Future interest payable - current

^[1]

$ 126,884

$ 105,188

Future interest payable - long-term

$ 2,693,424

$ 2,979,086

Stockholders' equity

Preferred stock, par value

$ 0.001

Preferred stock, shares authorized

25,000,000

Preferred stock, shares issued

0

Preferred stock, shares outstanding

0

Common stock, par value

$ 0.001

Common stock, shares authorized

600,000,000

Common stock, shares issued

462,462,855

402,549,346

Treasury stock, shares

1,893,882

457,041

Future interest payable on senior secured and convertible senior notes

Future interest payable - current

$ 102,181

$ 75,347

Future interest payable - long-term

$ 190,410

$ 241,472

[1]

Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a small extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of September 30, 2018 include $102.2 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion.

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues	$ 394,973	$ 266,559	$ 1,135,270	$ 803,197
Expenses
CO2 discovery and operating expenses	708	1,346	1,670	2,452
Taxes other than income	27,344	20,233	81,897	62,848
General and administrative expenses	21,579	27,273	61,223	81,303
Interest, net of amounts capitalized of $9,514, $9,416, $26,817 and $22,217, respectively	18,527	24,546	51,974	75,785
Depletion, depreciation, and amortization	51,316	52,101	156,711	154,448
Commodity derivatives expense (income)	44,577	25,263	189,601	(9,712)
Other expenses	1,933	0	7,241	0
Total expenses	300,938	280,346	947,984	749,808
Income (loss) before income taxes	94,035	(13,787)	187,286	53,389
Income tax provision (benefit)	15,616	(14,229)	39,067	17,018
Net income	$ 78,419	$ 442	$ 148,219	$ 36,371
Net income per common share
Basic	$ 0.17	$ 0.00	$ 0.35	$ 0.09
Diluted	$ 0.17	$ 0.00	$ 0.33	$ 0.09
Weighted average common shares outstanding
Basic	451,256	392,013	426,036	390,448
Diluted	458,450	393,023	455,934	392,625
Other income
Revenues	$ 7,196	$ 939	$ 17,640	$ 8,576
Lease operating expenses
Operating expenses	122,527	117,768	361,267	342,926
Marketing and plant operating expenses
Operating expenses	12,427	11,816	36,400	39,758
Oil, natural gas, and related product sales
Revenues	379,628	259,030	1,095,214	776,088
CO2 sales and transportation fees
Revenues	$ 8,149	$ 6,590	$ 22,416	$ 18,533

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Expenses
Capitalized interest	$ 9,514	$ 9,416	$ 26,817	$ 22,217

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities
Net income	$ 148,219	$ 36,371
Adjustments to reconcile net income to cash flows from operating activities
Depletion, depreciation, and amortization	156,711	154,448
Deferred income taxes	42,741	35,846
Stock-based compensation	8,711	12,215
Commodity derivatives expense (income)	189,601	(9,712)
Payment on settlements of commodity derivatives	(149,738)	(38,618)
Debt issuance costs	4,980	4,801
Other, net	(7,066)	(112)
Changes in assets and liabilities, net of effects from acquisitions
Accrued production receivable	(17,140)	3,590
Trade and other receivables	139	(13,604)
Other current and long-term assets	(4,467)	(4,734)
Accounts payable and accrued liabilities	27,435	(22,736)
Oil and natural gas production payable	(3,764)	(10,848)
Other liabilities	(2,832)	(4,048)
Net cash provided by operating activities	393,530	142,859
Cash flows from investing activities
Oil and natural gas capital expenditures	(210,504)	(197,982)
Acquisitions of oil and natural gas properties	(151)	(91,124)
Pipelines and plants capital expenditures	(19,134)	(1,479)
Net proceeds from sales of oil and natural gas properties and equipment	7,308	1,412
Other	5,749	(4,638)
Net cash used in investing activities	(216,732)	(293,811)
Cash flows from financing activities
Bank repayments	(1,943,653)	(1,188,000)
Bank borrowings	1,468,653	1,382,000
Interest payments treated as a reduction of debt	(37,233)	(25,139)
Proceeds from issuance of senior secured notes	450,000	0
Cost of debt financing	(15,933)	(341)
Pipeline financing and capital lease debt repayments	(18,353)	(20,523)
Other	(13,288)	1,603
Net cash provided by (used in) financing activities	(109,807)	149,600
Net increase (decrease) in cash, cash equivalents, and restricted cash	66,991	(1,352)
Cash, cash equivalents, and restricted cash at beginning of period	15,992	17,050
Cash, cash equivalents, and restricted cash at end of period	$ 82,983	$ 15,698

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands	Total	Common Stock ($.001 Par Value)	Paid-In Capital in Excess of Par	Retained Earnings (Accumulated Deficit)	Treasury Stock (at cost)
Beginning balance, shares at Dec. 31, 2017	402,549,346	402,549,346			457,041
Beginning balance at Dec. 31, 2017	$ 648,165	$ 403	$ 2,507,828	$ (1,855,810)	$ (4,256)
Issued or purchased pursuant to stock compensation plans, shares		4,663,554
Issued or purchased pursuant to stock compensation plans, value		$ 4	(4)
Issued pursuant to notes conversion, shares		55,249,955
Issued pursuant to notes conversion, value	162,004	$ 55	161,949
Stock-based compensation, value	11,126		11,126
Tax withholding - stock compensation, shares					1,436,841
Tax withholding - stock compensation, value	(6,330)				$ (6,330)
Net income	$ 148,219			148,219
Ending balance, shares at Sep. 30, 2018	462,462,855	462,462,855			1,893,882
Ending balance at Sep. 30, 2018	$ 963,184	$ 462	$ 2,680,899	$ (1,707,591)	$ (10,586)

Basis of Presentation

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Note 1. Basis of Presentation

Organization and Nature of Operations

Denbury Resources Inc., a Delaware corporation, is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. Our goal is to increase the value of our properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO₂ enhanced oil recovery operations.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of Denbury Resources Inc. and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury Resources Inc. and its subsidiaries.

Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of September 30, 2018, our consolidated results of operations for the three and nine months ended September 30, 2018 and 2017, our consolidated cash flows for the nine months ended September 30, 2018 and 2017, and our consolidated statement of changes in stockholders’ equity for the nine months ended September 30, 2018.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported net income, current assets, total assets, current liabilities, total liabilities or stockholders’ equity.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows:



In thousands	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	66,711	$	58
Restricted cash included in Other assets	16,272		15,934
Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows	$	82,983	$	15,992

Amounts included in restricted cash included in “Other assets” in the accompanying Unaudited Condensed Consolidated Balance Sheets represent escrow accounts that are legally restricted for certain of our asset retirement obligations.

Net Income per Common Share

Basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities consist of nonvested restricted stock, nonvested performance-based equity awards, and shares into which our previously-outstanding convertible senior notes were convertible.

The following table sets forth the reconciliations of net income and weighted average shares used for purposes of calculating the basic and diluted net income per common share for the periods indicated:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands	2018		2017		2018		2017
Numerator
Net income – basic	$	78,419	$	442	$	148,219	$	36,371
Effect of potentially dilutive securities
Interest on convertible senior notes	—		—		538		—
Net income – diluted	$	78,419	$	442	$	148,757	$	36,371

Denominator
Weighted average common shares outstanding – basic	451,256		392,013		426,036		390,448
Effect of potentially dilutive securities
Restricted stock and performance-based equity awards	7,194		1,010		6,983		2,177
Convertible senior notes	—		—		22,915		—
Weighted average common shares outstanding – diluted	458,450		393,023		455,934		392,625

Basic weighted average common shares exclude shares of nonvested restricted stock. As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net income per common share (although time-vesting restricted stock is issued and outstanding upon grant). For purposes of calculating diluted weighted average common shares during the three and nine months ended September 30, 2018 and 2017, the nonvested restricted stock and performance-based equity awards are included in the computation using the treasury stock method, with the deemed proceeds equal to the average unrecognized compensation during the period, and for the shares underlying the previously-outstanding convertible senior notes as if the convertible senior notes were converted at the beginning of the 2018 period. In April and May 2018, all outstanding convertible senior notes converted into shares of Denbury common stock, resulting in the issuance of 55.2 million shares of our common stock upon conversion. These shares have been included in basic weighted average common shares outstanding beginning on the date of conversion. See Note 4, Long-Term Debt, for further discussion.

The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income per share, as their effect would have been antidilutive:



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
In thousands	2018	2017	2018	2017
Stock appreciation rights	2,689	4,551	2,824	4,793
Restricted stock and performance-based equity awards	—	9,891	203	6,259

Recent Accounting Pronouncements

Recently Adopted

Cash Flows. In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (“ASU 2016-18”). ASU 2016-18 addresses the diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows, and requires that a statement of cash flows explain the change in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. Effective January 1, 2018, we adopted ASU 2016-18, which has been applied retrospectively for all comparative periods presented. Accordingly, restricted cash associated with our escrow accounts of $15.9 million and $15.4 million for the nine-month periods ended September 30, 2018 and 2017, respectively, have been included in “Cash, cash equivalents, and restricted cash at beginning of period” on our Unaudited Condensed Consolidated Statements of Cash Flows and $15.6 million included in “Cash, cash equivalents, and restricted cash at end of period” for the nine-month period ended September 30, 2017. The adoption of ASU 2016-18 did not have an impact on our consolidated balance sheets or results of operations.

Our quarterly reports on Form 10-Q for the periods ended March 31, 2018 and June 30, 2018, filed with the SEC on May 10, 2018 and August 9, 2018, respectively, incorrectly included in the beginning-of-period and end-of-period balances of “Cash, cash equivalents, and restricted cash” in our Statements of Cash Flows, certain U.S. Treasury Notes held in escrow accounts legally restricted for use in certain of our asset retirement obligations. Under Financial Accounting Standards Board Codification (“FASC”) 230-10-20, these notes do not meet the definition of restricted cash and restricted cash equivalents due to their maturity date exceeding 90 days. Previously disclosed balances of these U.S. Treasury Notes of $24.6 million, $25.2 million and $25.4 million as of January 1, 2018 (the date of adoption), March 31, 2018 and June 30, 2018, respectively, should have been excluded from “Cash, cash equivalents, and restricted cash” on the Consolidated Statements of Cash Flows. Accordingly, “Cash, cash equivalents, and restricted cash” as of January 1, 2018 (the date of adoption), March 31, 2018 and June 30, 2018, originally reported as $40.6 million, $40.9 million and $41.6 million, respectively, should have been reported as $16.0 million, $15.7 million and $16.2 million, respectively. In addition, changes in the U.S. Treasury Notes of $0.6 million and $0.8 million during the three months ended March 31, 2018 and six months ended June 30, 2018, respectively, should have been included in net cash used in investing activities. Accordingly, net cash used in investing activities for the three months ended March 31, 2018, originally reported as $50.8 million, should have been $51.4 million, and net cash used in investing activities for the six months ended June 30, 2018, originally reported as $134.1 million, should have been $134.9 million. Management has evaluated the quantitative and qualitative impact of the error to previously issued unaudited consolidated statements of cash flows and concluded that the previously issued consolidated financial statements were not materially misstated. However, management has elected to revise the unaudited consolidated statements of cash flows for each of the three months ended March 31, 2018 and six months ended June 30, 2018 in its future filings. These revisions had no impact on the Company’s financial condition or results of operations for the periods presented.

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. In March, April and May 2016, the FASB issued four additional ASUs which primarily clarified the implementation guidance on principal versus agent considerations, performance obligations and licensing, collectibility, presentation of sales taxes and other similar taxes collected from customers, and non-cash consideration. Effective January 1, 2018, we adopted ASU 2014-09 using the modified retrospective method. The adoption of ASU 2014-09 did not have an impact on our consolidated financial statements, but required enhanced footnote disclosures. See Note 2, Revenue Recognition, for additional information.

Not Yet Adopted

Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”). ASU 2018-13 adds, modifies, or removes certain disclosure requirements for recurring and nonrecurring fair value measurements based on the FASB’s consideration of costs and benefits. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and early adoption is permitted. Entities must adopt the amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty prospectively, and all other amendments should be applied retrospectively to all periods presented. The adoption of ASU 2018-13 is currently not expected to have a material effect on our consolidated financial statements, but may require enhanced footnote disclosures.

Leases. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the guidance for lease accounting to require lease assets and liabilities to be recognized on the balance sheet, along with additional disclosures regarding key leasing arrangements. The ASU does not apply to mineral leases or leases that convey the right to explore for or use the land on which oil, natural gas, and similar natural resources are contained. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and early adoption is permitted. Entities must adopt the standard using a modified retrospective transition and apply the guidance to the earliest comparative period presented, with certain practical expedients that entities may elect to apply. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842, which provides an optional practical expedient to existing or expired land easements that were not previously accounted for as leases under Topic 840, which permits a company to evaluate only new or modified land easements under the new guidance. We intend to elect the practical expedients provided in the new ASUs that allow historical lease classification of existing leases, allow entities to recognize leases with terms of one year or less in their statement of operations, and carry forward our accounting treatment for existing land easement agreements. We are currently evaluating our lease agreements and implementing a software system to summarize the key contract terms and financial information associated with each lease agreement, in order to assess the impact the adoption of ASU 2016-02 and ASU 2018-01 will have on our consolidated financial statements.

Revenue Recognition

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 2. Revenue Recognition

We record revenue in accordance with FASC Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, and applied to all existing contracts using the modified retrospective method. The core principle of FASC Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount of consideration that it expects to be entitled to receive for those goods or services. This principle is achieved through applying a five-step process for customer contract revenue recognition:

•Identify the contract or contracts with a customer – We derive the majority of our revenues from oil and natural gas sales contracts and CO₂ sales and transportation contracts. The contracts specify each party’s rights regarding the goods or services to be transferred and contain commercial substance as they impact our financial statements. A high percentage of our receivables balance is current, and we have not historically entered into contracts with counterparties that pose a credit risk without requiring adequate economic protection to ensure collection.

•Identify the performance obligations in the contract – Each of our revenue contracts specify a volume per day, or production from a lease designated in the contract (a distinct good), to be delivered at the delivery point over the term of the contract (the identified performance obligation). The customer takes delivery and physical possession of the product at the delivery point, which generally is also the point at which title transfers and the customer obtains the risks and rewards of ownership (the identified performance obligation is satisfied).

•Determine the transaction price – Typically, our oil and natural gas contracts define the price as a formula price based on the average market price, as specified on set dates each month, for the specific commodity during the month of delivery. Certain of our CO₂ contracts define the price as a fixed contractual price adjusted to an inflation index to reflect market pricing. Given the industry practice to invoice customers the month following the month of delivery and our high probability of collection of payment, no significant financing component is included in our contracts.

•Allocate the transaction price to the performance obligations in the contract – The majority of our revenue contracts are short-term, with terms of one year or less, to which we have applied the practical expedient permitted under the standard eliminating the requirement to disclose the transaction price allocated to remaining performance obligations. In limited instances, we have revenue contracts with terms greater than one year; however, the future delivery volumes are wholly unsatisfied as they represent separate performance obligations with variable consideration. We utilized the practical expedient which eliminates the requirement to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to wholly unsatisfied performance obligations. As there is only one performance obligation associated with our contracts, no allocation of the transaction price is necessary.

•Recognize revenue when, or as, we satisfy a performance obligation – Once we have delivered the volume of commodity to the delivery point and the customer takes delivery and possession, we are entitled to payment and we invoice the customer for such delivered production. Payment under most oil and CO₂ contracts is made within a month following product delivery and for natural gas and NGL contracts is generally made within two months following delivery. Timing of revenue recognition may differ from the timing of invoicing to customers; however, as the right to consideration after delivery is unconditional based on only the passage of time before payment of the consideration is due, upon delivery we record a receivable in “Accrued production receivable” in our Unaudited Condensed Consolidated Balance Sheets, which was $163.5 million and $146.3 million as of September 30, 2018 and December 31, 2017, respectively.

Disaggregation of Revenue

The following table summarizes our revenues by product type for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands	2018		2017		2018		2017
Oil sales	$	377,329	$	256,621	$	1,088,021	$	768,912
Natural gas sales	2,299		2,409		7,193		7,176
CO₂ sales and transportation fees	8,149		6,590		22,416		18,533
Total revenues	$	387,777	$	265,620	$	1,117,630	$	794,621

Assets Held for Sale	9 Months Ended
Assets Held for Sale	Sep. 30, 2018
Assets Held-for-sale, Not Part of Disposal Group [Abstract]
Assets Held for Sale	Note 3. Assets Held for Sale We are marketing for sale certain non-productive surface acreage in the Houston area. As of September 30, 2018, the carrying value of the land held for sale was $33.0 million, which is included in “Other property and equipment” on our Unaudited Condensed Consolidated Balance Sheets.

Long-Term Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-Term Debt

Note 4. Long-Term Debt

The table below reflects long-term debt and capital lease obligations outstanding as of the dates indicated:



	September 30,			December 31,
In thousands	2018			2017
Senior Secured Bank Credit Agreement	$	—		$	475,000
9% Senior Secured Second Lien Notes due 2021	614,919			614,919
9¼% Senior Secured Second Lien Notes due 2022	455,668			381,568
7½% Senior Secured Second Lien Notes due 2024	450,000			—
3½% Convertible Senior Notes due 2024	—			84,650
6⅜% Senior Subordinated Notes due 2021	203,545			215,144
5½% Senior Subordinated Notes due 2022	314,662			408,882
4⅝% Senior Subordinated Notes due 2023	307,978			376,501
Pipeline financings	183,428			192,429
Capital lease obligations	11,290			26,298
Total debt principal balance	2,541,490			2,775,391
Future interest payable⁽¹⁾	292,590			316,818
Debt issuance costs	(13,772		)	(7,935		)
Total debt, net of debt issuance costs	2,820,308			3,084,274
Less: current maturities of long-term debt⁽¹⁾	(126,884		)	(105,188		)
Long-term debt and capital lease obligations	$	2,693,424		$	2,979,086

(1)

Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a small extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of September 30, 2018 include $102.2 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion.

The ultimate parent company in our corporate structure, Denbury Resources Inc. (“DRI”), is the sole issuer of all of our outstanding senior secured and senior subordinated notes. DRI has no independent assets or operations. Each of the subsidiary guarantors of such notes is 100% owned, directly or indirectly, by DRI, and the guarantees of the notes are full and unconditional and joint and several; any subsidiaries of DRI that are not subsidiary guarantors of such notes are minor subsidiaries.

Senior Secured Bank Credit Facility

In December 2014, we entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto (as amended, the “Bank Credit Agreement”). The Bank Credit Agreement is a senior secured revolving credit facility with semiannual borrowing base redeterminations in May and November of each year, with the next such redetermination being scheduled for May 2019. If our outstanding debt under the Bank Credit Agreement were to ever exceed the borrowing base, we would be required to repay the excess amount over a period not to exceed six months. We incur a commitment fee of 0.50% on the undrawn portion of the aggregate lender commitments under the Bank Credit Agreement.

In August 2018, we entered into the Sixth Amendment to the Bank Credit Agreement (the “Sixth Amendment”), pursuant to which the following changes were made to the Bank Credit Agreement:


•	The maturity date was extended from December 9, 2019 to December 9, 2021, provided that the maturity date may occur earlier (between February 2021 and August 2021) if the 2021 Senior Secured Notes due in May 2021 or 6⅜% Senior Subordinated Notes due in August 2021 (the “2021 Subordinated Notes”) are not repaid or refinanced by their respective maturity dates;


•	The borrowing base and total commitments were reduced from $1.05 billion to $615 million in connection with a reduction in the number of lenders party to the Bank Credit Agreement;


•	The amount of junior lien debt we can incur was increased from $1.2 billion to $1.65 billion outstanding in the aggregate at any one time; and


•	A Consolidated Total Debt to Consolidated EBITDAX financial maintenance covenant was added with a ratio not to exceed 5.25 to 1.0 through December 31, 2020, and 4.50 to 1.0 thereafter through the maturity date.

At September 30, 2018, in addition to the Consolidated Total Debt to Consolidated EBITDAX covenant added by the Sixth Amendment, the Bank Credit Agreement contains certain financial performance covenants through the maturity of the facility, including the following:


•	A consolidated senior secured debt to consolidated EBITDAX covenant, with such ratio not to exceed 2.5 to 1.0. Currently, only debt under our Bank Credit Agreement is considered consolidated senior secured debt for purposes of this ratio;


•	A minimum permitted ratio of consolidated EBITDAX to consolidated interest charges of 1.25 to 1.0; and


•	A requirement to maintain a current ratio of 1.0 to 1.0.

As of September 30, 2018, we had no outstanding borrowings and were in compliance with all debt covenants under the Bank Credit Agreement. The above description of our Bank Credit Agreement is qualified by the express language and defined terms contained in the Bank Credit Agreement and the amendments thereto, each of which are filed as exhibits to our periodic reports filed with the SEC.

January 2018 Note Exchanges

During January 2018, we closed transactions to exchange a total of $174.3 million aggregate principal amount of our then existing senior subordinated notes for $74.1 million aggregate principal amount of new 2022 Senior Secured Notes and $59.4 million aggregate principal amount of new 5% Convertible Senior Notes due 2023 (the “2023 Convertible Senior Notes”), resulting in a net reduction in our debt principal from these exchanges of $40.8 million. The exchanged notes consisted of $11.6 million aggregate principal amount of our 2021 Subordinated Notes, $94.2 million aggregate principal amount of our 5½% Senior Subordinated Notes due 2022 and $68.5 million aggregate principal amount of our 4⅝% Senior Subordinated Notes due 2023.

In accordance with FASC 470-60, the exchange was accounted for as a troubled debt restructuring due to the level of concession provided by our senior subordinated note holders. Under this guidance, future interest applicable to the new 2022 Senior Secured Notes and 2023 Convertible Senior Notes was recorded as debt up to the point that the principal and future interest of the new notes was equal to the principal amount of the extinguished notes, rather than recognizing a gain on extinguishment for this amount. In May 2018, the debt principal balance and future interest applicable to the 2023 Convertible Senior Notes were reclassified to “Paid-in capital in excess of par” and “Common stock” in our Unaudited Condensed Consolidated Balance Sheets following the conversion of the notes into shares of Denbury common stock (see Conversions of 2023 and 2024 Convertible Senior Notes into Common Stock in May and June 2018 below for further discussion). As of September 30, 2018, $20.6 million of future interest on the new 2022 Senior Secured Notes was recorded as debt, which will be reduced as semiannual interest payments are made, with the remaining $3.3 million of future interest to be recognized as interest expense over the term of the notes. Therefore, future interest expense reflected in our Unaudited Condensed Consolidated Statements of Operations on the new 2022 Senior Secured Notes will be significantly lower than the actual cash interest payments.

August 2018 Issuance of 7½% Senior Secured Second Lien Notes due 2024

In August 2018, we issued $450.0 million of 7½% Senior Secured Second Lien Notes due 2024 (the “2024 Senior Secured Notes”). The 2024 Senior Secured Notes, which bear interest at a rate of 7.50% per annum, were issued at par to repay outstanding borrowings on our Bank Credit Agreement, with additional proceeds used for general corporate purposes. The 2024 Senior Secured Notes mature on February 15, 2024, and interest is payable semiannually in arrears on February 15 and August 15 of each year, beginning in February 2019. We may redeem the 2024 Senior Secured Notes in whole or in part at our option beginning August 15, 2020, at a redemption price of 103.75% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture governing the 2024 Senior Secured Notes. Prior to August 15, 2020, we may at our option redeem up to an aggregate of 35% of the principal amount of the 2024 Senior Secured Notes at a price of 107.50% of par with the proceeds of certain equity offerings. In addition, at any time prior to August 15, 2020, we may redeem the 2024 Senior Secured Notes in whole or in part at a price equal to 100% of the principal amount plus a “make-whole” premium and accrued and unpaid interest. The 2024 Senior Secured Notes are not subject to any sinking fund requirements.

The 2024 Senior Secured Notes are guaranteed jointly and severally by our subsidiaries representing substantially all of our assets, operations and income and are secured by second-priority liens on substantially all of the assets that secure the Bank Credit Agreement, which second-priority liens are contractually subordinated to liens that secure our Bank Credit Agreement and any future additional priority lien debt.

9¼% Senior Secured Second Lien Notes due 2022 issued in January 2018

In January 2018, we issued $74.1 million of 2022 Senior Secured Notes, which principal amount is in addition to the $381.6 million of 2022 Senior Secured Notes issued during December 2017. All $455.7 million of the 2022 Senior Secured Notes were issued in connection with exchanges with a limited number of holders of the Company’s existing senior subordinated notes in December 2017 and January 2018 (see January 2018 Note Exchanges above). The 2022 Senior Secured Notes bear interest at 9.25% per annum, with interest payable semiannually in arrears on March 31 and September 30 of each year, and mature on March 31, 2022. We may redeem the 2022 Senior Secured Notes in whole or in part at our option beginning March 31, 2019, at a redemption price of 109.25% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture governing the 2022 Senior Secured Notes. Prior to March 31, 2019, we may at our option redeem up to an aggregate of 35% of the principal amount of the 2022 Senior Secured Notes at a price of 109.25% of par with the proceeds of certain equity offerings. In addition, at any time prior to March 31, 2019, we may redeem the 2022 Senior Secured Notes in whole or in part at a price equal to 100% of the principal amount plus a “make-whole” premium and accrued and unpaid interest. The 2022 Senior Secured Notes are not subject to any sinking fund requirements.

The 2022 Senior Secured Notes are guaranteed jointly and severally by our subsidiaries representing substantially all of our assets, operations and income and are secured by second-priority liens on substantially all of the assets that secure the Bank Credit Agreement, which second-priority liens are contractually subordinated to liens that secure our Bank Credit Agreement and any future additional priority lien debt.

Conversions of 2023 and 2024 Convertible Senior Notes into Common Stock in May and June 2018

During the second quarter of 2018, holders of all $59.4 million aggregate principal amount outstanding of our 2023 Convertible Senior Notes and $84.7 million aggregate outstanding principal amount of our 2024 Convertible Senior Notes converted their notes into shares of Denbury common stock, at the rates specified in the indentures for these notes, resulting in the issuance of 55.2 million shares of our common stock upon conversion. The debt principal balances and future interest treated as debt applicable to the 2023 Convertible Senior Notes and 2024 Convertible Senior Notes, totaling $162.0 million, were reclassified to “Paid-in capital in excess of par” and “Common stock” in our Unaudited Condensed Consolidated Balance Sheets upon the conversion of the notes into shares of Denbury common stock. As of April 18, 2018 and May 30, 2018, there were no remaining 2024 Convertible Senior Notes and 2023 Convertible Senior Notes outstanding, respectively.

Commodity Derivative Contracts

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity Derivative Contracts

Note 5. Commodity Derivative Contracts

We do not apply hedge accounting treatment to our oil and natural gas derivative contracts; therefore, the changes in the fair values of these instruments are recognized in income in the period of change. These fair value changes, along with the settlements of expired contracts, are shown under “Commodity derivatives expense (income)” in our Unaudited Condensed Consolidated Statements of Operations.

Historically, we have entered into various oil and natural gas derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future oil and natural gas production and to provide more certainty to our future cash flows. We do not hold or issue derivative financial instruments for trading purposes. Generally, these contracts have consisted of various combinations of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. The production that we hedge has varied from year to year depending on our levels of debt, financial strength and expectation of future commodity prices.

We manage and control market and counterparty credit risk through established internal control procedures that are reviewed on an ongoing basis. We attempt to minimize credit risk exposure to counterparties through formal credit policies, monitoring procedures and diversification, and all of our commodity derivative contracts are with parties that are lenders under our Bank Credit Agreement (or affiliates of such lenders). As of September 30, 2018, all of our outstanding derivative contracts were subject to enforceable master netting arrangements whereby payables on those contracts can be offset against receivables from separate derivative contracts with the same counterparty. It is our policy to classify derivative assets and liabilities on a gross basis on our balance sheets, even if the contracts are subject to enforceable master netting arrangements.

The following table summarizes our commodity derivative contracts as of September 30, 2018, none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic:



Months	Index Price	Volume (Barrels per day)	Contract Prices ($/Bbl)
			Range⁽¹⁾				Weighted Average Price
			Range⁽¹⁾				Swap		Sold Put		Floor		Ceiling
Oil Contracts:
2018 Fixed-Price Swaps
Oct – Dec	NYMEX	20,500	$	50.00	–	56.65	$	51.69	$	—	$	—	$	—
Oct – Dec	Argus LLS	5,000		60.10	–	60.25	60.18		—		—		—
2018 Three-Way Collars⁽²⁾
Oct – Dec	NYMEX	15,000	$	45.00	–	56.60	$	—	$	36.50	$	46.50	$	53.88
2019 Fixed-Price Swaps
Jan – June	NYMEX	3,500	$	59.00	–	59.10	$	59.05	$	—	$	—	$	—
Jan - Dec	Argus LLS	4,000		69.10	–	74.90	71.40		—		—		—
2019 Three-Way Collars⁽²⁾
Jan – June	NYMEX	18,500	$	55.00	–	75.45	$	—	$	48.84	$	56.84	$	69.94
July – Dec	NYMEX	22,000		55.00	–	75.45	—		48.55		56.55		69.17
Jan – Dec	Argus LLS	5,500		62.00	–	86.00	—		54.73		63.09		79.93


(1)	Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For 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.

Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 6. Fair Value Measurements

The FASC Fair Value Measurement topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the income approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observability of those inputs. The FASC establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:


•	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. As of September 30, 2018, instruments in this category include non-exchange-traded 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 $400 thousand in the fair value of these instruments as of September 30, 2018.

We adjust the valuations from the valuation model for nonperformance risk, using our estimate of the counterparty’s credit quality for asset positions and our credit quality for liability positions. We use multiple sources of third-party credit data in determining counterparty nonperformance risk, including credit default swaps.

The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of the periods indicated:



	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, 2018
Liabilities
Oil derivative contracts – current	$	—	$	(120,298	)	$	(5,056	)	$	(125,354	)
Oil derivative contracts – long-term	—		(12,214		)	(1,356		)	(13,570		)
Total Liabilities	$	—	$	(132,512	)	$	(6,412	)	$	(138,924	)

December 31, 2017
Liabilities
Oil derivative contracts – current	$	—	$	(99,061	)	$	—		$	(99,061	)
Total Liabilities	$	—	$	(99,061	)	$	—		$	(99,061	)

Since we do not apply hedge accounting for our commodity derivative contracts, any gains and losses on our assets and liabilities are included in “Commodity derivatives expense (income)” in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Level 3 Fair Value Measurements

The following table summarizes the changes in the fair value of our Level 3 assets and liabilities for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands	2018			2017			2018			2017
Fair value of Level 3 instruments, beginning of period	$	(1,168	)	$	99		$	—		$	(526	)
Fair value gains (losses) on commodity derivatives	(5,244		)	(97		)	(6,412		)	528
Fair value of Level 3 instruments, end of period	$	(6,412	)	$	2		$	(6,412	)	$	2

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	$	(5,244	)	$	(71	)	$	(6,412	)	$	54

We utilize an income approach to value our Level 3 costless collars and three-way collars. We obtain and ensure the appropriateness of the significant inputs to the calculation, including contractual prices for the underlying instruments, maturity, forward prices for commodities, interest rates, volatility factors and credit worthiness, and the fair value estimate is prepared and reviewed on a quarterly basis. The following table details fair value inputs related to implied volatilities utilized in the valuation of our Level 3 oil derivative contracts:



	Fair Value at 9/30/2018 (in thousands)			Valuation Technique	Unobservable Input	Volatility Range
Oil derivative contracts	$	(6,412	)	Discounted cash flow / Black-Scholes	Volatility of Light Louisiana Sweet for settlement periods beginning after September 30, 2018	20.7% – 29.9%

Other Fair Value Measurements

The carrying value of our loans under our Bank Credit Agreement approximate fair value, as they are subject to short-term floating interest rates that approximate the rates available to us for those periods. We use a market approach to determine the fair value of our fixed-rate long-term debt using observable market data. The fair values of our senior secured second lien notes, convertible senior notes, and senior subordinated notes are based on quoted market prices, which are considered Level 1 measurements under the fair value hierarchy. The estimated fair value of the principal amount of our debt as of September 30, 2018 and December 31, 2017, excluding pipeline financing and capital lease obligations, was $2,377.0 million and $2,260.6 million, respectively. We have other financial instruments consisting primarily of cash, cash equivalents, short-term receivables and payables that approximate fair value due to the nature of the instrument and the relatively short maturities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 7. Commitments and Contingencies Litigation We are involved in various lawsuits, claims and regulatory proceedings incidental to our businesses. We are also subject to audits for various taxes (income, sales and use, and severance) in the various states in which we operate, and from time to time receive assessments for potential taxes that we may owe. While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position, results of operations or cash flows, litigation is subject to inherent uncertainties. Although a single or multiple adverse rulings or settlements could possibly have a material adverse effect on our finances, we only accrue for losses from litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated. Riley Ridge Helium Supply Contract Claim As part of our 2010 and 2011 acquisitions of the Riley Ridge Unit and associated gas processing facility that was under construction, the Company assumed a 20-year helium supply contract under which we agreed to supply the helium separated from the full well stream by operation of the gas processing facility to a third-party purchaser, APMTG Helium, LLC. The helium supply contract provides for the delivery of a minimum contracted quantity of helium, subject to adjustment after startup of the Riley Ridge gas processing facility, with liquidated damages payable if specified quantities of helium are not supplied in accordance with the terms of the contract. The liquidated damages are specified in the contract at up to $8.0 million per contract year and are capped at an aggregate of $46.0 million over the term of the contract. As the gas processing facility has been shut-in since mid-2014, we have not been able to supply helium under the helium supply contract. APMTG Helium, LLC filed a case in November 2014 in the Ninth Judicial District Court of Sublette County, Wyoming, claiming multiple years of liquidated damages for non-delivery of volumes of helium specified under the helium supply contract. The Company’s position is that our contractual obligations are excused by virtue of events that fall within the force majeure provisions in the helium supply contract. The evidentiary phase of the trial concluded on November 29, 2017. The parties submitted written closing briefs and rebuttal briefs to the District Court during February and April of 2018. We are currently awaiting a ruling from the District Court, and we are unable to predict at this time the outcome of this dispute.

Subsequent Event	9 Months Ended
Subsequent Event	Sep. 30, 2018
Subsequent Events [Abstract]
Subsequent Event	Note 8. Subsequent Event On October 28, 2018, the Company entered into a definitive merger agreement pursuant to which the Company will acquire Penn Virginia Corporation (NASDAQ: PVAC) (“Penn Virginia”). On the terms and subject to the conditions set forth in the merger agreement, each share of Penn Virginia common stock (“Penn Virginia Common Stock”), issued and outstanding immediately prior to the effective time of the merger (other than as described in the merger agreement) will be converted into the right to receive, at the election of the holder of such share of Penn Virginia Common Stock, either, (i) $25.86 in cash without interest and 12.4 shares of the Company’s common stock (“Denbury Common Stock”), (ii) $79.80 in cash without interest (the “Cash Election”), or (iii) 18.3454 shares of Denbury Common Stock (the “Stock Election”). The Cash and Stock Elections will be subject to proration to ensure that the total amount of cash paid to holders of Penn Virginia Common Stock is equal to $400 million. In the aggregate, $400 million in cash and approximately 191.8 million shares of Denbury Common Stock are expected to be paid as merger consideration. Consummation of the merger is subject to satisfaction of customary conditions.

Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Organization and Nature of Operations

Denbury Resources Inc., a Delaware corporation, is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. Our goal is to increase the value of our properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO₂ enhanced oil recovery operations.

Interim Financial Statements - Basis of Accounting, Policy

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of Denbury Resources Inc. and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury Resources Inc. and its subsidiaries.

Interim Financial Statements - Use of Estimates

Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of September 30, 2018, our consolidated results of operations for the three and nine months ended September 30, 2018 and 2017, our consolidated cash flows for the nine months ended September 30, 2018 and 2017, and our consolidated statement of changes in stockholders’ equity for the nine months ended September 30, 2018.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported net income, current assets, total assets, current liabilities, total liabilities or stockholders’ equity.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows:



In thousands	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	66,711	$	58
Restricted cash included in Other assets	16,272		15,934
Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows	$	82,983	$	15,992

Amounts included in restricted cash included in “Other assets” in the accompanying Unaudited Condensed Consolidated Balance Sheets represent escrow accounts that are legally restricted for certain of our asset retirement obligations.

Net Income per Common Share

Basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities consist of nonvested restricted stock, nonvested performance-based equity awards, and shares into which our previously-outstanding convertible senior notes were convertible.

The following table sets forth the reconciliations of net income and weighted average shares used for purposes of calculating the basic and diluted net income per common share for the periods indicated:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands	2018		2017		2018		2017
Numerator
Net income – basic	$	78,419	$	442	$	148,219	$	36,371
Effect of potentially dilutive securities
Interest on convertible senior notes	—		—		538		—
Net income – diluted	$	78,419	$	442	$	148,757	$	36,371

Denominator
Weighted average common shares outstanding – basic	451,256		392,013		426,036		390,448
Effect of potentially dilutive securities
Restricted stock and performance-based equity awards	7,194		1,010		6,983		2,177
Convertible senior notes	—		—		22,915		—
Weighted average common shares outstanding – diluted	458,450		393,023		455,934		392,625

Basic weighted average common shares exclude shares of nonvested restricted stock. As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net income per common share (although time-vesting restricted stock is issued and outstanding upon grant). For purposes of calculating diluted weighted average common shares during the three and nine months ended September 30, 2018 and 2017, the nonvested restricted stock and performance-based equity awards are included in the computation using the treasury stock method, with the deemed proceeds equal to the average unrecognized compensation during the period, and for the shares underlying the previously-outstanding convertible senior notes as if the convertible senior notes were converted at the beginning of the 2018 period. In April and May 2018, all outstanding convertible senior notes converted into shares of Denbury common stock, resulting in the issuance of 55.2 million shares of our common stock upon conversion. These shares have been included in basic weighted average common shares outstanding beginning on the date of conversion. See Note 4, Long-Term Debt, for further discussion.

The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income per share, as their effect would have been antidilutive:



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
In thousands	2018	2017	2018	2017
Stock appreciation rights	2,689	4,551	2,824	4,793
Restricted stock and performance-based equity awards	—	9,891	203	6,259

Recent Accounting Pronouncements

Recently Adopted

Cash Flows. In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (“ASU 2016-18”). ASU 2016-18 addresses the diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows, and requires that a statement of cash flows explain the change in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. Effective January 1, 2018, we adopted ASU 2016-18, which has been applied retrospectively for all comparative periods presented. Accordingly, restricted cash associated with our escrow accounts of $15.9 million and $15.4 million for the nine-month periods ended September 30, 2018 and 2017, respectively, have been included in “Cash, cash equivalents, and restricted cash at beginning of period” on our Unaudited Condensed Consolidated Statements of Cash Flows and $15.6 million included in “Cash, cash equivalents, and restricted cash at end of period” for the nine-month period ended September 30, 2017. The adoption of ASU 2016-18 did not have an impact on our consolidated balance sheets or results of operations.

Our quarterly reports on Form 10-Q for the periods ended March 31, 2018 and June 30, 2018, filed with the SEC on May 10, 2018 and August 9, 2018, respectively, incorrectly included in the beginning-of-period and end-of-period balances of “Cash, cash equivalents, and restricted cash” in our Statements of Cash Flows, certain U.S. Treasury Notes held in escrow accounts legally restricted for use in certain of our asset retirement obligations. Under Financial Accounting Standards Board Codification (“FASC”) 230-10-20, these notes do not meet the definition of restricted cash and restricted cash equivalents due to their maturity date exceeding 90 days. Previously disclosed balances of these U.S. Treasury Notes of $24.6 million, $25.2 million and $25.4 million as of January 1, 2018 (the date of adoption), March 31, 2018 and June 30, 2018, respectively, should have been excluded from “Cash, cash equivalents, and restricted cash” on the Consolidated Statements of Cash Flows. Accordingly, “Cash, cash equivalents, and restricted cash” as of January 1, 2018 (the date of adoption), March 31, 2018 and June 30, 2018, originally reported as $40.6 million, $40.9 million and $41.6 million, respectively, should have been reported as $16.0 million, $15.7 million and $16.2 million, respectively. In addition, changes in the U.S. Treasury Notes of $0.6 million and $0.8 million during the three months ended March 31, 2018 and six months ended June 30, 2018, respectively, should have been included in net cash used in investing activities. Accordingly, net cash used in investing activities for the three months ended March 31, 2018, originally reported as $50.8 million, should have been $51.4 million, and net cash used in investing activities for the six months ended June 30, 2018, originally reported as $134.1 million, should have been $134.9 million. Management has evaluated the quantitative and qualitative impact of the error to previously issued unaudited consolidated statements of cash flows and concluded that the previously issued consolidated financial statements were not materially misstated. However, management has elected to revise the unaudited consolidated statements of cash flows for each of the three months ended March 31, 2018 and six months ended June 30, 2018 in its future filings. These revisions had no impact on the Company’s financial condition or results of operations for the periods presented.

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. In March, April and May 2016, the FASB issued four additional ASUs which primarily clarified the implementation guidance on principal versus agent considerations, performance obligations and licensing, collectibility, presentation of sales taxes and other similar taxes collected from customers, and non-cash consideration. Effective January 1, 2018, we adopted ASU 2014-09 using the modified retrospective method. The adoption of ASU 2014-09 did not have an impact on our consolidated financial statements, but required enhanced footnote disclosures. See Note 2, Revenue Recognition, for additional information.

Not Yet Adopted

Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”). ASU 2018-13 adds, modifies, or removes certain disclosure requirements for recurring and nonrecurring fair value measurements based on the FASB’s consideration of costs and benefits. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and early adoption is permitted. Entities must adopt the amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty prospectively, and all other amendments should be applied retrospectively to all periods presented. The adoption of ASU 2018-13 is currently not expected to have a material effect on our consolidated financial statements, but may require enhanced footnote disclosures.

Leases. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the guidance for lease accounting to require lease assets and liabilities to be recognized on the balance sheet, along with additional disclosures regarding key leasing arrangements. The ASU does not apply to mineral leases or leases that convey the right to explore for or use the land on which oil, natural gas, and similar natural resources are contained. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and early adoption is permitted. Entities must adopt the standard using a modified retrospective transition and apply the guidance to the earliest comparative period presented, with certain practical expedients that entities may elect to apply. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842, which provides an optional practical expedient to existing or expired land easements that were not previously accounted for as leases under Topic 840, which permits a company to evaluate only new or modified land easements under the new guidance. We intend to elect the practical expedients provided in the new ASUs that allow historical lease classification of existing leases, allow entities to recognize leases with terms of one year or less in their statement of operations, and carry forward our accounting treatment for existing land easement agreements. We are currently evaluating our lease agreements and implementing a software system to summarize the key contract terms and financial information associated with each lease agreement, in order to assess the impact the adoption of ASU 2016-02 and ASU 2018-01 will have on our consolidated financial statements.

Revenue Recognition

We record revenue in accordance with FASC Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, and applied to all existing contracts using the modified retrospective method. The core principle of FASC Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount of consideration that it expects to be entitled to receive for those goods or services. This principle is achieved through applying a five-step process for customer contract revenue recognition:

•Identify the contract or contracts with a customer – We derive the majority of our revenues from oil and natural gas sales contracts and CO₂ sales and transportation contracts. The contracts specify each party’s rights regarding the goods or services to be transferred and contain commercial substance as they impact our financial statements. A high percentage of our receivables balance is current, and we have not historically entered into contracts with counterparties that pose a credit risk without requiring adequate economic protection to ensure collection.

•Identify the performance obligations in the contract – Each of our revenue contracts specify a volume per day, or production from a lease designated in the contract (a distinct good), to be delivered at the delivery point over the term of the contract (the identified performance obligation). The customer takes delivery and physical possession of the product at the delivery point, which generally is also the point at which title transfers and the customer obtains the risks and rewards of ownership (the identified performance obligation is satisfied).

•Determine the transaction price – Typically, our oil and natural gas contracts define the price as a formula price based on the average market price, as specified on set dates each month, for the specific commodity during the month of delivery. Certain of our CO₂ contracts define the price as a fixed contractual price adjusted to an inflation index to reflect market pricing. Given the industry practice to invoice customers the month following the month of delivery and our high probability of collection of payment, no significant financing component is included in our contracts.

•Allocate the transaction price to the performance obligations in the contract – The majority of our revenue contracts are short-term, with terms of one year or less, to which we have applied the practical expedient permitted under the standard eliminating the requirement to disclose the transaction price allocated to remaining performance obligations. In limited instances, we have revenue contracts with terms greater than one year; however, the future delivery volumes are wholly unsatisfied as they represent separate performance obligations with variable consideration. We utilized the practical expedient which eliminates the requirement to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to wholly unsatisfied performance obligations. As there is only one performance obligation associated with our contracts, no allocation of the transaction price is necessary.

•Recognize revenue when, or as, we satisfy a performance obligation – Once we have delivered the volume of commodity to the delivery point and the customer takes delivery and possession, we are entitled to payment and we invoice the customer for such delivered production. Payment under most oil and CO₂ contracts is made within a month following product delivery and for natural gas and NGL contracts is generally made within two months following delivery. Timing of revenue recognition may differ from the timing of invoicing to customers; however, as the right to consideration after delivery is unconditional based on only the passage of time before payment of the consideration is due, upon delivery we record a receivable in “Accrued production receivable” in our Unaudited Condensed Consolidated Balance Sheets, which was $163.5 million and $146.3 million as of September 30, 2018 and December 31, 2017, respectively.

Commodity Derivative Contracts

We do not apply hedge accounting treatment to our oil and natural gas derivative contracts; therefore, the changes in the fair values of these instruments are recognized in income in the period of change. These fair value changes, along with the settlements of expired contracts, are shown under “Commodity derivatives expense (income)” in our Unaudited Condensed Consolidated Statements of Operations.

Historically, we have entered into various oil and natural gas derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future oil and natural gas production and to provide more certainty to our future cash flows. We do not hold or issue derivative financial instruments for trading purposes. Generally, these contracts have consisted of various combinations of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. The production that we hedge has varied from year to year depending on our levels of debt, financial strength and expectation of future commodity prices.

We manage and control market and counterparty credit risk through established internal control procedures that are reviewed on an ongoing basis. We attempt to minimize credit risk exposure to counterparties through formal credit policies, monitoring procedures and diversification, and all of our commodity derivative contracts are with parties that are lenders under our Bank Credit Agreement (or affiliates of such lenders). As of September 30, 2018, all of our outstanding derivative contracts were subject to enforceable master netting arrangements whereby payables on those contracts can be offset against receivables from separate derivative contracts with the same counterparty. It is our policy to classify derivative assets and liabilities on a gross basis on our balance sheets, even if the contracts are subject to enforceable master netting arrangements.

Fair Value Measurements

The FASC Fair Value Measurement topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the income approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observability of those inputs. The FASC establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:


•	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. As of September 30, 2018, instruments in this category include non-exchange-traded 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 $400 thousand in the fair value of these instruments as of September 30, 2018.

We adjust the valuations from the valuation model for nonperformance risk, using our estimate of the counterparty’s credit quality for asset positions and our credit quality for liability positions. We use multiple sources of third-party credit data in determining counterparty nonperformance risk, including credit default swaps.

Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Schedule of cash, cash equivalents, and restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows:



In thousands	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	66,711	$	58
Restricted cash included in Other assets	16,272		15,934
Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows	$	82,983	$	15,992

Schedule of earnings per share, basic and diluted reconciliation

The following table sets forth the reconciliations of net income and weighted average shares used for purposes of calculating the basic and diluted net income per common share for the periods indicated:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands	2018		2017		2018		2017
Numerator
Net income – basic	$	78,419	$	442	$	148,219	$	36,371
Effect of potentially dilutive securities
Interest on convertible senior notes	—		—		538		—
Net income – diluted	$	78,419	$	442	$	148,757	$	36,371

Denominator
Weighted average common shares outstanding – basic	451,256		392,013		426,036		390,448
Effect of potentially dilutive securities
Restricted stock and performance-based equity awards	7,194		1,010		6,983		2,177
Convertible senior notes	—		—		22,915		—
Weighted average common shares outstanding – diluted	458,450		393,023		455,934		392,625

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income per share, as their effect would have been antidilutive:



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
In thousands	2018	2017	2018	2017
Stock appreciation rights	2,689	4,551	2,824	4,793
Restricted stock and performance-based equity awards	—	9,891	203	6,259

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table summarizes our revenues by product type for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands	2018		2017		2018		2017
Oil sales	$	377,329	$	256,621	$	1,088,021	$	768,912
Natural gas sales	2,299		2,409		7,193		7,176
CO₂ sales and transportation fees	8,149		6,590		22,416		18,533
Total revenues	$	387,777	$	265,620	$	1,117,630	$	794,621

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Components of Long-Term Debt

The table below reflects long-term debt and capital lease obligations outstanding as of the dates indicated:



	September 30,			December 31,
In thousands	2018			2017
Senior Secured Bank Credit Agreement	$	—		$	475,000
9% Senior Secured Second Lien Notes due 2021	614,919			614,919
9¼% Senior Secured Second Lien Notes due 2022	455,668			381,568
7½% Senior Secured Second Lien Notes due 2024	450,000			—
3½% Convertible Senior Notes due 2024	—			84,650
6⅜% Senior Subordinated Notes due 2021	203,545			215,144
5½% Senior Subordinated Notes due 2022	314,662			408,882
4⅝% Senior Subordinated Notes due 2023	307,978			376,501
Pipeline financings	183,428			192,429
Capital lease obligations	11,290			26,298
Total debt principal balance	2,541,490			2,775,391
Future interest payable⁽¹⁾	292,590			316,818
Debt issuance costs	(13,772		)	(7,935		)
Total debt, net of debt issuance costs	2,820,308			3,084,274
Less: current maturities of long-term debt⁽¹⁾	(126,884		)	(105,188		)
Long-term debt and capital lease obligations	$	2,693,424		$	2,979,086

(1)

Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a small extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of September 30, 2018 include $102.2 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion.

Commodity Derivative Contracts (Tables)

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity derivative contracts not classified as hedging instruments

The following table summarizes our commodity derivative contracts as of September 30, 2018, none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic:



Months	Index Price	Volume (Barrels per day)	Contract Prices ($/Bbl)
			Range⁽¹⁾				Weighted Average Price
			Range⁽¹⁾				Swap		Sold Put		Floor		Ceiling
Oil Contracts:
2018 Fixed-Price Swaps
Oct – Dec	NYMEX	20,500	$	50.00	–	56.65	$	51.69	$	—	$	—	$	—
Oct – Dec	Argus LLS	5,000		60.10	–	60.25	60.18		—		—		—
2018 Three-Way Collars⁽²⁾
Oct – Dec	NYMEX	15,000	$	45.00	–	56.60	$	—	$	36.50	$	46.50	$	53.88
2019 Fixed-Price Swaps
Jan – June	NYMEX	3,500	$	59.00	–	59.10	$	59.05	$	—	$	—	$	—
Jan - Dec	Argus LLS	4,000		69.10	–	74.90	71.40		—		—		—
2019 Three-Way Collars⁽²⁾
Jan – June	NYMEX	18,500	$	55.00	–	75.45	$	—	$	48.84	$	56.84	$	69.94
July – Dec	NYMEX	22,000		55.00	–	75.45	—		48.55		56.55		69.17
Jan – Dec	Argus LLS	5,500		62.00	–	86.00	—		54.73		63.09		79.93


(1)	Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For 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.

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair value hierarchy of financial assets and liabilities

The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of the periods indicated:



	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, 2018
Liabilities
Oil derivative contracts – current	$	—	$	(120,298	)	$	(5,056	)	$	(125,354	)
Oil derivative contracts – long-term	—		(12,214		)	(1,356		)	(13,570		)
Total Liabilities	$	—	$	(132,512	)	$	(6,412	)	$	(138,924	)

December 31, 2017
Liabilities
Oil derivative contracts – current	$	—	$	(99,061	)	$	—		$	(99,061	)
Total Liabilities	$	—	$	(99,061	)	$	—		$	(99,061	)

Changes in fair value of Level 3 assets and liabilities

The following table summarizes the changes in the fair value of our Level 3 assets and liabilities for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands	2018			2017			2018			2017
Fair value of Level 3 instruments, beginning of period	$	(1,168	)	$	99		$	—		$	(526	)
Fair value gains (losses) on commodity derivatives	(5,244		)	(97		)	(6,412		)	528
Fair value of Level 3 instruments, end of period	$	(6,412	)	$	2		$	(6,412	)	$	2

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	$	(5,244	)	$	(71	)	$	(6,412	)	$	54

Qualitative valuation techniques for assets and liabilities measured on a recurring basis (Level 3)

The following table details fair value inputs related to implied volatilities utilized in the valuation of our Level 3 oil derivative contracts:



	Fair Value at 9/30/2018 (in thousands)			Valuation Technique	Unobservable Input	Volatility Range
Oil derivative contracts	$	(6,412	)	Discounted cash flow / Black-Scholes	Volatility of Light Louisiana Sweet for settlement periods beginning after September 30, 2018	20.7% – 29.9%

Basis of Presentation Basis of Presentation (Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 66,711				$ 58
Restricted cash included in Other assets	16,272				15,934	$ 15,600	$ 15,400
Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statement of cash flows	$ 82,983	$ 16,200	$ 15,700	$ 16,000	$ 15,992	$ 15,698	$ 17,050

Basis of Presentation (Reconciliation of Weighted Average Shares Table) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Numerator
Net income - basic	$ 78,419	$ 442	$ 148,219	$ 36,371
Interest on convertible senior notes	0	0	538	0
Net income - diluted	$ 78,419	$ 442	$ 148,757	$ 36,371
Denominator
Weighted average common shares outstanding - basic	451,256	392,013	426,036	390,448
Restricted stock and performance-based equity awards	7,194	1,010	6,983	2,177
Convertible senior notes	0	0	22,915	0
Weighted average common shares outstanding - diluted	458,450	393,023	455,934	392,625

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Basis of Presentation (Antidilutive Securities) (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock appreciation rights
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,689	4,551	2,824	4,793
Restricted stock and performance-based equity awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	9,891	203	6,259

Basis of Presentation Basis of Presentation (Details Textuals) - USD ($) $ in Thousands, shares in Millions	2 Months Ended	3 Months Ended	6 Months Ended
	May 31, 2018	Mar. 31, 2018	Jun. 30, 2018	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Restricted cash				$ 16,272		$ 15,934	$ 15,600	$ 15,400
Debt Conversion, Converted Instrument, Shares Issued	55.2
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents		$ 15,700	$ 16,200	$ 82,983	$ 16,000	$ 15,992	$ 15,698	$ 17,050
Net Cash Used in Investing Activities		51,400	134,900
Previously Reported
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents		40,900	41,600		40,600
Net Cash Used in Investing Activities		50,800	134,100
Adjustments
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents		(25,200)	(25,400)		$ (24,600)
Net Cash Used in Investing Activities		$ (600)	$ (800)

Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Revenues and other income	$ 387,777,000	$ 265,620,000	$ 1,117,630,000	$ 794,621,000
Oil sales
Disaggregation of Revenue [Line Items]
Revenues and other income	377,329,000	256,621,000	1,088,021,000	768,912,000
Natural gas sales
Disaggregation of Revenue [Line Items]
Revenues and other income	2,299,000	2,409,000	7,193,000	7,176,000
CO2 sales and transportation fees
Disaggregation of Revenue [Line Items]
Revenues and other income	$ 8,149,000	$ 6,590,000	$ 22,416,000	$ 18,533,000

Revenue Recognition (Details Textuals) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
Accrued production receivable	$ 163,475	$ 146,334

Assets Held for Sale (Details Textuals) $ in Millions	Sep. 30, 2018 USD ($)
Assets Held-for-sale, Not Part of Disposal Group [Abstract]
Land available for sale	$ 33.0

Long-Term Debt (Components of Long-Term Debt) (Details) - USD ($)
$ in Thousands

Sep. 30, 2018

Dec. 31, 2017

Senior Secured Bank Credit Agreement

$ 0

$ 475,000

Pipeline financings

183,428

192,429

Capital lease obligations

11,290

26,298

Total debt principal balance

2,541,490

2,775,391

Future interest payable

^[1]

292,590

316,818

Debt issuance costs

(13,772)

(7,935)

Total debt, net of debt issuance costs

2,820,308

3,084,274

Less: current maturities of long-term debt

^[1]

(126,884)

(105,188)

Long-term Debt and Capital Lease Obligations

2,693,424

2,979,086

9% Senior Secured Second Lien Notes Due 2021

$ 614,919

614,919

9 1/4% Senior Secured Second Lien Notes Due 2022

9.00%

$ 455,668

381,568

7 1/2% Senior Secured Second Lien Notes due 2024 [Member]

9.25%

$ 450,000

0

3 1/2% Convertible Senior Notes Due 2024

7.50%

$ 0

84,650

6 3/8% Senior Subordinated Notes due 2021

3.50%

$ 203,545

215,144

5 1/2% Senior Subordinated Notes due 2022

6.375%

$ 314,662

408,882

4 5/8% Senior Subordinated Notes due 2023

5.50%

$ 307,978

376,501

Future interest payable on senior secured and convertible senior notes

4.625%

Less: current maturities of long-term debt

$ (102,181)

(75,347)

Long-term Debt and Capital Lease Obligations

$ 190,410

$ 241,472

[1]

Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a small extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of September 30, 2018 include $102.2 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion.

Long-Term Debt (Details Textuals)

1 Months Ended

2 Months Ended

3 Months Ended

9 Months Ended

Jan. 31, 2018

USD ($)

Sep. 30, 2018

USD ($)

Sep. 30, 2018

USD ($)

Jun. 30, 2018

USD ($)

Sep. 30, 2018

USD ($)

shares

Aug. 31, 2018

USD ($)

Aug. 13, 2018

USD ($)

May 30, 2018

USD ($)

Apr. 18, 2018

USD ($)

Dec. 31, 2017

USD ($)

Interest in guarantor subsidiaries

100.00%

Extinguishment of Debt, Amount

$ 40,800,000

Future interest payable on senior secured notes

^[1]

$ 292,590,000

$ 316,818,000

Line of Credit Facility, Unused Capacity, Commitment Fee Percentage

0.50%

Line of Credit, Borrowing Base

615,000,000

$ 615,000,000

$ 1,050,000,000

Line of Credit Facility, Current Borrowing Capacity

615,000,000

$ 615,000,000

1,050,000,000

Senior Secured Debt to Consolidated EBITDAX

2.5

Consolidated EBITDAX to Consolidated Interest Charges

1.25

Current Ratio Requirement

1.0

Long-term Line of Credit

0

$ 0

475,000,000

Stock Issued During Period, Value, New Issues

162,004,000

Maximum Incurrence of Junior Lien Debt Permitted

$ 1,650,000,000

$ 1,200,000,000

Common Stock [Member]

Issued pursuant to notes conversion, shares | shares

55,249,955

Stock Issued During Period, Value, New Issues

$ 55,000

6 3/8% Senior Subordinated Notes due 2021

6.375%

11,600,000

5 1/2% Senior Subordinated Notes due 2022

$ 203,545,000

215,144,000

5.50%

94,200,000

4 5/8% Senior Subordinated Notes due 2023

$ 314,662,000

408,882,000

4.625%

68,500,000

9 1/4% Senior Secured Second Lien Notes Due 2022

$ 307,978,000

376,501,000

Face value of notes

74,100,000

381,600,000

9.25%

5% Convertible Senior Notes Due 2023

$ 455,668,000

381,568,000

Face value of notes

59,400,000

Debt Conversion, Original Debt, Amount

59,400,000

Convertible Debt

$ 0

3 1/2% Convertible Senior Notes Due 2024

3.50%

$ 0

84,650,000

Debt Conversion, Original Debt, Amount

$ 84,700,000

Convertible Debt

$ 0

7 1/2% Senior Secured Second Lien Notes due 2024 [Member]

Face value of notes

$ 450,000,000

7.50%

$ 450,000,000

$ 0

Year 2018 | Q3 [Member]

5.25

Year 2018 | Q4 [Member]

5.25

Year 2019

5.25

Year 2020 [Member]

Year 2021 [Member] | Q1 [Member]

5.25

Year 2021 [Member] | Q2 [Member]

4.50

Year 2021 [Member] | Q3 [Member]

4.50

Debt Instrument, Redemption, Period One | 9 1/4% Senior Secured Second Lien Notes Due 2022

4.50

Debt Instrument, Redemption, Period One | 7 1/2% Senior Secured Second Lien Notes due 2024 [Member]

109.25%

Initial Redemption Period With Proceeds From Equity Offering Member | 9 1/4% Senior Secured Second Lien Notes Due 2022

103.75%

Debt Instrument, Percentage of Principal Amount Available To Be Redeemed

109.25%

35.00%

Initial Redemption Period With Proceeds From Equity Offering Member | 7 1/2% Senior Secured Second Lien Notes due 2024 [Member]

Debt Instrument, Percentage of Principal Amount Available To Be Redeemed

107.50%

35.00%

Initial Redemption Period With Make Whole Premium | 9 1/4% Senior Secured Second Lien Notes Due 2022

Initial Redemption Period With Make Whole Premium | 7 1/2% Senior Secured Second Lien Notes due 2024 [Member]

100.00%

Senior Subordinated Notes

100.00%

$ 174,300,000

Notes Exchange