracted floor and ceiling price of the related collar. At the contract settlement date, (1) if the index price is higher than the ceiling price, we pay the counterparty the difference between the index price and ceiling price for the contracted volumes, (2) if the index price is between the floor and ceiling price, no settlements occur, (3) if the index price is lower than the floor price but at or above the sold put price, the counterparty pays us the difference between the index price and the floor price for the contracted volumes and (4) if the index price is lower than the sold put price, the counterparty pays us the difference between the floor price and the sold put price for the contracted volumes. |
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• | Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date. |
• | Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX pricing and fixed-price swaps that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. |
• | Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At September 30, 2016, instruments in this category include non-exchange-traded costless collars and three-way collars that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for costless collars and three-way collars are consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments are developed using a benchmark, which is considered a significant unobservable input. An increase or decrease of 100 basis points in the implied volatility inputs utilized in our fair value measurement would result in a change of approximately $43 thousand in the fair value of these instruments as of September 30, 2016. |
Fair Value Measurements Using: | ||||||||||||||||
In thousands | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
September 30, 2016 | ||||||||||||||||
Assets | ||||||||||||||||
Oil derivative contracts – current | $ | — | $ | 302 | $ | 5 | $ | 307 | ||||||||
Total Assets | $ | — | $ | 302 | $ | 5 | $ | 307 | ||||||||
Liabilities | ||||||||||||||||
Oil derivative contracts – current | $ | — | $ | 73,699 | $ | 530 | $ | 74,229 | ||||||||
Total Liabilities | $ | — | $ | 73,699 | $ | 530 | $ | 74,229 | ||||||||
December 31, 2015 | ||||||||||||||||
Assets | ||||||||||||||||
Oil derivative contracts – current | $ | — | $ | 90,012 | $ | 52,834 | $ | 142,846 | ||||||||
Total Assets | $ | — | $ | 90,012 | $ | 52,834 | $ | 142,846 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Fair value of Level 3 instruments, beginning of period | $ | 240 | $ | 112,358 | $ | 52,834 | $ | 188,446 | ||||||||
Fair value gains (losses) on commodity derivatives | 2,402 | 21,089 | (2,134 | ) | 38,872 | |||||||||||
Receipts on settlements of commodity derivatives | (3,167 | ) | (50,573 | ) | (51,225 | ) | (144,444 | ) | ||||||||
Fair value of Level 3 instruments, end of period | $ | (525 | ) | $ | 82,874 | $ | (525 | ) | $ | 82,874 | ||||||
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities still held at the reporting date | $ | 891 | $ | 15,332 | $ | (525 | ) | $ | 25,456 |
Fair Value at 9/30/2016 (in thousands) | Valuation Technique | Unobservable Input | Volatility Range | |||||||
Oil derivative contracts | $ | (525 | ) | Discounted cash flow / Black-Scholes | Volatility of Light Louisiana Sweet for settlement periods beginning after September 30, 2016 | 20.8%-40.8% |
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September 30, | December 31, | |||||||
In thousands | 2016 | 2015 | ||||||
Trade accounts receivable, net | $ | 24,890 | $ | 40,146 | ||||
Commodity derivative settlement receivables | 433 | 25,994 | ||||||
Other receivables | 19,696 | 20,953 | ||||||
Total | $ | 45,019 | $ | 87,093 |
September 30, | December 31, | |||||||
In thousands | 2016 | 2015 | ||||||
Accrued interest | $ | 30,099 | $ | 48,908 | ||||
Accounts payable | 27,875 | 30,477 | ||||||
Accrued lease operating expenses | 26,656 | 37,549 | ||||||
Accrued compensation | 25,813 | 46,780 | ||||||
Taxes payable | 25,386 | 32,438 | ||||||
Accrued exploration and development costs | 6,309 | 20,892 | ||||||
Other | 31,632 | 36,153 | ||||||
Total | $ | 173,770 | $ | 253,197 |
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Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||
Basic weighted average common shares outstanding | 388,572 | 350,052 | 368,863 | 349,787 | ||||||||
Potentially dilutive securities | ||||||||||||
Restricted stock, SARs and performance-based equity awards | — | — | — | — | ||||||||
Diluted weighted average common shares outstanding | 388,572 | 350,052 | 368,863 | 349,787 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||
SARs | 6,091 | 9,118 | 6,590 | 9,858 | ||||||||
Restricted stock and performance-based equity awards | 9,178 | 4,988 | 6,053 | 3,392 |
• | Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date. |
• | Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX pricing and fixed-price swaps that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. |
• | Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At September 30, 2016, instruments in this category include non-exchange-traded costless collars and three-way collars that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for costless collars and three-way collars are consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments are developed using a benchmark, which is considered a significant unobservable input. An increase or decrease of 100 basis points in the implied volatility inputs utilized in our fair value measurement would result in a change of approximately $43 thousand in the fair value of these instruments as of September 30, 2016. |
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Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||
Basic weighted average common shares outstanding | 388,572 | 350,052 | 368,863 | 349,787 | ||||||||
Potentially dilutive securities | ||||||||||||
Restricted stock, SARs and performance-based equity awards | — | — | — | — | ||||||||
Diluted weighted average common shares outstanding | 388,572 | 350,052 | 368,863 | 349,787 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||
SARs | 6,091 | 9,118 | 6,590 | 9,858 | ||||||||
Restricted stock and performance-based equity awards | 9,178 | 4,988 | 6,053 | 3,392 |
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September 30, | December 31, | |||||||
In thousands | 2016 | 2015 | ||||||
Senior Secured Bank Credit Agreement | $ | 260,000 | $ | 175,000 | ||||
9% Senior Secured Second Lien Notes due 2021 | 614,919 | — | ||||||
6⅜% Senior Subordinated Notes due 2021 | 215,144 | 400,000 | ||||||
5½% Senior Subordinated Notes due 2022 | 772,912 | 1,250,000 | ||||||
4⅝% Senior Subordinated Notes due 2023 | 622,297 | 1,200,000 | ||||||
Other Subordinated Notes, including premium of $4 and $7, respectively | 2,254 | 2,257 | ||||||
Pipeline financings | 205,208 | 211,766 | ||||||
Capital lease obligations | 55,189 | 71,324 | ||||||
Total debt principal balance | 2,747,923 | 3,310,347 | ||||||
Future interest payable on 9% Senior Secured Second Lien Notes due 2021 (1) | 254,660 | — | ||||||
Issuance costs on senior subordinated notes | (16,332 | ) | (32,752 | ) | ||||
Total debt, net of debt issuance costs on senior subordinated notes | 2,986,251 | 3,277,595 | ||||||
Less: current maturities of long-term debt (1) | (83,200 | ) | (32,481 | ) | ||||
Long-term debt and capital lease obligations | $ | 2,903,051 | $ | 3,245,114 |
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Months | Index Price | Volume (Barrels per day) | Contract Prices ($/Bbl) | |||||||||||||||||||||||
Range (1) | Weighted Average Price | |||||||||||||||||||||||||
Swap | Sold Put | Floor | Ceiling | |||||||||||||||||||||||
Oil Contracts: | ||||||||||||||||||||||||||
2016 Fixed-Price Swaps | ||||||||||||||||||||||||||
Oct – Dec | NYMEX | 26,000 | $ | 36.25 | – | 45.40 | $ | 38.70 | $ | — | $ | — | $ | — | ||||||||||||
Oct – Dec | LLS | 7,000 | 37.24 | – | 41.00 | 39.16 | — | — | — | |||||||||||||||||
2016 Collars | ||||||||||||||||||||||||||
Oct – Dec | NYMEX | 4,000 | $ | 40.00 | – | 54.00 | $ | — | $ | — | $ | 40.00 | $ | 53.48 | ||||||||||||
Oct – Dec | LLS | 4,000 | 40.00 | – | 56.00 | — | — | 40.00 | 55.79 | |||||||||||||||||
2017 Fixed-Price Swaps | ||||||||||||||||||||||||||
Jan – Mar | NYMEX | 22,000 | $ | 41.15 | – | 45.45 | $ | 42.67 | $ | — | $ | — | $ | — | ||||||||||||
Jan – Mar | LLS | 10,000 | 42.35 | – | 46.15 | 43.77 | — | — | — | |||||||||||||||||
Apr – June | NYMEX | 22,000 | 41.20 | – | 46.50 | 43.99 | — | — | — | |||||||||||||||||
Apr – June | LLS | 7,000 | 42.65 | – | 46.65 | 45.35 | — | — | — | |||||||||||||||||
2017 Collars | ||||||||||||||||||||||||||
Jan – Mar | NYMEX | 4,000 | $ | 40.00 | – | 55.40 | $ | — | $ | — | $ | 40.00 | $ | 54.80 | ||||||||||||
Jan – Mar | LLS | 3,000 | 40.00 | – | 57.35 | — | — | 40.00 | 57.23 | |||||||||||||||||
2017 Three-Way Collars (2) | ||||||||||||||||||||||||||
July – Sept | NYMEX | 7,500 | $ | 40.00 | – | 70.25 | $ | — | $ | 30.00 | $ | 40.00 | $ | 69.77 | ||||||||||||
July – Sept | LLS | 1,000 | 41.00 | – | 69.25 | — | 31.00 | 41.00 | 69.25 |
(1) | Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For collars and three-way collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. |
(2) | A three-way collar is a costless collar contract combined with a sold put feature (at a lower price) with the same counterparty. The value received for the sold put is used to enhance the contracted floor and ceiling price of the related collar. At the contract settlement date, (1) if the index price is higher than the ceiling price, we pay the counterparty the difference between the index price and ceiling price for the contracted volumes, (2) if the index price is between the floor and ceiling price, no settlements occur, (3) if the index price is lower than the floor price but at or above the sold put price, the counterparty pays us the difference between the index price and the floor price for the contracted volumes and (4) if the index price is lower than the sold put price, the counterparty pays us the difference between the floor price and the sold put price for the contracted volumes. |
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Fair Value Measurements Using: | ||||||||||||||||
In thousands | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
September 30, 2016 | ||||||||||||||||
Assets | ||||||||||||||||
Oil derivative contracts – current | $ | — | $ | 302 | $ | 5 | $ | 307 | ||||||||
Total Assets | $ | — | $ | 302 | $ | 5 | $ | 307 | ||||||||
Liabilities | ||||||||||||||||
Oil derivative contracts – current | $ | — | $ | 73,699 | $ | 530 | $ | 74,229 | ||||||||
Total Liabilities | $ | — | $ | 73,699 | $ | 530 | $ | 74,229 | ||||||||
December 31, 2015 | ||||||||||||||||
Assets | ||||||||||||||||
Oil derivative contracts – current | $ | — | $ | 90,012 | $ | 52,834 | $ | 142,846 | ||||||||
Total Assets | $ | — | $ | 90,012 | $ | 52,834 | $ | 142,846 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
In thousands | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Fair value of Level 3 instruments, beginning of period | $ | 240 | $ | 112,358 | $ | 52,834 | $ | 188,446 | ||||||||
Fair value gains (losses) on commodity derivatives | 2,402 | 21,089 | (2,134 | ) | 38,872 | |||||||||||
Receipts on settlements of commodity derivatives | (3,167 | ) | (50,573 | ) | (51,225 | ) | (144,444 | ) | ||||||||
Fair value of Level 3 instruments, end of period | $ | (525 | ) | $ | 82,874 | $ | (525 | ) | $ | 82,874 | ||||||
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities still held at the reporting date | $ | 891 | $ | 15,332 | $ | (525 | ) | $ | 25,456 |
Fair Value at 9/30/2016 (in thousands) | Valuation Technique | Unobservable Input | Volatility Range | |||||||
Oil derivative contracts | $ | (525 | ) | Discounted cash flow / Black-Scholes | Volatility of Light Louisiana Sweet for settlement periods beginning after September 30, 2016 | 20.8%-40.8% |
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September 30, | December 31, | |||||||
In thousands | 2016 | 2015 | ||||||
Trade accounts receivable, net | $ | 24,890 | $ | 40,146 | ||||
Commodity derivative settlement receivables | 433 | 25,994 | ||||||
Other receivables | 19,696 | 20,953 | ||||||
Total | $ | 45,019 | $ | 87,093 |
September 30, | December 31, | |||||||
In thousands | 2016 | 2015 | ||||||
Accrued interest | $ | 30,099 | $ | 48,908 | ||||
Accounts payable | 27,875 | 30,477 | ||||||
Accrued lease operating expenses | 26,656 | 37,549 | ||||||
Accrued compensation | 25,813 | 46,780 | ||||||
Taxes payable | 25,386 | 32,438 | ||||||
Accrued exploration and development costs | 6,309 | 20,892 | ||||||
Other | 31,632 | 36,153 | ||||||
Total | $ | 173,770 | $ | 253,197 |
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