Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Stockholders' equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 50,193,656 | 49,999,999 |
Treasury stock, shares | 0 | 0 |
Consolidated Statements of Operations - USD ($) shares in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Revenues and other income | $ 220,600,000 | $ 530,112,000 | $ 1,258,160,000 | $ 1,274,883,000 |
Expenses | ||||
Taxes other than income | 16,584,000 | 43,531,000 | 91,390,000 | 93,752,000 |
General and administrative expenses | 19,470,000 | 48,522,000 | 79,258,000 | 83,029,000 |
Interest, net of amounts capitalized of $4,585, $1,261, $22,885 and $36,671, respectively | 1,815,000 | 48,267,000 | 4,147,000 | 81,632,000 |
Depletion, depreciation, and amortization | 45,812,000 | 188,593,000 | 150,640,000 | 233,816,000 |
Commodity derivatives expense (income) | 61,902,000 | (102,032,000) | 352,984,000 | 70,078,000 |
Gain on debt extinguishment | 0 | (18,994,000) | 0 | (155,998,000) |
Write-down of oil and natural gas properties | 1,006,000 | 996,658,000 | 14,377,000 | 0 |
Reorganization items, net | 0 | 849,980,000 | 0 | 0 |
Other expenses | 8,072,000 | 35,868,000 | 10,816,000 | 11,187,000 |
Total expenses | 273,784,000 | 2,378,819,000 | 1,201,391,000 | 953,572,000 |
Income (loss) before income taxes | (53,184,000) | (1,848,707,000) | 56,769,000 | 321,311,000 |
Income tax provision (benefit) | (2,526,000) | (416,129,000) | 767,000 | 104,352,000 |
Net income (loss) | $ (50,658,000) | $ (1,432,578,000) | $ 56,002,000 | $ 216,959,000 |
Net income (loss) per common share | ||||
Basic | $ (1.01) | $ (2.89) | $ 1.10 | $ 0.47 |
Diluted | $ (1.01) | $ (2.89) | $ 1.04 | $ 0.45 |
Weighted average common shares outstanding | ||||
Basic | 50,000 | 495,560 | 50,918 | 459,524 |
Diluted | 50,000 | 495,560 | 53,818 | 510,341 |
Other income | ||||
Revenues and other income | $ 4,697,000 | $ 8,419,000 | $ 15,288,000 | $ 14,523,000 |
Transportation and marketing | ||||
Operating expenses | 10,595,000 | 27,164,000 | 28,817,000 | 41,810,000 |
Oil, natural gas, and related product sales | ||||
Revenues and other income | 201,108,000 | 492,101,000 | 1,159,955,000 | 1,212,020,000 |
Operating expenses | 101,234,000 | 250,271,000 | 424,550,000 | 477,220,000 |
CO2 | ||||
Revenues and other income | 9,419,000 | 21,049,000 | 44,175,000 | 34,142,000 |
Operating expenses | 1,976,000 | 2,592,000 | 6,678,000 | 2,922,000 |
Oil marketing | ||||
Revenues and other income | 5,376,000 | 8,543,000 | 38,742,000 | 14,198,000 |
Operating expenses | $ 5,318,000 | $ 8,399,000 | $ 37,734,000 | $ 14,124,000 |
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
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Expenses | ||||
Capitalized interest | $ 1,261 | $ 22,885 | $ 4,585 | $ 36,671 |
Consolidated Statements of Cash Flows - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Cash flows from operating activities | ||||
Net income (loss) | $ (50,658,000) | $ (1,432,578,000) | $ 56,002,000 | $ 216,959,000 |
Adjustments to reconcile net income (loss) to cash flows from operating activities | ||||
Noncash reorganization items, net | 0 | 810,909,000 | 0 | 0 |
Depletion, depreciation, and amortization | 45,812,000 | 188,593,000 | 150,640,000 | 233,816,000 |
Write-down of oil and natural gas properties | 1,006,000 | 996,658,000 | 14,377,000 | 0 |
Deferred income taxes | (2,556,000) | (408,869,000) | 364,000 | 100,471,000 |
Stock-based compensation | 8,212,000 | 4,111,000 | 25,322,000 | 12,470,000 |
Commodity derivatives expense (income) | 61,902,000 | (102,032,000) | 352,984,000 | 70,078,000 |
Receipt (payment) on settlements of commodity derivatives | 21,089,000 | 81,396,000 | (277,240,000) | 23,606,000 |
Gain on debt extinguishment | 0 | (18,994,000) | 0 | (155,998,000) |
Debt issuance costs and discounts | 799,000 | 11,571,000 | 2,740,000 | 12,303,000 |
Gain from asset sales and other | (3,546,000) | (6,723,000) | (10,609,000) | (8,504,000) |
Other, net | 1,197,000 | 7,162,000 | (2,465,000) | (92,000) |
Changes in assets and liabilities, net of effects from acquisitions | ||||
Accrued production receivable | 21,411,000 | 26,575,000 | (51,944,000) | (13,619,000) |
Trade and other receivables | 15,567,000 | (22,343,000) | (284,000) | 9,379,000 |
Other current and long-term assets | (1,795,000) | 743,000 | 10,390,000 | 7,629,000 |
Accounts payable and accrued liabilities | (67,167,000) | (16,102,000) | 28,500,000 | (3,275,000) |
Oil and natural gas production payable | (6,912,000) | (6,792,000) | 29,351,000 | 2,170,000 |
Other liabilities | (4,035,000) | 123,000 | (10,970,000) | (13,250,000) |
Net cash provided by operating activities | 40,326,000 | 113,408,000 | 317,158,000 | 494,143,000 |
Cash flows from investing activities | ||||
Oil and natural gas capital expenditures | (17,964,000) | (99,582,000) | (150,911,000) | (262,005,000) |
Acquisitions of oil and natural gas properties | 82,000 | 0 | 10,979,000 | 79,000 |
Pipeline capital expenditures | (618,000) | (11,601,000) | (69,223,000) | (27,319,000) |
Net proceeds from sales of oil and natural gas properties and equipment | 938,000 | 41,322,000 | 19,053,000 | 10,196,000 |
Other | 15,842,000 | 12,747,000 | 9,128,000 | 9,515,000 |
Net cash used in investing activities | (1,884,000) | (57,114,000) | (202,932,000) | (269,692,000) |
Cash flows from financing activities | ||||
Bank repayments | (190,000,000) | (551,000,000) | (933,000,000) | (925,791,000) |
Bank borrowings | 120,000,000 | 691,000,000 | 898,000,000 | 925,791,000 |
Interest payments treated as a reduction of debt | 0 | (46,417,000) | 0 | (85,303,000) |
Cash paid in conjunction with debt exchange | 0 | 0 | 0 | (136,427,000) |
Cash paid in conjunction with debt repurchases | 0 | (14,171,000) | 0 | 0 |
Costs of debt financing | (8,000) | (12,482,000) | 0 | (11,065,000) |
Pipeline financing and capital lease debt repayments | (22,938,000) | (51,792,000) | (68,008,000) | (13,908,000) |
Other | 1,638,000 | (9,363,000) | (3,122,000) | 348,000 |
Net cash provided by (used in) financing activities | (91,308,000) | 5,775,000 | (106,130,000) | (246,355,000) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (52,866,000) | 62,069,000 | 8,096,000 | (21,904,000) |
Cash, cash equivalents, and restricted cash at beginning of period | 95,114,000 | 33,045,000 | 42,248,000 | 54,949,000 |
Cash, cash equivalents, and restricted cash at end of period | $ 42,248,000 | $ 95,114,000 | $ 50,344,000 | $ 33,045,000 |
Nature of Operations and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations and Summary of Significant Accounting Policies | Note 1. Nature of Operations and Summary of Significant Accounting Policies Organization and Nature of Operations Denbury Inc. (“Denbury,” “Company” or the “Successor”), a Delaware corporation, is an independent energy company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States. The Company is differentiated by our focus on CO2 EOR and the emerging CCUS industry, supported by the Company’s CO2 EOR technical and operational expertise and extensive CO2 pipeline infrastructure. As further described in Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code below, Denbury Inc. became the successor reporting company of Denbury Resources Inc. (the “Predecessor”) upon the Predecessor’s emergence from bankruptcy on September 18, 2020. References to “Successor” relate to the financial position and results of operations of the Company subsequent to September 18, 2020, and references to “Predecessor” relate to the financial position and results of operations of the Company prior to, and including, September 18, 2020. On September 18, 2020, Denbury filed the Third Restated Certificate of Incorporation with the Delaware Secretary of State to effect a change of the Company’s corporate name from Denbury Resources Inc. to Denbury Inc., and on September 21, 2020, the Successor’s new common stock commenced trading on the New York Stock Exchange under the ticker symbol DEN. Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code On July 28, 2020, Denbury Resources Inc. and its subsidiaries entered into a restructuring support agreement with lenders holding 100% of the revolving loans under our pre-petition revolving bank credit facility and debtholders holding approximately 67.1% of our senior secured second lien notes and approximately 73.1% of our convertible senior notes, which contemplated a restructuring of the Company pursuant to a prepackaged joint plan of reorganization (the “Plan”). On July 30, 2020 (the “Petition Date”), Denbury Resources Inc. and its subsidiaries filed petitions for reorganization in a “prepackaged” voluntary bankruptcy (the “Chapter 11 Restructuring”) under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the caption “In re Denbury Resources Inc., et al., Case No. 20-33801”. On September 2, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan and approving the Disclosure Statement, and on September 18, 2020 (the “Emergence Date”), the Plan became effective in accordance with its terms and the Company emerged from Chapter 11. On April 23, 2021, the Bankruptcy Court entered a final decree closing the Chapter 11 case captioned “In re Denbury Resources Inc., et al., Case No. 20-33801”; therefore, we have no remaining obligations related to this reorganization. On the Emergence Date and pursuant to the terms of the Plan and the Confirmation Order, all outstanding obligations under the senior secured second lien notes, convertible senior notes, and senior subordinated notes were fully extinguished, relieving approximately $2.1 billion in aggregate principal of debt by issuing equity and/or warrants in the Successor to the former holders of that debt, and the Company: •Adopted an amended and restated certificate of incorporation and bylaws which reserved for issuance 250,000,000 shares of common stock, par value $0.001 per share, of Denbury (the “New Common Stock”) and 50,000,000 shares of preferred stock, par value $0.001 per share; •Cancelled all outstanding senior secured second lien notes, convertible senior notes, and senior subordinated notes issued by the Predecessor. In accordance with the Plan, claims against and interests in the Predecessor were treated as follows: ◦Holders of secured pipeline lease claims received payment in full in cash, the collateral securing such pipeline lease claim, reinstatement, or such other treatment rendering such pipeline lease claim unimpaired (see Note 8, Long-Term Debt – Restructuring of Pipeline Financing Transactions, for discussion of subsequent pipeline transactions); ◦Holders of senior secured second lien notes claims received their pro rata share of 47,499,999 shares representing 95% of the New Common Stock issued on the Emergence Date, subject to dilution on account of warrants and a management incentive plan; ◦Holders of convertible senior notes claims received their pro rata share of (a) 2,500,000 shares representing 5% of the New Common Stock issued on the Emergence Date, subject to dilution on account of warrants and a management incentive plan and (b) 100% of the series A warrants (see below), reflecting up to a maximum of 5% ownership stake in the reorganized company’s equity interests; ◦Holders of subordinated notes claims received their pro rata share of 54.55% of the series B warrants (see below), reflecting up to a maximum of 3% of the reorganized company’s equity interests after giving effect to the exercise of the series A warrants; ◦Holders of existing equity interests received their pro rata share of 45.45% of the series B warrants (see below), reflecting up to a maximum of 2.5% of the reorganized company’s equity interests after giving effect to the exercise of the series A warrants; ◦Issued 2,631,579 series A warrants at an exercise price of $32.59 per share to former holders of the Predecessor’s convertible senior notes and 2,894,740 series B warrants at an exercise price of $35.41 per share to former holders of the Predecessor’s senior subordinated notes and Predecessor’s equity interests; and ◦Holders of general unsecured claims received payment in full in cash, reimbursement, or such other treatment rendering such general unsecured claim unimpaired. •Entered into a new senior secured revolving credit agreement with a syndicate of banks (the “Successor Bank Credit Agreement”) with total aggregate commitments of $575 million; •Appointed a new board of directors (the “Board”) consisting of four new independent members: Anthony Abate, Caroline Angoorly, Brett Wiggs and James N. “Jim” Chapman, and three continuing members: Dr. Kevin O. Meyers (Chairman of the Board), Lynn A. Peterson and Chris Kendall, Denbury’s President and Chief Executive Officer; and •Adopted a framework for a management incentive plan which reserves for officers, other employees, directors and other service providers a pool of shares of New Common Stock, with initial awards issued on December 4, 2020 (see Note 11, Stock Compensation, for further discussion). During the Predecessor period, the Company applied Financial Accounting Standards Board Codification (“FASC”) Topic 852, Reorganizations, in preparing the consolidated financial statements. FASC Topic 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Restructuring, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during 2020 related to the Chapter 11 Restructuring, including the write-off of unamortized long-term debt fees and discounts associated with debt classified as liabilities subject to compromise, and professional fees incurred directly as a result of the Chapter 11 Restructuring are recorded as “Reorganization items, net” in our Consolidated Statements of Operations in the Predecessor period. FASC Topic 852 requires certain additional reporting for financial statements prepared between the bankruptcy filing date and the date of emergence from bankruptcy, including: •Reclassification of pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured, to a separate line item in the Unaudited Condensed Consolidated Balance Sheet titled “Liabilities subject to compromise”; and •Segregation of “Reorganization items, net” as a separate line in the Unaudited Condensed Consolidated Statements of Operations. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Principles of Reporting and Consolidation The consolidated financial statements herein have been prepared in accordance with GAAP and include the accounts of Denbury and entities in which we hold a controlling financial interest. Undivided interests in oil and gas joint ventures are consolidated on a proportionate basis. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during each reporting period. Management believes its estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates underlying these financial statements include (1) the fair value of financial derivative instruments; (2) the estimated quantities of proved oil and natural gas reserves used to compute depletion of oil and natural gas properties, the related present value of estimated future net cash flows therefrom and the ceiling test; (3) future net cash flow estimates used in the impairment assessment of long-lived assets; (4) the estimated quantities of proved and probable CO2 reserves used to compute depletion of CO2 properties; (5) estimated useful lives used to compute depreciation and amortization of long-lived assets; (6) accruals related to oil and natural gas sales volumes and revenues, capital expenditures and lease operating expenses; (7) the estimated costs and timing of future asset retirement obligations; (8) estimates made in the calculation of income taxes; (9) estimates made in determining the fair values for purchase price allocations; and (10) fair value estimates including estimates of reorganization value, enterprise value, and the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting. While management is not aware of any significant revisions to any of its current year-end estimates, there will likely be future revisions to its estimates resulting from matters such as revisions in estimated oil and natural gas volumes, changes in ownership interests, payouts, joint venture audits, re-allocations by purchasers or pipelines, or other corrections and adjustments common in the oil and natural gas industry, many of which require retroactive application. These types of adjustments cannot be currently estimated and will be recorded in the period in which the adjustment occurs. Business Segment Information We have evaluated the organization and management of our business and identified only one operating segment related to our oil and natural gas operations. Management measures financial performance and makes capital allocation decisions as a single enterprise and not on a geographical or area-by-area basis. All of our operating revenues, income from operations and assets are generated in the United States. Reclassifications Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported total revenues, expenses, net income (loss), current assets, total assets, current liabilities, total liabilities or stockholders’ equity. Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments to be cash equivalents if they have maturities of three months or less at the date of purchase. The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Consolidated Statements of Cash Flows:
Restricted cash, long-term in the table above consists of escrow accounts that are legally restricted for certain of our asset retirement obligations, and are included in “Other assets” in the accompanying Consolidated Balance Sheets. Oil and Natural Gas Properties Capitalized Costs. We follow the full cost method of accounting for oil and natural gas properties. Under this method, all costs related to the acquisition, exploration and development of oil and natural gas reserves are capitalized and accumulated in a single cost center representing our activities, which are undertaken exclusively in the United States. Such costs include lease acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties, costs of drilling both productive and nonproductive wells, capitalized interest on qualifying projects, and general and administrative expenses directly related to exploration and development activities, and do not include any costs related to production, general corporate overhead or similar activities. We assign the purchase price of oil and natural gas properties we acquire to proved and unevaluated properties based on the estimated fair values as defined in the FASC Fair Value Measurement topic. Proceeds received from disposals are credited against accumulated costs except when the sale represents a significant disposal of reserves, in which case a gain or loss would be recognized. A disposal of 25% or more of our proved reserves would be considered significant. Depletion. The costs capitalized, including production equipment and future development costs, are depleted using the unit-of-production method, based on proved oil and natural gas reserves as determined by independent petroleum engineers. Oil and natural gas reserves are converted to equivalent units on a basis of 6,000 cubic feet of natural gas to one barrel of crude oil. Under full cost accounting, we may exclude certain unevaluated costs from the amortization base pending determination of whether proved reserves can be assigned to such properties. The costs classified as unevaluated are transferred to the full cost amortization base as the properties are developed, tested and evaluated. At least annually, we test these assets for impairment based on an evaluation of management’s expectations of future pricing, evaluation of lease expiration terms, and planned project development activities. As a result of this analysis, we recognized impairments of our unevaluated costs totaling $18.2 million during the year ended December 31, 2019, whereby these costs were transferred to the full cost amortization base. Given the significant declines in NYMEX oil prices in March and April 2020 due to the oil supply and demand imbalance precipitated by the dramatic fall in demand associated with the COVID-19 coronavirus pandemic combined with the concurrent OPEC+ decision to increase oil supply, we reassessed our development plans and transferred $244.9 million of our unevaluated costs to the full cost pool during the Predecessor period from January 1, 2020 through September 18, 2020. Upon emergence from bankruptcy, the Company adopted fresh start accounting which resulted in our oil and natural gas properties, including unevaluated properties, being recorded at their fair values at the Emergence Date (see Note 2, Fresh Start Accounting, for additional information). Write-Down of Oil and Natural Gas Properties. The net capitalized costs of oil and natural gas properties are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as (1) the present value of estimated future net revenues from proved oil and natural gas reserves before future abandonment costs (discounted at 10%), based on the average first-day-of-the-month oil and natural gas price for each month during a 12-month rolling period prior to the end of a particular reporting period; plus (2) the cost of properties not being amortized; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) related income tax effects. Our future net revenues from proved oil and natural gas reserves are not reduced for development costs related to the cost of drilling for and developing CO2 reserves nor those related to the cost of constructing CO2 pipelines, as we do not have to incur additional CO2 capital costs to develop the proved oil and natural gas reserves. Therefore, we include in the ceiling test, as a reduction of future net revenues, that portion of our capitalized CO2 costs related to CO2 reserves and CO2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves. The fair value of our oil and natural gas derivative contracts is not included in the ceiling test, as we do not designate these contracts as hedge instruments for accounting purposes. The cost center ceiling test is prepared quarterly. The average first-day-of-the-month NYMEX oil price used in estimating our proved reserves, after adjustments for market differentials and transportation expenses by field, was $63.86 at December 31, 2021, $35.84 at December 31, 2020, $40.08 at September 18, 2020, and $55.55 at December 31, 2019. We recognized a full cost pool ceiling test write-down of $14.4 million during the first quarter of 2021, with first-day-of-the-month NYMEX oil prices for the preceding 12 months averaging $36.40 per Bbl, after adjustments for market differentials and transportation expenses by field. The write-down was primarily a result of the March 2021 acquisition of Wyoming property interests (see Note 3, Acquisition and Divestitures) which was recorded based on a valuation that utilized NYMEX strip oil prices at the acquisition date, which were significantly higher than the average first-day-of-the-month NYMEX oil prices used to value the cost ceiling. Primarily as a result of the commodity price declines during 2020, the Predecessor recognized full cost pool ceiling test write-downs of $996.7 million during the period from January 1, 2020 through September 18, 2020, and an additional full cost pool ceiling test write-down of $1.0 million was recognized during the Successor period from September 19, 2020 through December 31, 2020. We did not record any ceiling test write-downs during the 2019 Predecessor period. Joint Interest Operations. Substantially all of our oil and natural gas exploration and production activities are conducted jointly with others. These financial statements reflect only our proportionate interest in such activities, and any amounts due from other partners are included in trade receivables. Tertiary Injection Costs. Our tertiary operations are conducted in reservoirs that have already produced significant amounts of oil over many years; however, in accordance with the Securities and Exchange Commission (“SEC”) rules and regulations for recording proved reserves, we cannot recognize proved reserves associated with enhanced recovery techniques, such as CO2 injection, until we can demonstrate production resulting from the tertiary process or unless the field is analogous to an existing flood. We capitalize, as a development cost, injection costs in fields that are in their development stage, which means we have not yet seen incremental oil production due to the CO2 injections (i.e., a production response). These capitalized development costs are included in our unevaluated property costs until we are able to recognize proved reserves associated with the development project. After we see a production response to the CO2 injections (i.e., the production stage), injection costs are expensed as incurred, and any previously deferred unevaluated development costs become subject to depletion. CO2 Properties We own and produce CO2 reserves, a non-hydrocarbon resource, that are used in our tertiary oil recovery operations on our own behalf and on behalf of other interest owners in enhanced recovery fields, with a portion sold to third-party industrial users. We record revenue from our sales of CO2 to third parties when it is produced and sold. Expenses related to the production of CO2 are allocated between volumes sold to third parties and volumes consumed internally that are directly related to our tertiary production. The expenses related to third-party sales are recorded in “CO2 operating and discovery expenses,” and the expenses related to internal use are recorded in “Lease operating expenses” in the Consolidated Statements of Operations or are capitalized as oil and natural gas properties in our Consolidated Balance Sheets, depending on the stage of the tertiary flood that is receiving the CO2 (see Tertiary Injection Costs above for further discussion). Costs incurred to search for CO2 are expensed as incurred until proved or probable reserves are established. Once proved or probable reserves are established, costs incurred to obtain those reserves are capitalized and classified as “CO2 properties” on our Consolidated Balance Sheets. Capitalized CO2 costs are aggregated by geologic formation and depleted on a unit-of-production basis over proved and probable reserves. Pipelines CO2 used in our tertiary floods is transported to our fields through CO2 pipelines. Costs of CO2 pipelines under construction are not depreciated until the pipelines are placed into service. Pipelines are depreciated on a straight-line basis over their estimated useful lives, which range from 20 to 50 years. Capitalized costs include $22.4 million of CO2 pipelines as of December 31, 2021, that were either under construction or had not been placed into service and therefore, were not subject to depreciation during 2021. Property and Equipment – Other Other property and equipment, which includes furniture and fixtures, vehicles, and computer equipment and software, is depreciated principally on a straight-line basis over each asset’s estimated useful life. Vehicles are generally depreciated over a useful life of to five years, furniture and fixtures over a life of to ten years, and computer equipment and software are generally depreciated over a useful life of to five years. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. Maintenance and repair costs that do not extend the useful life of the property or equipment are charged to expense as incurred. Intangible Assets Our intangible assets subject to amortization represent amounts assigned in fresh start accounting to long-term contracts to sell CO2 to industrial customers. We amortize the CO2 contract intangible assets on a straight-line basis over their estimated useful lives, which range from to 14 years. Total amortization expense for our intangible assets was $9.1 million during the year ended December 31, 2021, $2.7 million during the Successor period September 19, 2020 through December 31, 2020, $1.7 million for the Predecessor period January 1, 2020 through September 18, 2020, and $2.4 million during the year ended 2019. The following table summarizes the carrying value of our intangible assets as of December 31, 2021 and 2020:
As of December 31, 2021, our estimated amortization expense for our intangible assets subject to amortization over the next five years is as follows:
Impairment Assessment of Long-Lived Assets We test long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. These long-lived assets, which are not subject to our full cost pool ceiling test, are principally comprised of our capitalized CO2 properties and pipelines, and for the Successor period also included long-term contracts to sell CO2 to industrial customers. We perform our long-lived asset impairment test by comparing the net carrying costs of our long-lived asset groups to the respective expected future undiscounted net cash flows that are supported by these long-lived assets which include production of our probable and possible oil and natural gas reserves. The portion of our capitalized CO2 costs related to CO2 reserves and CO2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves is included in the full cost pool ceiling test as a reduction to future net revenues. The remaining net capitalized costs that are not included in the full cost pool ceiling test, and related intangible assets, are subject to long-lived asset impairment testing. If the undiscounted net cash flows are below the net carrying costs for an asset group, we must record an impairment loss by the amount, if any, that net carrying costs exceed the fair value of the long-lived asset group. We did not record an impairment of long-lived assets during the year ended December 31, 2021, 2020 or 2019. Asset Retirement Obligations In general, our future asset retirement obligations relate to future costs associated with plugging and abandoning our oil, natural gas and CO2 wells, removing equipment and facilities from leased acreage, and returning land to its original condition. The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred, discounted to its present value using our credit-adjusted-risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period, and the capitalized cost is depreciated over the useful life of the related asset. Revisions to estimated retirement obligations will result in an adjustment to the related capitalized asset and corresponding liability. If the liability for an oil or natural gas well is settled for an amount other than the recorded amount, the difference is recorded to the full cost pool. Asset retirement obligations are estimated at the present value of expected future net cash flows. We utilize unobservable inputs in the estimation of asset retirement obligations that include, but are not limited to, costs of labor and materials, profits on costs of labor and materials, the effect of inflation on estimated costs, and the discount rate. Accordingly, asset retirement obligations are considered a Level 3 measurement under the FASC Fair Value Measurement topic. Commodity Derivative Contracts We utilize oil and natural gas derivative contracts to mitigate our exposure to commodity price risk associated with our future oil and natural gas production. These derivative contracts have historically consisted of options, in the form of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. Our derivative financial instruments, other than any derivative instruments that are designated under the “normal purchase normal sale” exclusion, are recorded on the balance sheet as either an asset or a liability measured at fair value. We do not apply hedge accounting to our commodity derivative contracts; accordingly, changes in the fair value of these instruments are recognized in “Commodity derivatives expense (income)” in our Consolidated Statements of Operations in the period of change. Concentrations of Credit Risk Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents, trade and accrued production receivables, and the derivative instruments discussed above. Our cash equivalents represent high-quality securities placed with various investment-grade institutions. This investment practice limits our exposure to concentrations of credit risk. Our trade and accrued production receivables are dispersed among various customers and purchasers; therefore, concentrations of credit risk are limited. We evaluate the credit ratings of our purchasers, and if customers are considered a credit risk, letters of credit are the primary security obtained to support lines of credit. We attempt to minimize our credit risk exposure to the counterparties of our oil and natural gas derivative contracts through formal credit policies, monitoring procedures and diversification. All of our derivative contracts are with parties that are lenders under our senior secured bank credit facility (or affiliates of such lenders). There are no margin requirements with the counterparties of our derivative contracts. Oil and natural gas sales are made on a day-to-day basis or under short-term contracts at the current area market price. We would not expect the loss of any purchaser to have a material adverse effect upon our operations. For the year ended December 31, 2021 (Successor), four purchasers each accounted for 10% or more of our oil and natural gas revenues: Plains Marketing LP (28%), Hunt Crude Oil Supply Company (12%), Marathon Petroleum (11%) and Sunoco Inc. (11%). For the Successor period September 19, 2020 through December 31, 2020, three purchasers each accounted for 10% or more of our oil and natural gas revenues: Plains Marketing LP (30%), Marathon Petroleum (13%) and Hunt Crude Oil Supply Company (12%), and for the Predecessor period January 1, 2020 through September 18, 2020, three purchasers each accounted for 10% or more of our oil and natural gas revenues: Plains Marketing LP (30%), Hunt Crude Oil Supply Company (12%) and Marathon Petroleum (12%). For the year ended December 31, 2019 (Predecessor), three purchasers each accounted for 10% or more of our oil and natural gas revenues: Plains Marketing LP (32%), Hunt Crude Oil Supply Company (11%) and Sunoco Inc. (11%). Income Taxes Income taxes are accounted for using the asset and liability method, under which deferred income taxes are recognized for the future tax effects of temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities using the enacted statutory tax rates in effect at year end. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance for deferred tax assets is recorded when it is more likely than not that the benefit from the deferred tax asset will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is calculated in the same manner but includes the impact of potentially dilutive securities. Potentially dilutive securities during the Successor periods consist of nonvested restricted stock units, nonvested performance stock units, and outstanding series A and series B warrants, and during the Predecessor periods consisted of nonvested restricted stock, nonvested performance-based equity awards, and convertible senior notes. The following table sets forth the reconciliations of net income (loss) and weighted average shares used for purposes of calculating basic and diluted net income (loss) per common share for the periods indicated:
(1)For the year ended December 31, 2019, shares shown under “convertible senior notes” represent the prorated portion of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019 (see Note 8, Long-Term Debt – 2019 Predecessor Debt Reduction Transactions). For each of the periods from September 19, 2020 through December 31, 2020 (Successor) and from January 1, 2020 through September 18, 2020 (Predecessor), the weighted average common shares outstanding used to calculate basic earnings per share and diluted earnings per share were the same, since the Company generated a net loss during those periods. The weighted average diluted shares outstanding would have been 50.0 million for the period September 19, 2020 through December 31, 2020 and 584.4 million for the period January 1, 2020 through September 18, 2020, if the Company had recognized net income during those periods. Basic weighted average common shares during the year ended December 31, 2021 includes 1,383,144 performance-based and restricted stock units which are fully vested as of December 31, 2021. Although vesting criteria for these awards have been achieved, the shares underlying these awards are not currently outstanding as actual delivery of the shares is not scheduled to occur until December 4, 2023. During the Predecessor periods, basic weighted average common shares includes restricted stock that vested during the periods. For purposes of calculating diluted weighted average common shares for the years ended December 31, 2021 and 2019, the nonvested restricted stock units, nonvested restricted stock and performance-based equity awards, along with unexercised warrants are included in the computation using the treasury stock method, and for the shares underlying the convertible senior notes as if the convertible senior notes were converted at the earliest date outstanding during the respective periods. The following outstanding securities were excluded from the computation of diluted net income (loss) per share for the year ended December 31, 2021, the period September 19, 2020 through December 31, 2020, and the year ended December 31, 2019, as their effect would have been antidilutive, as of the respective dates:
For the period September 19, 2020 through December 31, 2020, the Company’s restricted stock units and series A and series B warrants were antidilutive based on the Company’s net loss position for the periods. At December 31, 2021, the Company had approximately 5.2 million warrants outstanding that can be exercised for shares of the Successor’s common stock, at an exercise price of $32.59 per share for the 2.6 million series A warrants outstanding and at an exercise price of $35.41 per share for the 2.6 million series B warrants outstanding. The series A warrants are exercisable until September 18, 2025, and the series B warrants are exercisable until September 18, 2023, at which time the warrants expire. The warrants were issued pursuant to the Plan to holders of the Predecessor’s convertible senior notes, senior subordinated notes, and equity. As of December 31, 2021, 11,694 series A warrants and 327,266 series B warrants have been exercised in exchange for a total of 193,657 shares. The warrants may be exercised for cash or on a cashless basis. Environmental and Litigation Contingencies The Company makes judgments and estimates in recording liabilities for contingencies such as environmental remediation or ongoing litigation. Liabilities are recorded when it is both probable that a loss has been incurred and such loss is reasonably estimable. Assessments of liabilities are based on information obtained from independent and in-house experts, loss experience in similar situations, actual costs incurred, and other case-by-case factors. Any related insurance recoveries are recognized in our financial statements during the period received or at the time receipt is determined to be virtually certain. Recent Accounting Pronouncements Recently Adopted Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The objective of ASU 2019-12 is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. Effective January 1, 2021, we adopted ASU 2019-02. The implementation of this standard did not have a material impact on our consolidated financial statements and related footnote disclosures.
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Fresh Start Accounting | Note 2. Fresh Start Accounting Fresh Start Accounting Upon emergence from bankruptcy, we met the criteria and were required to adopt fresh start accounting in accordance with FASC Topic 852, Reorganizations, which on the Emergence Date resulted in a new entity, the Successor, for financial reporting purposes, with no beginning retained earnings or deficit as of the fresh start reporting date. The criteria requiring fresh start accounting are: (1) the holders of the then-existing common shares of the Predecessor received less than 50 percent of the new common shares of the Successor outstanding upon emergence from bankruptcy and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims. Fresh start accounting requires that new fair values be established for the Company’s assets, liabilities and equity as of the date of emergence from bankruptcy, September 18, 2020, and therefore certain values and operational results of the consolidated financial statements subsequent to September 18, 2020 are not comparable to those in the Company’s consolidated financial statements prior to, and including September 18, 2020. The Emergence Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor. Reorganization Value The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values. Under FASC Topic 852, reorganization value generally approximates the fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of the restructuring. The value of the reconstituted entity (i.e., Successor) was based on management projections and the valuation models as determined by the Company’s financial advisors in setting an estimated range of enterprise values. As set forth in the Plan and Disclosure Statement approved by the Bankruptcy Court, the valuation analysis resulted in an enterprise value between $1.1 billion and $1.5 billion, with a midpoint of $1.3 billion. For U.S. GAAP purposes, we valued the Successor’s individual assets, liabilities, and equity instruments and determined the value of the enterprise was approximately $1.3 billion as of the Emergence Date, which fell in line with the midpoint of the forecast enterprise value ranges approved by the Bankruptcy Court. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process. The following table reconciles the enterprise value to the equity value of the Successor as of the Emergence Date:
The following table reconciles enterprise value to reorganization value of the Successor (i.e., value of the reconstituted entity) and total reorganization value:
With the assistance of third-party valuation advisors, we determined the enterprise and corresponding equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of the present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of September 18, 2020. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. Reorganization Items, Net “Reorganization items, net” in our Consolidated Statements of Operations includes (i) expenses incurred during the Chapter 11 Restructuring subsequent to the Petition Date as a direct result of the Plan, (ii) gains or losses from liabilities settled and (iii) fresh start accounting adjustments. Professional service provider charges associated with our restructuring that were incurred outside of this period (before the Petition Date and after the Emergence Date) are recorded in “Other expenses” in our Consolidated Statements of Operations. Contractual interest expense of $22.0 million from the Petition Date through the Emergence Date associated with our outstanding senior secured second lien notes, convertible senior notes, and senior subordinated notes was not accrued or recorded in the consolidated statement of operations as interest expense. The following table summarizes the losses (gains) on reorganization items, net:
Valuation Process The fair values of our principal assets, including oil and natural gas properties, CO2 properties, pipelines, other property and equipment, long-term contracts to sell CO2 to industrial customers, favorable and unfavorable vendor contracts, pipeline financing liabilities and right-of-use assets, asset retirement obligations and warrants were estimated as of the Emergence Date. Oil and Natural Gas Properties The Company’s principal assets are its oil and natural gas properties, which are accounted for under the full cost accounting method as described in Note 1, Nature of Operations and Summary of Significant Accounting Policies – Oil and Natural Gas Properties. The Company determined the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the Emergence Date. The fair value analysis was based on the Company’s estimated future production rates of proved and probable reserves as prepared by the Company’s independent petroleum engineers. Discounted cash flow models were prepared using the estimated future revenues and operating costs for all developed wells and undeveloped properties comprising the proved and probable reserves. Future revenues were based upon future production rates and forward strip oil and natural gas prices as of the Emergence Date through 2024 and escalated for inflation thereafter, adjusted for differentials. Operating costs were adjusted for inflation beginning in year 2025. A risk adjustment factor was applied to each reserve category, consistent with the risk of the category. The discounted cash flow models also included adjustments for income tax expenses. Discount factors utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type and varying corporate income tax rates based on the expected point of sale for each property’s produced assets. Reserve values were also adjusted for any asset retirement obligations as well as for CO2 indirect costs not directly allocable to oil fields. Based on this analysis, the Company concluded the fair value of its proved and probable reserves was $865.4 million as of the Emergence Date (see footnote 10 to Fresh Start Adjustments discussion below). CO2 Properties The fair value of CO2 properties includes the value of CO2 mineral rights and associated infrastructure and was determined using the discounted cash flow method under the income approach. After-tax cash flows were forecast based on expected costs to produce and transport CO2 as estimated by management, and income was imputed using a gross-up of costs based on a five-year average historical EBITDA margin for publicly traded companies that primarily develop or produce natural gas. Cash flows were also adjusted for a market participant profit on CO2 costs, since Denbury charges oil fields for CO2 use on a cost basis. Cash flows were then discounted using a rate considering reduced risk associated with CO2 industrial sales. Pipelines The fair values of our pipelines were determined using a combination of the replacement cost method under the cost approach and the discounted cash flow method under the income approach. The replacement cost method considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow. For assets valued using the discounted cash flow method, after-tax cash flows were forecast based on expected costs estimated by management, and profits were imputed using a gross-up of costs based on a five-year average historical EBITDA margin for publicly traded companies that primarily transport natural gas. Pipeline depreciable lives represent the remaining estimated useful lives of the pipelines. Other Property and Equipment The fair value of the non-reserve related property and equipment such as land, buildings, equipment, leasehold improvements and software was determined using the replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow. Long-Term Contracts to Sell CO2 to Industrial Customers The fair value of long-term contracts to sell CO2 to industrial customers was determined using the multi-period excess earnings method (“MPEEM”) under the income approach. MPEEM attributes cash flow to a specific intangible asset based on residual cash flows from a set of assets generating revenues after accounting for appropriate returns on and of other assets contributing to that revenue generation. Cash flows were forecast based on expected changes in pricing, volumes, renewal rates, and costs using volumes and prices through and beyond the initial contract terms. After-tax cash flows were discounted using a rate considering reduced risk of these industrial contracts relative to overall oil and gas production risks. Favorable and Unfavorable Vendor Contracts We recognized both favorable and unfavorable contracts using the incremental value method under the income approach. The incremental value method calculates value on the basis of the pricing differential between historical contracted rates and estimated pricing that the Company would most likely receive if it entered into similar contract conditions (other than the price) as of the Emergence Date. The differential is applied to expected contract volumes, tax-affected and discounted at a discount rate consistent with the risk of the associated cash flows. Asset Retirement Obligations The fair value of the asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate (“CARFR”). The new CARFR was based on an evaluation of similar industry peers with similar factors such as emergence, new capital structure and current rates for oil and gas companies. Pipeline Financing Liabilities The fair value of the pipeline financing liabilities was measured as the present value of the remaining payments under the restructured pipeline agreements (see Note 8, Long-Term Debt – Restructuring of Pipeline Financing Transactions, for further discussion). Warrants The fair values of the warrants issued upon the Emergence Date were estimated by applying a Black-Scholes model. The Black-Scholes model is a pricing model used to estimate the fair value of a European-style call or put option/warrant based on a current stock price, strike price, time to maturity, risk-free rate, annual volatility rate, and annual dividend yield. The model used the following assumptions: implied stock price (total equity divided by total shares outstanding) of the Successor’s shares of common stock of $22.14; exercise price per share of $32.59 and $35.41 for series A and B warrants, respectively; expected volatility of 49.3% and 53.6% for series A and B warrants, respectively; risk-free interest rates of 0.3% and 0.2% for series A and B warrants, respectively, using the United States Treasury Constant Maturity rates; and an expected annual dividend yield of 0%. Expected volatility was estimated using volatilities of similar entities whose share or option prices and assumptions were publicly available. The time to maturity of the warrants was based on the contractual terms of the warrants of and years for series A and series B warrants, respectively. The values were also adjusted for potential dilution impacts. Condensed Consolidated Balance Sheet The following illustrates the effects on the Company’s consolidated balance sheet due to the reorganization and fresh start accounting adjustments. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities, and warrants.
Reorganization Adjustments (1)Represents the net cash payments that occurred on the Emergence Date as follows:
(2)Represents the transfer of funds to a restricted cash account utilized for the payment of fees to retained professional service providers assisting in the bankruptcy process. (3)Represents the write-off of costs related to the DIP Facility and a run-off policy for directors’ and officers’ insurance coverage, partially offset by the recording of prepaid amounts for non-retained professional service provider fees. (4)Represents debt issuance costs related to the Successor Bank Credit Agreement. (5)Adjustments to accounts payable and accrued liabilities as follows:
(6)Liabilities subject to compromise were settled as follows in accordance with the Plan:
(7)Represents the cancellation of the Predecessor’s common stock, treasury stock, and related components of the Predecessor’s paid-in capital in excess of par. Paid-in capital in excess of par includes $4.6 million as a result of terminated Predecessor stock compensation plans. (8)Represents the Successor’s common stock and additional paid-in capital as follows:
(9)Reflects the cumulative net impact of the effects on accumulated deficit as follows:
Fresh Start Adjustments (10)Reflects fair value adjustments to our (i) oil and natural gas properties, CO2 properties, pipelines, and other property and equipment, as well as the elimination of accumulated depletion, depreciation, and amortization, (ii) operating lease right-of-use assets and liabilities, and (iii) asset retirement obligations. (11)Reflects fair value adjustments to our long-term contracts to sell CO2 to industrial customers. (12)Reflects fair value adjustments to our other assets as follows:
(13)Reflects fair value adjustments to accounts payable and accrued liabilities as follows:
(14)Represents adjustments to current and long-term maturities of debt associated with pipeline lease financings. The cumulative effect is as follows:
Our pipeline lease financings were restructured in late October 2020 (see Note 8, Long-Term Debt – Restructuring of Pipeline Financing Transactions). (15)Represents (i) adjustment to deferred taxes, including the recognition of tax expenses related to reorganization adjustments as a result of the cancellation of debt and retaining tax attributes for the Successor and the reinstatement of deferred tax liabilities subject to compromise totaling $128.6 million and (ii) adjustments to deferred tax liabilities related to fresh start accounting of $414.1 million. (16)Represents a fair value adjustment for the long-term portion of an unfavorable vendor contract. (17)Represents the cumulative effect of the fresh start accounting adjustments discussed above.
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Acquisition and Divestitures |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and Divestitures | Note 3. Acquisition and Divestitures Acquisition of Wyoming CO2 EOR Fields On March 3, 2021, we acquired a nearly 100% working interest (approximately 83% net revenue interest) in the Big Sand Draw and Beaver Creek EOR fields located in Wyoming from a subsidiary of Devon Energy Corporation, including surface facilities and a 46-mile CO2 transportation pipeline to the acquired fields. The acquisition purchase price was $10.9 million cash (after final closing adjustments) plus two contingent $4 million cash payments if NYMEX WTI oil prices average at least $50 per Bbl during each of 2021 and 2022. We made the first contingent payment in January 2022 and if the price condition is met, the second $4 million payment will be due in January 2023. The fair value of the contingent consideration on the acquisition date was $5.3 million, and as of December 31, 2021, the fair value of the contingent consideration recorded on our Consolidated Balance Sheets was $7.7 million. The $2.4 million increase at December 31, 2021 from the March 2021 acquisition date fair value was the result of higher NYMEX WTI oil prices and was recorded to “Other expenses” in our Consolidated Statements of Operations. The fair values allocated to our assets acquired and liabilities assumed for the acquisition were based on significant inputs not observable in the market and considered level 3 inputs. The fair value of the assets acquired and liabilities assumed was finalized during the third quarter of 2021, after consideration of final closing adjustments and evaluation of reserves and liabilities assumed. The following table presents a summary of the fair value of assets acquired and liabilities assumed in the acquisition:
Divestitures Hartzog Draw Deep Mineral Rights On June 30, 2021, we closed the sale of undeveloped, unconventional deep mineral rights in Hartzog Draw Field in Wyoming. The cash proceeds of $18 million were recorded to “Proved properties” in our Consolidated Balance Sheets. The proceeds reduced our full cost pool; therefore, no gain or loss was recorded on the transaction, and the sale had no impact on our production or reserves. Houston Area Land Sales During the second half of 2021, we completed sales of a portion of certain non-producing surface acreage in the Houston area. We received cash proceeds of $15.2 million from the sales and recognized a $10.3 million gain to “Other income” in our Consolidated Statements of Operations. Gulf Coast Working Interests Sale On March 4, 2020, the Predecessor sold half of its working interest positions in four southeast Texas oil fields for $40 million net cash and a carried interest in ten wells to be drilled by the purchaser. The Predecessor did not record a gain or loss on the sale of the properties in accordance with the full cost method of accounting.
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Note 4. Revenue Recognition We record revenue in accordance with FASC Topic 606, Revenue from Contracts with Customers. 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 control (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 received within a month following product delivery, and for natural gas and NGL contracts, payment is generally received 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 Consolidated Balance Sheets. In addition to revenues from oil and natural gas sales contracts and CO2 sales and transportation contracts, in certain situations, the Company enters into marketing arrangements for the purchase and subsequent sale of crude oil from third parties. We recognize the revenue received and the associated expenses incurred on these sales on a gross basis, as “Oil marketing revenues” and “Oil marketing purchases” in our Consolidated Statements of Operations, since we act as a principal in the transaction by assuming control of the commodities purchased and the responsibility to deliver the commodities sold. Revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser. Disaggregation of Revenue The following table summarizes our revenues by product type:
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Leases |
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Leases | Note 5. Leases We evaluate contracts for leasing arrangements at inception. We lease office space, equipment, and vehicles that have non-cancelable lease terms. Currently, our outstanding leases have remaining terms up to 14 years, with certain land leases having remaining terms up to 48 years. Leases with a term of 12 months or less are not recorded on our balance sheet. The table below reflects our operating lease right-of-use assets and operating lease liabilities, which primarily consist of our office leases:
The majority of our leases contain renewal options, typically exercisable at our sole discretion. At emergence, we recorded right-of-use assets and liabilities based on the fair value of lease payments and utilized our incremental borrowing rate based on information available at the Emergence Date. The following weighted average remaining lease terms and discount rates related to our outstanding operating leases:
We account for lease and nonlease components in a contract as a single lease component for all asset classes. Lease costs for operating leases or leases with a term of 12 months or less are recognized on a straight-line basis over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset are recognized separately, with the depreciable life reflective of the expected lease term. Variable lease costs represent additional payments in excess of our minimum base rental payments under our office space leases. The Predecessor Company previously subleased part of the office space included in its operating leases for which it received rental payments. Since those office space leases were terminated during the Chapter 11 Restructuring, the underlying sublease agreements were also terminated. The Successor Company subsequently entered into an operating lease for a new corporate office space which commenced in October 2020. The following table summarizes the components of lease costs and sublease income:
Our statement of cash flows included the following activity related to our operating and finance leases:
The following table summarizes by year the maturities of our lease liabilities as of December 31, 2021:
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Asset Retirement Obligations |
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Asset Retirement Obligation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligations | Note 6. Asset Retirement Obligations The following table summarizes the changes in our asset retirement obligations:
(1)Included in “Accounts payable and accrued liabilities” in our Consolidated Balance Sheets. Liabilities assumed relate to our March 2021 acquisition of Wyoming property interests (see Note 3, Acquisition and Divestitures), with liabilities incurred generally relating to wells and facilities. Revisions during 2021 primarily related to increased well abandonment cost estimates at certain of these fields and an acceleration in the estimated timing of certain future abandonment activities. We have escrow accounts that are legally restricted for certain of our asset retirement obligations. The balances of these escrow accounts were $55.6 million and $55.2 million as of December 31, 2021 and 2020, respectively. These balances are primarily invested in U.S. Treasury bonds, recorded at amortized cost, and money market accounts, which investments are included in “Other assets” in our Consolidated Balance Sheets. A portion of these investments are included in cash, cash equivalents, and restricted cash balances on our Consolidated Statements of Cash Flows (see Note 1, Nature of Operations and Summary of Significant Accounting Policies – Cash, Cash Equivalents, and Restricted Cash). The carrying values of these investments approximate their estimated fair market value as of December 31, 2021 and 2020.
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Unevaluated Property |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unevaluated Property | Note 7. Unevaluated Property A summary of the unevaluated property costs excluded from oil and natural gas properties being amortized at December 31, 2021, and the year in which the costs were incurred follows:
(1)Reflects the carrying values of our unevaluated properties as a result of the application of fresh start accounting upon emergence from bankruptcy (see Note 2, Fresh Start Accounting, for additional information) that remain in unevaluated properties as of December 31, 2021. Our property acquisition costs reflected in the table above relate to fair values assigned during fresh start accounting and are primarily associated with our Cedar Creek Anticline fields and CO2 tertiary potential at Tinsley and Salt Creek fields. Exploration and development costs shown as unevaluated properties are primarily associated with our tertiary oil field projects at Cedar Creek Anticline that are under development but did not have associated proved reserves at December 31, 2021. Costs are transferred into the amortization base on an ongoing basis as projects are evaluated and proved reserves established or impairment determined. We review the excluded properties for impairment at least annually. We currently estimate that evaluation of the majority of these properties and the inclusion of their costs in the amortization base is expected to be completed within to ten years. Until we are able to determine whether there are any proved reserves attributable to the above costs, we are not able to assess the future impact on the amortization rate of the full cost pool.
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Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 8. Long-Term Debt The table below reflects long-term debt outstanding as of December 31, 2021 and 2020:
The ultimate parent company in our corporate structure, Denbury Inc., is the sole issuer of all our outstanding obligations under our Successor Bank Credit Agreement. Denbury Inc. has no independent assets or operations. Each of the subsidiary guarantors of such obligations is 100% owned, directly or indirectly, by Denbury Inc, and the guarantees of such obligations are full and unconditional and joint and several. Prior to our emergence from bankruptcy, our debt consisted of the Predecessor’s Bank Credit Agreement, senior secured second lien notes, convertible senior notes, senior subordinated notes, pipeline financings, and capital lease obligations. On the Emergence Date, pursuant to the terms of the Plan, all outstanding obligations under the senior secured second lien notes, convertible senior notes, and senior subordinated notes were fully extinguished, relieving approximately $2.1 billion of debt by issuing equity and/or warrants in the Successor to the holders of that debt. See Note 1, Nature of Operations and Summary of Significant Accounting Policies – Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code, for additional information. Senior Secured Bank Credit Facility In connection with our emergence from Chapter 11 proceedings on September 18, 2020, we entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto. The Successor Bank Credit Agreement is a senior secured revolving credit facility with an initial borrowing base and lender commitments of $575 million. Additionally, under the Successor Bank Credit Agreement, letters of credit are available in an aggregate amount not to exceed $100 million, and short-term swingline loans are available in an aggregate amount not to exceed $25 million, each subject to the available commitments under the Successor Bank Credit Agreement. Availability under the Successor Bank Credit Agreement is subject to a borrowing base, which is redetermined semiannually on or around May 1 and November 1 of each year, with our next scheduled redetermination around May 1, 2022. The borrowing base is adjusted at the lenders’ discretion and is based, in part, upon external factors over which we have no control. The borrowing base is subject to a reduction by twenty-five percent (25%) of the principal amount of any unsecured or subordinated debt issued or incurred. The borrowing base may also be reduced if we sell borrowing base properties and/or cancel commodity derivative positions with an aggregate value in excess of 5% of the then-effective borrowing base between redeterminations. If our outstanding debt under the Successor Bank Credit Agreement exceeds the then-effective borrowing base, we would be required to repay the excess amount over a period not to exceed six months. The Successor Bank Credit Agreement matures on January 30, 2024. The Successor Bank Credit Agreement limits our ability to pay dividends on our common stock or make other restricted payments in an amount not to exceed Distributable Free Cash Flow (as defined in the Successor Bank Credit Agreement), but only if (1) no event of default or borrowing base deficiency exists; (2) our total leverage ratio is 2 to 1 or lower; and (3) availability under the Successor Bank Credit Agreement is at least 20%. The Successor Bank Credit Agreement also limits our ability to, among other things, incur and repay other indebtedness; grant liens; engage in certain mergers, consolidations, liquidations and dissolutions; engage in sales of assets; make acquisitions and investments; make other restricted payments (including redeeming, repurchasing or retiring our common stock); and enter into commodity derivative agreements, in each case subject to customary exceptions. The Successor Bank Credit Agreement is secured by (1) our proved oil and natural gas properties, which are held through our restricted subsidiaries; (2) the pledge of equity interests of such subsidiaries; (3) a pledge of our commodity derivative agreements; (4) a pledge of deposit accounts, securities accounts and commodity accounts of Denbury Inc. and such subsidiaries (as applicable); and (5) a security interest in substantially all other collateral that may be perfected by a Uniform Commercial Code filing, subject to certain exceptions. The Successor Bank Credit Agreement contains certain financial performance covenants including the following: •A Consolidated Total Debt to Consolidated EBITDAX covenant, with such ratio not to exceed 3.5 times; and •A requirement to maintain a current ratio (i.e., Consolidated Current Assets to Consolidated Current Liabilities) of 1.0. For purposes of computing the current ratio per the Successor Bank Credit Agreement, Consolidated Current Assets exclude the current portion of derivative assets but include available borrowing capacity under the Successor Bank Credit Agreement, and Consolidated Current Liabilities exclude the current portion of derivative liabilities as well as the current portions of long-term indebtedness outstanding. Loans under the Successor Bank Credit Agreement are subject to varying rates of interest based on either (1) for alternate base rate loans, a base rate determined under the Successor Bank Credit Agreement plus an applicable margin ranging from 2% to 3% per annum, or (b) for LIBOR Loans, the LIBOR rate (subject to a 1% floor) plus an applicable margin ranging from 3% to 4% per annum (capitalized terms as defined in the Successor Bank Credit Agreement). The weighted average interest rate on borrowings outstanding as of December 31, 2021 under the Successor Bank Credit Agreement was 4.0%. The undrawn portion of the aggregate lender commitments under the Successor Bank Credit Agreement is subject to a commitment fee of 0.5%. As of December 31, 2021, we were in compliance with all debt covenants under the Successor Bank Credit Agreement. The above description of our Successor Bank Credit Agreement and defined terms are contained in the Successor Bank Credit Agreement. Restructuring of Pipeline Financing Transactions In May 2008, we closed two transactions with Genesis Energy, L.P. (“Genesis”) involving two of our pipelines. The NEJD pipeline system included a 20-year secured financing lease, and the Free State Pipeline included a long-term transportation service agreement. In late October 2020, we restructured our CO2 pipeline financing arrangements with Genesis, whereby (1) Denbury reacquired the NEJD pipeline system from Genesis in exchange for $70 million which was paid in four equal payments during 2021, representing full settlement of all remaining obligations under the NEJD secured financing lease; and (2) Denbury reacquired the Free State Pipeline from Genesis in exchange for a one-time payment of $22.5 million on October 30, 2020. Predecessor Senior Secured Bank Credit Facility From December 2014 through September 18, 2020, the Company maintained a senior secured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto (the “Predecessor Bank Credit Agreement”). All but a minor portion of the Predecessor Bank Credit Agreement was refinanced through the DIP Facility from August 4, 2020 through September 18, 2020, which was in turn refinanced by the Successor Bank Credit Agreement upon emergence from the Chapter 11 Restructuring. Extinguishment of Predecessor Senior Secured Second Lien Notes, Convertible Senior Notes, and Senior Subordinated Notes Upon emergence from the Chapter 11 Restructuring on September 18, 2020, the Predecessor’s 9% Senior Secured Second Lien Notes due 2021 (the “2021 Notes”), 9¼% Senior Secured Second Lien Notes due 2022, 7¾% Senior Secured Second Lien Notes due 2024, 7½% Senior Secured Second Lien Notes due 2024, 6⅜% Convertible Senior Notes due 2024 (the “2024 Convertible Notes”), 6⅜% Senior Subordinated Notes due 2021, 5½% Senior Subordinated Notes due 2022, and 4⅝% Senior Subordinated Notes due 2023 were fully extinguished by issuing equity and/or warrants in the Successor to the holders of that debt. The Predecessor debt discussions that follow are included to provide context on the impact of these transactions on the Predecessor’s financial statements. Second Quarter 2020 Conversion of 2024 Convertible Notes During the second quarter of 2020, holders of $19.9 million aggregate principal amount outstanding of the Predecessor’s 2024 Convertible Notes converted their notes into shares of the Predecessor’s common stock, at the rates specified in the indenture for the notes, resulting in the issuance of 7.4 million shares of Predecessor common stock upon conversion. The debt principal balance, net of debt discounts, totaling $13.9 million, was reclassified to “Paid-in capital in excess of par” and “Common stock” in the Consolidated Balance Sheet of the Predecessor upon the conversion of the notes into shares of Predecessor common stock. First Quarter 2020 Repurchases of Senior Secured Notes During March 2020, the Predecessor repurchased a total of $30.2 million aggregate principal amount of its 2021 Notes in open-market transactions for a total purchase price of $14.2 million, excluding accrued interest. In connection with these transactions, the Predecessor recognized a $19.0 million gain on debt extinguishment, net of unamortized debt issuance costs and future interest payable written off. 2019 Predecessor Debt Reduction Transactions With a focus on reducing the amount of outstanding debt principal, the Predecessor engaged in a series of debt exchanges and repurchase transactions, resulting in total gains on extinguishments of $156.0 million for the year ended December 31, 2019, in its Consolidated Statements of Operations. Debt Issuance Costs In connection with the issuance of our outstanding long-term debt, we have incurred debt issuance costs, which are being amortized to interest expense using the straight line or effective interest method over the term of each related facility or borrowing. Remaining unamortized debt issuance costs were $5.7 million and $8.4 million at December 31, 2021 and 2020, respectively. Issuance costs associated with our Successor Bank Credit Agreement are included in “Other assets” in the Consolidated Balance Sheets. Indebtedness Repayment Schedule At December 31, 2021, our indebtedness is payable over the next five years and thereafter as follows:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 9. Income Taxes Our income tax provision (benefit) is as follows:
At December 31, 2021, we had federal net operating loss carryforwards (“NOLs”) and business credit carryforwards (before provision for valuation allowance) totaling $10.3 million and $18.1 million, respectively. Our federal NOLs may be carried forward indefinitely and our credit carryforwards begin to expire in 2041. NOL, enhanced oil recovery credit and research and development credit carryforwards generated prior to January 1, 2021 were fully reduced in accordance with the attribute reduction and ordering rules of Section 108 of the Internal Revenue Code of 1986 pertaining to discharge of indebtedness. At December 31, 2021, we had $0.6 million of alternative minimum tax credits, which under the Tax Cut and Jobs Act passed in 2017 will be fully refundable by 2022, and are recorded as a receivable on the balance sheet, and state NOLs and tax credits totaling $54.9 million (before provision for valuation allowance) related to all our state operations, which continue as carryforwards for the Successor. Our state NOLs expire in various years, starting in 2025. Deferred income taxes reflect the available tax carryforwards and the temporary differences based on tax laws and statutory rates in effect at the December 31, 2021 and 2020 balance sheet dates. As of December 31, 2021, we had $74.1 million of net state deferred tax assets associated with operations in Louisiana, Mississippi, Montana, North Dakota and Alabama, which were fully offset with valuation allowances. The valuation allowances will remain until the realization of future deferred tax benefits are more likely than not to become utilized. The changes in our valuation allowance are detailed below:
As of December 31, 2021, we had no unrecognized tax benefits recorded related to an uncertain tax position. Significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows:
Our reconciliation of income tax expense computed by applying the U.S. federal statutory rate and the reported effective tax rate on income from continuing operations is as follows:
We file consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state jurisdictions. The statutes of limitation for our income tax returns for tax years ending prior to 2018 have lapsed and therefore are not subject to examination by respective taxing authorities. We have not paid any significant interest or penalties associated with our income taxes.
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 10. Stockholders’ Equity Registration Rights Agreement On September 18, 2020, in connection with the Company’s emergence from Chapter 11 proceedings, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain former beneficial holders of second lien notes of the Predecessor that entered into the restructuring support agreement leading to the restructuring of the Company pursuant to a prepackaged plan of reorganization and pursuant to which the Company included these holders’ shares of common stock of the Successor in an automatically effective resale registration statement filed with the SEC in April 2021 for their use in connection with resale of these shares. Under the Registration Rights Agreement, these security holders have customary demand and piggyback registration rights, subject to the limitations set forth in the Registration Rights Agreement. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in an offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. 401(k) Plan We offer a 401(k) plan to which employees may contribute earnings subject to IRS limitations. We match 100% of an employee’s contribution, up to 6% of compensation, as defined by the plan, which is vested immediately. Matching contributions to the 401(k) plan totaled $5.1 million during 2021 (Successor), $1.1 million for the period September 19, 2020 through December 31, 2020 (Successor), $4.4 million for the period January 1, 2020 through September 18, 2020 (Predecessor), and $6.3 million during 2019 (Predecessor).
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Stock Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | Note 11. Stock Compensation Below is a description of stock compensation relating to both the Predecessor periods (2019 and January 1, 2020 through September 18, 2020), and the Successor periods (September 19, 2020 through December 31, 2020 and 2021). All stock compensation plans and awards in effect during the Predecessor periods were cancelled upon emergence of the Company from its Chapter 11 Restructuring on September 18, 2020. The plans and awards described below which are designated as Successor plans or awards are the only such plans and awards in effect as of December 31, 2021. Each of the plans and awards described below are designated as either Predecessor or Successor, with the exception of the section labeled “Stock-Based Compensation – Predecessor and Successor” which pertains to both Predecessor and Successor periods. Stock-based Compensation – Predecessor and Successor Stock-based compensation expense is included in “General and administrative expenses” in the Consolidated Statements of Operations. Stock-based compensation associated with our employees involved in exploration and drilling activities is capitalized as part of “Oil and natural gas properties” in the Consolidated Balance Sheets. Our accounting policy is to account for forfeitures as they occur. The following table sets forth stock-based compensation costs for the periods indicated:
Management Incentive Plan – Successor In connection with our emergence from bankruptcy, the Plan provided for the adoption of a management incentive plan, the Denbury Inc. 2020 Omnibus Stock and Incentive Plan (the “LTIP”), effective as of the Emergence Date, through an amendment and restatement of the Denbury Resources Inc. Amended and Restated 2004 Omnibus Stock and Incentive Plan, as amended and restated as of March 26, 2020. The LTIP reserved 6.2 million shares of Denbury’s common stock for awards to officers, other employees, directors and other service providers. The LTIP provides for, among other things, the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalents, other stock-based awards, cash awards, or any combination of the foregoing. On December 2, 2020, Denbury’s board of directors approved and ratified the LTIP, with initial awards covering 2.2 million shares of common stock granted on December 4, 2020. As of December 31, 2021, 3.9 million shares were available for future grants under the LTIP, all of which could be issued in the form of restricted stock units or performance stock units. Our incentive compensation program is administered by the Compensation Committee of our Board of Directors. The LTIP will expire September 2030. Restricted Stock Units – Successor In December 2020, non-performance-based restricted stock unit (“RSU”) awards were granted to directors and a limited number of employees under the Successor’s LTIP. Holders of non-performance-based RSUs will receive shares of Successor common stock equal to the number of RSUs that have vested upon settlement. Non-performance-based RSUs generally vest ratably over a -year period with delivery of the shares occurring at the end of the three-year period. Vested non-performance-based RSU awards provide the holders with dividend equivalent rights payable upon settlement of the underlying RSU awards. Shares to be delivered to participants are expected to be made available from authorized but unissued shares reserved under the LTIP. The grant-date fair value of the RSUs is based on the fair market value of our common stock on the date of grant. As of December 31, 2021, there was $19.9 million of unrecognized compensation expense related to the Successor’s nonvested non-performance-based restricted stock unit grants. This unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.9 years. The following is a summary of the total vesting date fair value of non-performance-based restricted stock units:
A summary of the status of our nonvested non-performance-based RSUs issued and the changes during the Successor period is presented below:
Performance-Based Stock Units – Successor In December 2020, the Successor Board of Directors granted performance stock unit (“PSU”) awards to a limited number of employees. The PSU awards had vesting parameters tied to the Company’s common stock trading prices and became fully vested on March 3, 2021. Although the performance measures for vesting of these awards have been achieved, delivery of the shares will not occur until the conclusion of the -year performance period, December 4, 2023. Vested performance-based PSU awards provide the holders with dividend equivalent rights payable upon settlement of the underlying PSU awards. Shares to be delivered to participants are expected to be made available from authorized but unissued shares reserved under the LTIP. PSU awards are valued using a Monte Carlo simulation. Expected volatilities utilized in the model were estimated using historical volatility of the Predecessor stock over a look-back term generally equivalent to the expected life of the award from the grant date. As of December 31, 2021, there was no remaining unrecognized compensation expense related to the Successor’s PSU awards. The range of assumptions used in the Monte Carlo simulation valuation approach is as follows:
A summary of the PSU awards activity during the Successor period is as follows:
The following is a summary of the total vesting date fair value of PSU awards:
June 2020 Compensation Adjustments – Predecessor In response to the then ongoing significant economic and market uncertainty affecting the oil and gas industry, in June 2020 the Predecessor and its Board of Directors and Compensation Committee implemented a revised compensation structure under which for 21 of the Company’s executives (including our named executive officers) and senior managers, all outstanding equity awards and 2020 targeted variable cash-based compensation were canceled and replaced with a cash retention incentive. In total, $15.2 million in cash retention incentives were prepaid to those employees in June 2020, with an obligation of the executives to repay up to 100% of the compensation (on an after-tax basis) if specified conditions were not satisfied. The Predecessor’s named executive officers’ cash retention incentives were earned 50% based on their continued employment for a period of up to 12 months and 50% based on achieving certain specified incentive metrics. In accordance with FASC Topic 718, Compensation – Stock Compensation, we accounted for the transaction involving equity compensation as an award modification and reclassified the awards from equity to liability awards. As a result of the modification of the awards, unrecognized compensation at the time of modification was determined to be $18.7 million ($4.1 million of incremental compensation expense), which was higher than the $15.2 million cash payment, and was calculated as the greater of (i) grant date fair value of the previously-outstanding awards plus incremental compensation (defined as cash paid related to the cash retention incentive in excess of the modification date fair value of the previously-existing awards) or (ii) cash paid for the cash retention incentive for each award. The value was recognized as total compensation expense for each award over the service period. The compensation expense was recognized in “General and administrative expenses” in the Consolidated Statements of Operations during the period January 1, 2020 through September 18, 2020 (Predecessor). The accounting for the Predecessor’s remaining share-based compensation awards continued throughout the period covered by the Chapter 11 Restructuring, and upon cancellation of the awards, an additional $4.6 million of compensation expense was recognized during the Predecessor period ended September 18, 2020. 2004 Omnibus Stock and Incentive Plan – Predecessor The Amended and Restated 2004 Omnibus Stock and Incentive Plan, amended and restated as of March 26, 2020 (the “2004 Plan”), was an incentive plan that provided for the issuance of incentive and non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights settled in stock, and performance-based awards to officers, employees and directors. Since the 2004 Plan’s inception, awards covering a total of 61.4 million shares of common stock were authorized for issuance pursuant to the 2004 Plan. In connection with our emergence from bankruptcy, all outstanding equity as of September 18, 2020 was cancelled. Restricted Stock – Predecessor During the Predecessor period, we granted non-performance-based restricted stock to employees and directors as part of our long-term compensation program. Holders of non-performance-based restricted stock awards had the rights of owning non-restricted stock (including voting rights) except that the holders were not entitled to delivery of a portion thereof until certain requirements were met. Beginning in 2014, non-performance-based restricted stock awards provided the holders with forfeitable dividend equivalent rights which vested with the underlying shares. Non-performance-based restricted stock vested over a -year vesting period, with the specific terms of vesting determined at the time of grant. The following is a summary of the total vesting date fair value of non-performance-based restricted stock:
In connection with our emergence from bankruptcy, all restricted stock outstanding as of September 18, 2020 was cancelled and there was no remaining compensation cost to be recognized in future periods related to nonvested non-performance-based restricted stock arrangements. Performance-Based Equity Awards – Predecessor The Predecessor’s Compensation Committee of the Board of Directors annually granted performance-based equity awards to Denbury’s officers. Performance-based awards generally vested over 3.25 years for awards granted in 2019 and 2020. The number of performance-based shares earned (and eligible to vest) during the performance period was dependent upon: (1) the level of success in achieving specifically identified performance targets (“Performance-Based Operational Awards”) and (2) performance of the Predecessor’s stock relative to that of a designated peer group (“Performance-Based TSR Awards”). Performance-Based Operational Awards were valued using the fair market value of the Predecessor’s stock, and Performance-Based TSR Awards were valued using a Monte Carlo simulation. Expected volatilities utilized in the model were estimated using historical volatility of the Predecessor stock over a look-back term generally equivalent to the expected life of the award from the grant date. The range of assumptions used in the Monte Carlo simulation valuation approach for Performance-Based TSR Awards (presented at the target level) is as follows:
The following is a summary of the total vesting date fair value of performance-based equity awards for the Predecessor:
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Commodity Derivative Contracts |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commodity Derivative Contracts | Note 12. 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 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, expectation of future commodity prices, and occasionally requirements under our bank credit facility. As of December 31, 2020, we were in compliance with the hedging requirements under our Successor Bank Credit Agreement requiring certain minimum commodity hedge levels through July 31, 2022, and we have no further hedging requirements under the Successor Bank Credit Agreement. 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 Successor Bank Credit Agreement (or affiliates of such lenders). As of December 31, 2021, 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 December 31, 2021, none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic:
(1)Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For collars, ranges represent the lowest floor price and the highest ceiling price for all open contracts for the period presented.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 13. 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 and 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. 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 December 31, 2021 and 2020:
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 Consolidated Statements of Operations. Other Fair Value Measurements The carrying value of our loans under our Successor 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. The estimated fair value of the principal amount of our debt as of December 31, 2021 and 2020, excluding pipeline financing obligations, was $35.0 million and $70.0 million, respectively. We have other financial instruments consisting primarily of cash, cash equivalents, U.S. Treasury notes, short-term receivables and payables that approximate fair value due to the nature of the instrument and the relatively short maturities.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14. Commitments and Contingencies Commitments We have entered into long-term commitments to purchase CO2 that are either non-cancelable or cancelable only upon the occurrence of specified future events. The commitments continue for up to 7 years. The price we will pay for CO2 generally varies depending on the amount of CO2 delivered and the price of oil. In addition, we have a processing fee contract related to our overriding royalty interest in the CO2 at LaBarge Field. Our annual commitment under these contracts could range from $39 million to $46 million in 2022, assuming a $70 per Bbl NYMEX oil price and declines in future years as the CO2 purchase contract commitments expire. We are party to long-term contracts that require us to deliver CO2 to our customers who are industrial end-users of CO2 or EOR customers at various contracted prices. Based upon the maximum daily contract quantities as stated in the industrial contracts, total amounts deliverable to these customers could be up to 572 Bcf of CO2 over the next 13 years. Litigation We are involved in various lawsuits, claims and regulatory proceedings incidental to our businesses. 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. We accrue for losses from litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated. Other Contingencies We are 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. In the past, settlement of these matters has not had a material adverse financial impact on us, and currently we have no material assessments for potential taxes. We are subject to various possible contingencies that arise primarily from interpretation of federal and state laws and regulations affecting the oil and natural gas industry. Such contingencies include differing interpretations as to the prices at which oil and natural gas sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Although we believe that we have complied with the various laws and regulations, administrative rulings and interpretations thereof, adjustments could be required as new interpretations and regulations are issued. In addition, production rates, marketing and environmental matters are subject to regulation by various federal and state agencies.
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Additional Balance Sheet Details |
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Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Balance Sheet Details | Note 15. Additional Balance Sheet Details Rollforward of Allowance for Doubtful Accounts
Accounts Payable and Accrued Liabilities
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Note 16. Supplemental Cash Flow Information Supplemental Cash Flow Information
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Nature of Operations and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Nature of Operations | Organization and Nature of Operations Denbury Inc. (“Denbury,” “Company” or the “Successor”), a Delaware corporation, is an independent energy company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States. The Company is differentiated by our focus on CO2 EOR and the emerging CCUS industry, supported by the Company’s CO2 EOR technical and operational expertise and extensive CO2 pipeline infrastructure. As further described in Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code below, Denbury Inc. became the successor reporting company of Denbury Resources Inc. (the “Predecessor”) upon the Predecessor’s emergence from bankruptcy on September 18, 2020. References to “Successor” relate to the financial position and results of operations of the Company subsequent to September 18, 2020, and references to “Predecessor” relate to the financial position and results of operations of the Company prior to, and including, September 18, 2020. On September 18, 2020, Denbury filed the Third Restated Certificate of Incorporation with the Delaware Secretary of State to effect a change of the Company’s corporate name from Denbury Resources Inc. to Denbury Inc., and on September 21, 2020, the Successor’s new common stock commenced trading on the New York Stock Exchange under the ticker symbol DEN.
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Principles of Reporting and Consolidation | Principles of Reporting and Consolidation The consolidated financial statements herein have been prepared in accordance with GAAP and include the accounts of Denbury and entities in which we hold a controlling financial interest. Undivided interests in oil and gas joint ventures are consolidated on a proportionate basis. All intercompany balances and transactions have been eliminated.
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Use Of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during each reporting period. Management believes its estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates underlying these financial statements include (1) the fair value of financial derivative instruments; (2) the estimated quantities of proved oil and natural gas reserves used to compute depletion of oil and natural gas properties, the related present value of estimated future net cash flows therefrom and the ceiling test; (3) future net cash flow estimates used in the impairment assessment of long-lived assets; (4) the estimated quantities of proved and probable CO2 reserves used to compute depletion of CO2 properties; (5) estimated useful lives used to compute depreciation and amortization of long-lived assets; (6) accruals related to oil and natural gas sales volumes and revenues, capital expenditures and lease operating expenses; (7) the estimated costs and timing of future asset retirement obligations; (8) estimates made in the calculation of income taxes; (9) estimates made in determining the fair values for purchase price allocations; and (10) fair value estimates including estimates of reorganization value, enterprise value, and the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting. While management is not aware of any significant revisions to any of its current year-end estimates, there will likely be future revisions to its estimates resulting from matters such as revisions in estimated oil and natural gas volumes, changes in ownership interests, payouts, joint venture audits, re-allocations by purchasers or pipelines, or other corrections and adjustments common in the oil and natural gas industry, many of which require retroactive application. These types of adjustments cannot be currently estimated and will be recorded in the period in which the adjustment occurs.
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Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported total revenues, expenses, net income (loss), current assets, total assets, current liabilities, total liabilities or stockholders’ equity.
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Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments to be cash equivalents if they have maturities of three months or less at the date of purchase. The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Consolidated Statements of Cash Flows:
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Oil and Natural Gas Properties | Oil and Natural Gas Properties Capitalized Costs. We follow the full cost method of accounting for oil and natural gas properties. Under this method, all costs related to the acquisition, exploration and development of oil and natural gas reserves are capitalized and accumulated in a single cost center representing our activities, which are undertaken exclusively in the United States. Such costs include lease acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties, costs of drilling both productive and nonproductive wells, capitalized interest on qualifying projects, and general and administrative expenses directly related to exploration and development activities, and do not include any costs related to production, general corporate overhead or similar activities. We assign the purchase price of oil and natural gas properties we acquire to proved and unevaluated properties based on the estimated fair values as defined in the FASC Fair Value Measurement topic. Proceeds received from disposals are credited against accumulated costs except when the sale represents a significant disposal of reserves, in which case a gain or loss would be recognized. A disposal of 25% or more of our proved reserves would be considered significant. Depletion. The costs capitalized, including production equipment and future development costs, are depleted using the unit-of-production method, based on proved oil and natural gas reserves as determined by independent petroleum engineers. Oil and natural gas reserves are converted to equivalent units on a basis of 6,000 cubic feet of natural gas to one barrel of crude oil. Under full cost accounting, we may exclude certain unevaluated costs from the amortization base pending determination of whether proved reserves can be assigned to such properties. The costs classified as unevaluated are transferred to the full cost amortization base as the properties are developed, tested and evaluated. At least annually, we test these assets for impairment based on an evaluation of management’s expectations of future pricing, evaluation of lease expiration terms, and planned project development activities. As a result of this analysis, we recognized impairments of our unevaluated costs totaling $18.2 million during the year ended December 31, 2019, whereby these costs were transferred to the full cost amortization base. Given the significant declines in NYMEX oil prices in March and April 2020 due to the oil supply and demand imbalance precipitated by the dramatic fall in demand associated with the COVID-19 coronavirus pandemic combined with the concurrent OPEC+ decision to increase oil supply, we reassessed our development plans and transferred $244.9 million of our unevaluated costs to the full cost pool during the Predecessor period from January 1, 2020 through September 18, 2020. Upon emergence from bankruptcy, the Company adopted fresh start accounting which resulted in our oil and natural gas properties, including unevaluated properties, being recorded at their fair values at the Emergence Date (see Note 2, Fresh Start Accounting, for additional information). Write-Down of Oil and Natural Gas Properties. The net capitalized costs of oil and natural gas properties are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as (1) the present value of estimated future net revenues from proved oil and natural gas reserves before future abandonment costs (discounted at 10%), based on the average first-day-of-the-month oil and natural gas price for each month during a 12-month rolling period prior to the end of a particular reporting period; plus (2) the cost of properties not being amortized; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) related income tax effects. Our future net revenues from proved oil and natural gas reserves are not reduced for development costs related to the cost of drilling for and developing CO2 reserves nor those related to the cost of constructing CO2 pipelines, as we do not have to incur additional CO2 capital costs to develop the proved oil and natural gas reserves. Therefore, we include in the ceiling test, as a reduction of future net revenues, that portion of our capitalized CO2 costs related to CO2 reserves and CO2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves. The fair value of our oil and natural gas derivative contracts is not included in the ceiling test, as we do not designate these contracts as hedge instruments for accounting purposes. The cost center ceiling test is prepared quarterly. The average first-day-of-the-month NYMEX oil price used in estimating our proved reserves, after adjustments for market differentials and transportation expenses by field, was $63.86 at December 31, 2021, $35.84 at December 31, 2020, $40.08 at September 18, 2020, and $55.55 at December 31, 2019. We recognized a full cost pool ceiling test write-down of $14.4 million during the first quarter of 2021, with first-day-of-the-month NYMEX oil prices for the preceding 12 months averaging $36.40 per Bbl, after adjustments for market differentials and transportation expenses by field. The write-down was primarily a result of the March 2021 acquisition of Wyoming property interests (see Note 3, Acquisition and Divestitures) which was recorded based on a valuation that utilized NYMEX strip oil prices at the acquisition date, which were significantly higher than the average first-day-of-the-month NYMEX oil prices used to value the cost ceiling. Primarily as a result of the commodity price declines during 2020, the Predecessor recognized full cost pool ceiling test write-downs of $996.7 million during the period from January 1, 2020 through September 18, 2020, and an additional full cost pool ceiling test write-down of $1.0 million was recognized during the Successor period from September 19, 2020 through December 31, 2020. We did not record any ceiling test write-downs during the 2019 Predecessor period. Joint Interest Operations. Substantially all of our oil and natural gas exploration and production activities are conducted jointly with others. These financial statements reflect only our proportionate interest in such activities, and any amounts due from other partners are included in trade receivables. Tertiary Injection Costs. Our tertiary operations are conducted in reservoirs that have already produced significant amounts of oil over many years; however, in accordance with the Securities and Exchange Commission (“SEC”) rules and regulations for recording proved reserves, we cannot recognize proved reserves associated with enhanced recovery techniques, such as CO2 injection, until we can demonstrate production resulting from the tertiary process or unless the field is analogous to an existing flood. We capitalize, as a development cost, injection costs in fields that are in their development stage, which means we have not yet seen incremental oil production due to the CO2 injections (i.e., a production response). These capitalized development costs are included in our unevaluated property costs until we are able to recognize proved reserves associated with the development project. After we see a production response to the CO2 injections (i.e., the production stage), injection costs are expensed as incurred, and any previously deferred unevaluated development costs become subject to depletion.
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Property, Plant, and Equipment Policy | CO2 Properties We own and produce CO2 reserves, a non-hydrocarbon resource, that are used in our tertiary oil recovery operations on our own behalf and on behalf of other interest owners in enhanced recovery fields, with a portion sold to third-party industrial users. We record revenue from our sales of CO2 to third parties when it is produced and sold. Expenses related to the production of CO2 are allocated between volumes sold to third parties and volumes consumed internally that are directly related to our tertiary production. The expenses related to third-party sales are recorded in “CO2 operating and discovery expenses,” and the expenses related to internal use are recorded in “Lease operating expenses” in the Consolidated Statements of Operations or are capitalized as oil and natural gas properties in our Consolidated Balance Sheets, depending on the stage of the tertiary flood that is receiving the CO2 (see Tertiary Injection Costs above for further discussion). Costs incurred to search for CO2 are expensed as incurred until proved or probable reserves are established. Once proved or probable reserves are established, costs incurred to obtain those reserves are capitalized and classified as “CO2 properties” on our Consolidated Balance Sheets. Capitalized CO2 costs are aggregated by geologic formation and depleted on a unit-of-production basis over proved and probable reserves. Pipelines CO2 used in our tertiary floods is transported to our fields through CO2 pipelines. Costs of CO2 pipelines under construction are not depreciated until the pipelines are placed into service. Pipelines are depreciated on a straight-line basis over their estimated useful lives, which range from 20 to 50 years. Capitalized costs include $22.4 million of CO2 pipelines as of December 31, 2021, that were either under construction or had not been placed into service and therefore, were not subject to depreciation during 2021. Property and Equipment – Other Other property and equipment, which includes furniture and fixtures, vehicles, and computer equipment and software, is depreciated principally on a straight-line basis over each asset’s estimated useful life. Vehicles are generally depreciated over a useful life of to five years, furniture and fixtures over a life of to ten years, and computer equipment and software are generally depreciated over a useful life of to five years. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. Maintenance and repair costs that do not extend the useful life of the property or equipment are charged to expense as incurred.
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Intangible Assets | Intangible Assets Our intangible assets subject to amortization represent amounts assigned in fresh start accounting to long-term contracts to sell CO2 to industrial customers. We amortize the CO2 contract intangible assets on a straight-line basis over their estimated useful lives, which range from to 14 years. Total amortization expense for our intangible assets was $9.1 million during the year ended December 31, 2021, $2.7 million during the Successor period September 19, 2020 through December 31, 2020, $1.7 million for the Predecessor period January 1, 2020 through September 18, 2020, and $2.4 million during the year ended 2019. The following table summarizes the carrying value of our intangible assets as of December 31, 2021 and 2020:
As of December 31, 2021, our estimated amortization expense for our intangible assets subject to amortization over the next five years is as follows:
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Impairment Assessment of Long-Lived Assets | Impairment Assessment of Long-Lived Assets We test long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. These long-lived assets, which are not subject to our full cost pool ceiling test, are principally comprised of our capitalized CO2 properties and pipelines, and for the Successor period also included long-term contracts to sell CO2 to industrial customers. We perform our long-lived asset impairment test by comparing the net carrying costs of our long-lived asset groups to the respective expected future undiscounted net cash flows that are supported by these long-lived assets which include production of our probable and possible oil and natural gas reserves. The portion of our capitalized CO2 costs related to CO2 reserves and CO2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves is included in the full cost pool ceiling test as a reduction to future net revenues. The remaining net capitalized costs that are not included in the full cost pool ceiling test, and related intangible assets, are subject to long-lived asset impairment testing. If the undiscounted net cash flows are below the net carrying costs for an asset group, we must record an impairment loss by the amount, if any, that net carrying costs exceed the fair value of the long-lived asset group. We did not record an impairment of long-lived assets during the year ended December 31, 2021, 2020 or 2019.
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Asset Retirement Obligations | Asset Retirement Obligations In general, our future asset retirement obligations relate to future costs associated with plugging and abandoning our oil, natural gas and CO2 wells, removing equipment and facilities from leased acreage, and returning land to its original condition. The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred, discounted to its present value using our credit-adjusted-risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period, and the capitalized cost is depreciated over the useful life of the related asset. Revisions to estimated retirement obligations will result in an adjustment to the related capitalized asset and corresponding liability. If the liability for an oil or natural gas well is settled for an amount other than the recorded amount, the difference is recorded to the full cost pool. Asset retirement obligations are estimated at the present value of expected future net cash flows. We utilize unobservable inputs in the estimation of asset retirement obligations that include, but are not limited to, costs of labor and materials, profits on costs of labor and materials, the effect of inflation on estimated costs, and the discount rate. Accordingly, asset retirement obligations are considered a Level 3 measurement under the FASC Fair Value Measurement topic.
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Commodity Derivative Contracts | Commodity Derivative Contracts We utilize oil and natural gas derivative contracts to mitigate our exposure to commodity price risk associated with our future oil and natural gas production. These derivative contracts have historically consisted of options, in the form of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. Our derivative financial instruments, other than any derivative instruments that are designated under the “normal purchase normal sale” exclusion, are recorded on the balance sheet as either an asset or a liability measured at fair value. We do not apply hedge accounting to our commodity derivative contracts; accordingly, changes in the fair value of these instruments are recognized in “Commodity derivatives expense (income)” in our Consolidated Statements of Operations in the period of change. 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 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, expectation of future commodity prices, and occasionally requirements under our bank credit facility. As of December 31, 2020, we were in compliance with the hedging requirements under our Successor Bank Credit Agreement requiring certain minimum commodity hedge levels through July 31, 2022, and we have no further hedging requirements under the Successor Bank Credit Agreement. 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 Successor Bank Credit Agreement (or affiliates of such lenders). As of December 31, 2021, 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.
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Concentrations of Credit Risk | Concentrations of Credit Risk Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents, trade and accrued production receivables, and the derivative instruments discussed above. Our cash equivalents represent high-quality securities placed with various investment-grade institutions. This investment practice limits our exposure to concentrations of credit risk. Our trade and accrued production receivables are dispersed among various customers and purchasers; therefore, concentrations of credit risk are limited. We evaluate the credit ratings of our purchasers, and if customers are considered a credit risk, letters of credit are the primary security obtained to support lines of credit. We attempt to minimize our credit risk exposure to the counterparties of our oil and natural gas derivative contracts through formal credit policies, monitoring procedures and diversification. All of our derivative contracts are with parties that are lenders under our senior secured bank credit facility (or affiliates of such lenders). There are no margin requirements with the counterparties of our derivative contracts. Oil and natural gas sales are made on a day-to-day basis or under short-term contracts at the current area market price. We would not expect the loss of any purchaser to have a material adverse effect upon our operations.
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Income Taxes | Income Taxes Income taxes are accounted for using the asset and liability method, under which deferred income taxes are recognized for the future tax effects of temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities using the enacted statutory tax rates in effect at year end. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance for deferred tax assets is recorded when it is more likely than not that the benefit from the deferred tax asset will not be realized.
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Uncertain Tax Positions | We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Common Share | Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is calculated in the same manner but includes the impact of potentially dilutive securities. Potentially dilutive securities during the Successor periods consist of nonvested restricted stock units, nonvested performance stock units, and outstanding series A and series B warrants, and during the Predecessor periods consisted of nonvested restricted stock, nonvested performance-based equity awards, and convertible senior notes. The following table sets forth the reconciliations of net income (loss) and weighted average shares used for purposes of calculating basic and diluted net income (loss) per common share for the periods indicated:
(1)For the year ended December 31, 2019, shares shown under “convertible senior notes” represent the prorated portion of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019 (see Note 8, Long-Term Debt – 2019 Predecessor Debt Reduction Transactions). For each of the periods from September 19, 2020 through December 31, 2020 (Successor) and from January 1, 2020 through September 18, 2020 (Predecessor), the weighted average common shares outstanding used to calculate basic earnings per share and diluted earnings per share were the same, since the Company generated a net loss during those periods. The weighted average diluted shares outstanding would have been 50.0 million for the period September 19, 2020 through December 31, 2020 and 584.4 million for the period January 1, 2020 through September 18, 2020, if the Company had recognized net income during those periods. Basic weighted average common shares during the year ended December 31, 2021 includes 1,383,144 performance-based and restricted stock units which are fully vested as of December 31, 2021. Although vesting criteria for these awards have been achieved, the shares underlying these awards are not currently outstanding as actual delivery of the shares is not scheduled to occur until December 4, 2023. During the Predecessor periods, basic weighted average common shares includes restricted stock that vested during the periods. For purposes of calculating diluted weighted average common shares for the years ended December 31, 2021 and 2019, the nonvested restricted stock units, nonvested restricted stock and performance-based equity awards, along with unexercised warrants are included in the computation using the treasury stock method, and for the shares underlying the convertible senior notes as if the convertible senior notes were converted at the earliest date outstanding during the respective periods. The following outstanding securities were excluded from the computation of diluted net income (loss) per share for the year ended December 31, 2021, the period September 19, 2020 through December 31, 2020, and the year ended December 31, 2019, as their effect would have been antidilutive, as of the respective dates:
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Environmental and Litigation Contingencies | Environmental and Litigation Contingencies The Company makes judgments and estimates in recording liabilities for contingencies such as environmental remediation or ongoing litigation. Liabilities are recorded when it is both probable that a loss has been incurred and such loss is reasonably estimable. Assessments of liabilities are based on information obtained from independent and in-house experts, loss experience in similar situations, actual costs incurred, and other case-by-case factors. Any related insurance recoveries are recognized in our financial statements during the period received or at the time receipt is determined to be virtually certain.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The objective of ASU 2019-12 is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. Effective January 1, 2021, we adopted ASU 2019-02. The implementation of this standard did not have a material impact on our consolidated financial statements and related footnote disclosures.
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Revenue Recognition | We record revenue in accordance with FASC Topic 606, Revenue from Contracts with Customers. 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 control (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 received within a month following product delivery, and for natural gas and NGL contracts, payment is generally received 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 Consolidated Balance Sheets. In addition to revenues from oil and natural gas sales contracts and CO2 sales and transportation contracts, in certain situations, the Company enters into marketing arrangements for the purchase and subsequent sale of crude oil from third parties. We recognize the revenue received and the associated expenses incurred on these sales on a gross basis, as “Oil marketing revenues” and “Oil marketing purchases” in our Consolidated Statements of Operations, since we act as a principal in the transaction by assuming control of the commodities purchased and the responsibility to deliver the commodities sold. Revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser.
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Leases | We evaluate contracts for leasing arrangements at inception. We lease office space, equipment, and vehicles that have non-cancelable lease terms. Currently, our outstanding leases have remaining terms up to 14 years, with certain land leases having remaining terms up to 48 years. Leases with a term of 12 months or less are not recorded on our balance sheet.The majority of our leases contain renewal options, typically exercisable at our sole discretion. At emergence, we recorded right-of-use assets and liabilities based on the fair value of lease payments and utilized our incremental borrowing rate based on information available at the Emergence Date.We account for lease and nonlease components in a contract as a single lease component for all asset classes. Lease costs for operating leases or leases with a term of 12 months or less are recognized on a straight-line basis over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset are recognized separately, with the depreciable life reflective of the expected lease term. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | Restricted Stock Units – Successor In December 2020, non-performance-based restricted stock unit (“RSU”) awards were granted to directors and a limited number of employees under the Successor’s LTIP. Holders of non-performance-based RSUs will receive shares of Successor common stock equal to the number of RSUs that have vested upon settlement. Non-performance-based RSUs generally vest ratably over a -year period with delivery of the shares occurring at the end of the three-year period. Vested non-performance-based RSU awards provide the holders with dividend equivalent rights payable upon settlement of the underlying RSU awards. Shares to be delivered to participants are expected to be made available from authorized but unissued shares reserved under the LTIP. The grant-date fair value of the RSUs is based on the fair market value of our common stock on the date of grant. PSU awards are valued using a Monte Carlo simulation. Expected volatilities utilized in the model were estimated using historical volatility of the Predecessor stock over a look-back term generally equivalent to the expected life of the award from the grant date.Restricted Stock – Predecessor During the Predecessor period, we granted non-performance-based restricted stock to employees and directors as part of our long-term compensation program. Holders of non-performance-based restricted stock awards had the rights of owning non-restricted stock (including voting rights) except that the holders were not entitled to delivery of a portion thereof until certain requirements were met. Beginning in 2014, non-performance-based restricted stock awards provided the holders with forfeitable dividend equivalent rights which vested with the underlying shares. Non-performance-based restricted stock vested over a -year vesting period, with the specific terms of vesting determined at the time of grant.Performance-Based Equity Awards – Predecessor The Predecessor’s Compensation Committee of the Board of Directors annually granted performance-based equity awards to Denbury’s officers. Performance-based awards generally vested over 3.25 years for awards granted in 2019 and 2020. The number of performance-based shares earned (and eligible to vest) during the performance period was dependent upon: (1) the level of success in achieving specifically identified performance targets (“Performance-Based Operational Awards”) and (2) performance of the Predecessor’s stock relative to that of a designated peer group (“Performance-Based TSR Awards”). Performance-Based Operational Awards were valued using the fair market value of the Predecessor’s stock, and Performance-Based TSR Awards were valued using a Monte Carlo simulation. Expected volatilities utilized in the model were estimated using historical volatility of the Predecessor stock over a look-back term generally equivalent to the expected life of the award from the grant date.
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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 and 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. 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.
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Nature of Operations and Summary of Significant Accounting Policies (Tables) |
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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 Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Consolidated Statements of Cash Flows:
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Schedule of intangible assets | The following table summarizes the carrying value of our intangible assets as of December 31, 2021 and 2020:
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Schedule of future amortization expense of intangible assets | As of December 31, 2021, our estimated amortization expense for our intangible assets subject to amortization over the next five years is as follows:
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Schedule of earnings per share, basic and diluted reconciliation | The following table sets forth the reconciliations of net income (loss) and weighted average shares used for purposes of calculating basic and diluted net income (loss) per common share for the periods indicated:
(1)For the year ended December 31, 2019, shares shown under “convertible senior notes” represent the prorated portion of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019 (see Note 8, Long-Term Debt – 2019 Predecessor Debt Reduction Transactions).
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Schedule of antidilutive securities excluded from computation of earnings per share | The following outstanding securities were excluded from the computation of diluted net income (loss) per share for the year ended December 31, 2021, the period September 19, 2020 through December 31, 2020, and the year ended December 31, 2019, as their effect would have been antidilutive, as of the respective dates:
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Fresh Start Accounting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Reorganization Value | The following table reconciles the enterprise value to the equity value of the Successor as of the Emergence Date:
The following table reconciles enterprise value to reorganization value of the Successor (i.e., value of the reconstituted entity) and total reorganization value:
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Schedule Of Reorganization Adjustments | The following table summarizes the losses (gains) on reorganization items, net:
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Schedule of Fresh-Start Adjustments | The following illustrates the effects on the Company’s consolidated balance sheet due to the reorganization and fresh start accounting adjustments. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities, and warrants.
Reorganization Adjustments (1)Represents the net cash payments that occurred on the Emergence Date as follows:
(2)Represents the transfer of funds to a restricted cash account utilized for the payment of fees to retained professional service providers assisting in the bankruptcy process. (3)Represents the write-off of costs related to the DIP Facility and a run-off policy for directors’ and officers’ insurance coverage, partially offset by the recording of prepaid amounts for non-retained professional service provider fees. (4)Represents debt issuance costs related to the Successor Bank Credit Agreement. (5)Adjustments to accounts payable and accrued liabilities as follows:
(6)Liabilities subject to compromise were settled as follows in accordance with the Plan:
(7)Represents the cancellation of the Predecessor’s common stock, treasury stock, and related components of the Predecessor’s paid-in capital in excess of par. Paid-in capital in excess of par includes $4.6 million as a result of terminated Predecessor stock compensation plans. (8)Represents the Successor’s common stock and additional paid-in capital as follows:
(9)Reflects the cumulative net impact of the effects on accumulated deficit as follows:
Fresh Start Adjustments (10)Reflects fair value adjustments to our (i) oil and natural gas properties, CO2 properties, pipelines, and other property and equipment, as well as the elimination of accumulated depletion, depreciation, and amortization, (ii) operating lease right-of-use assets and liabilities, and (iii) asset retirement obligations. (11)Reflects fair value adjustments to our long-term contracts to sell CO2 to industrial customers. (12)Reflects fair value adjustments to our other assets as follows:
(13)Reflects fair value adjustments to accounts payable and accrued liabilities as follows:
(14)Represents adjustments to current and long-term maturities of debt associated with pipeline lease financings. The cumulative effect is as follows:
Our pipeline lease financings were restructured in late October 2020 (see Note 8, Long-Term Debt – Restructuring of Pipeline Financing Transactions). (15)Represents (i) adjustment to deferred taxes, including the recognition of tax expenses related to reorganization adjustments as a result of the cancellation of debt and retaining tax attributes for the Successor and the reinstatement of deferred tax liabilities subject to compromise totaling $128.6 million and (ii) adjustments to deferred tax liabilities related to fresh start accounting of $414.1 million. (16)Represents a fair value adjustment for the long-term portion of an unfavorable vendor contract. (17)Represents the cumulative effect of the fresh start accounting adjustments discussed above.
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Acquisition and Divestitures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents a summary of the fair value of assets acquired and liabilities assumed in the acquisition:
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Revenue Recognition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes our revenues by product type:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Assets and Liabilities | The table below reflects our operating lease right-of-use assets and operating lease liabilities, which primarily consist of our office leases:
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Schedule of Weighted Average Lease Terms and Discount Rates | The following weighted average remaining lease terms and discount rates related to our outstanding operating leases:
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Schedule of Lease Costs | The following table summarizes the components of lease costs and sublease income:
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Supplemental Cash Flow Information Related to Leases | Our statement of cash flows included the following activity related to our operating and finance leases:
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Schedule of Maturities of Operating Lease Liabilities | The following table summarizes by year the maturities of our lease liabilities as of December 31, 2021:
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Asset Retirement Obligations (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes In Asset Retirement Obligations | The following table summarizes the changes in our asset retirement obligations:
(1)Included in “Accounts payable and accrued liabilities” in our Consolidated Balance Sheets.
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Unevaluated Property (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of unevaluated properties excluded from oil and natural gas properties being amortized | A summary of the unevaluated property costs excluded from oil and natural gas properties being amortized at December 31, 2021, and the year in which the costs were incurred follows:
(1)Reflects the carrying values of our unevaluated properties as a result of the application of fresh start accounting upon emergence from bankruptcy (see Note 2, Fresh Start Accounting, for additional information) that remain in unevaluated properties as of December 31, 2021.
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Long-Term Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of long-term debt | The table below reflects long-term debt outstanding as of December 31, 2021 and 2020:
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Indebtedness repayable over the next five years and thereafter | At December 31, 2021, our indebtedness is payable over the next five years and thereafter as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Provision (Benefit) | Our income tax provision (benefit) is as follows:
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Deferred Tax Assets And Liabilities | Significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows:
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Income Tax Provision (Benefit) Rate Reconciliation | Our reconciliation of income tax expense computed by applying the U.S. federal statutory rate and the reported effective tax rate on income from continuing operations is as follows:
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Tax Valuation Allowance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation Allowance [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Valuation Allowance | The changes in our valuation allowance are detailed below:
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Stock Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock-based compensation costs | The following table sets forth stock-based compensation costs for the periods indicated:
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Restricted Stock Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the total vesting date fair value of equity awards | The following is a summary of the total vesting date fair value of non-performance-based restricted stock units:
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Schedule of nonvested restricted stock units activity | A summary of the status of our nonvested non-performance-based RSUs issued and the changes during the Successor period is presented below:
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Performance Share Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the total vesting date fair value of equity awards | The following is a summary of the total vesting date fair value of PSU awards:
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Summary of performance-based equity awards valuation assumptions | The range of assumptions used in the Monte Carlo simulation valuation approach is as follows:
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Schedule of nonvested performance stock unit awards activity | A summary of the PSU awards activity during the Successor period is as follows:
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Restricted Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the total vesting date fair value of equity awards | The following is a summary of the total vesting date fair value of non-performance-based restricted stock:
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Performance-Based Equity Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the total vesting date fair value of equity awards | The following is a summary of the total vesting date fair value of performance-based equity awards for the Predecessor:
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Summary of performance-based equity awards valuation assumptions | The range of assumptions used in the Monte Carlo simulation valuation approach for Performance-Based TSR Awards (presented at the target level) is as follows:
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Commodity Derivative Contracts (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 December 31, 2021, none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic:
(1)Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For collars, ranges represent the lowest floor price and the highest ceiling price for all open contracts for the period presented.
|
Fair Value Measurements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 December 31, 2021 and 2020:
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Additional Balance Sheet Details (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities
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Trade and Other Receivables, Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation Allowance [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Valuation Allowance | Rollforward of Allowance for Doubtful Accounts
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Supplemental Cash Flow Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Supplemental Cash Flow Information
|
Nature of Ops and Sign. Acctg Policies (Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|---|
Accounting Policies [Abstract] | |||||
Cash and cash equivalents | $ 3,671 | $ 518 | $ 45,585 | ||
Restricted cash, current | 0 | 1,000 | |||
Restricted cash, long-term | 46,673 | 40,730 | |||
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows | $ 50,344 | $ 42,248 | $ 95,114 | $ 33,045 | $ 54,949 |
Nature of Ops and Sign. Acctg Policies (Intangibles) (Details 1) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Long-term contracts to sell CO2 to industrial customers | $ 97,943 | $ 97,943 |
Other intangibles | 2,179 | 2,167 |
Accumulated amortization | (11,874) | (2,748) |
Net book value | $ 88,248 | $ 97,362 |
Nature of Ops and Sign. Acctg Policies (Estimated Amortization Expense for Intangibles) (Details 2) $ in Thousands |
Dec. 31, 2021
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2022 | $ 9,120 |
2023 | 9,117 |
2024 | 9,117 |
2025 | 9,117 |
2026 | $ 9,117 |
Nature of Ops and Sign. Acctg Policies (Reconciliation of Weighted Average Shares Table) (Details 3) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
||||
Numerator | |||||||
Net income (loss) - basic | $ (50,658) | $ (1,432,578) | $ 56,002 | $ 216,959 | |||
Interest on convertible senior notes including amortization of discount, net of tax | 0 | 0 | 0 | 14,134 | |||
Net income (loss) - diluted | $ (50,658) | $ (1,432,578) | $ 56,002 | $ 231,093 | |||
Denominator | |||||||
Weighted average common shares outstanding – basic | 50,000 | 495,560 | 50,918 | 459,524 | |||
Restricted stock units | 0 | 0 | 762 | 0 | |||
Warrants | 0 | 0 | 2,138 | 0 | |||
Restricted stock and performance-based equity awards | 0 | 0 | 0 | 2,396 | |||
Convertible senior notes | 0 | 0 | 0 | 48,421 | [1] | ||
Weighted average common shares outstanding – diluted | 50,000 | 495,560 | 53,818 | 510,341 | |||
Predecessor common shares issuable upon full conversion of convertible senior notes | 90,900 | ||||||
|
Nature of Ops and Sign. Acctg Policies (Antidilutive Securities) (Details 4) - shares shares in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Number of antidilutive equity-based instruments outstanding | 0 | 1,220 | 0 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Number of antidilutive equity-based instruments outstanding | 0 | 5,526 | 0 |
Stock appreciation rights | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Number of antidilutive equity-based instruments outstanding | 0 | 0 | 1,981 |
Restricted stock and performance-based equity awards | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Number of antidilutive equity-based instruments outstanding | 0 | 0 | 4,445 |
Nature of Ops and Sign. Acctg Policies (Major Customers) (Details Textuals 3) - Revenue Benchmark - Customer Concentration Risk |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Plains Marketing LP | ||||
Product Information [Line Items] | ||||
Revenue from major customer (percentage) | 30.00% | 30.00% | 28.00% | 32.00% |
Hunt Crude Oil Company | ||||
Product Information [Line Items] | ||||
Revenue from major customer (percentage) | 12.00% | 12.00% | 12.00% | 11.00% |
Marathon Petroleum Company | ||||
Product Information [Line Items] | ||||
Revenue from major customer (percentage) | 13.00% | 12.00% | 11.00% | |
Sunoco Inc | ||||
Product Information [Line Items] | ||||
Revenue from major customer (percentage) | 11.00% | 11.00% |
Nature of Ops and Sign. Acctg Policies (Weighted Avg Shares) (Details Textuals 4) - $ / shares |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Weighted average number of dilutive shares | 50,000,000 | 495,560,000 | 53,818,000 | 510,341,000 |
Weighted average common shares outstanding – basic | 50,000,000 | 495,560,000 | 50,918,000 | 459,524,000 |
Number of warrants outstanding | 5,200,000 | |||
Issued pursuant to exercise of warrants, shares | 193,657 | |||
Series A Warrants | ||||
Number of warrants outstanding | 2,631,579 | 2,600,000 | ||
Exercise price of warrants | $ 32.59 | $ 32.59 | ||
Number of warrants exercised | 11,694 | |||
Series B Warrants | ||||
Number of warrants outstanding | 2,894,740 | 2,600,000 | ||
Exercise price of warrants | $ 35.41 | $ 35.41 | ||
Number of warrants exercised | 327,266 | |||
Performance-based and restricted stock units | ||||
Weighted average common shares outstanding – basic | 1,383,144 | |||
Net Income Scenario | ||||
Weighted average number of dilutive shares | 50,000,000 | 584,400,000 |
Fresh Start Accounting (Enterprise Value to Equity Value) (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|---|
Reorganizations [Abstract] | |||||
Enterprise value | $ 1,280,856 | ||||
Cash and cash equivalents | $ 3,671 | $ 518 | 45,585 | ||
Postconfirmation Debt | (231,022) | ||||
Stockholders' Equity Attributable to Parent | $ 1,135,390 | $ 1,053,668 | $ 1,095,419 | $ 1,412,259 | $ 1,141,777 |
Fresh Start Accounting (Reconciliation of Reorganization Value) (Details 1) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Reorganizations [Abstract] | |||
Enterprise value | $ 1,280,856 | ||
Cash and cash equivalents | $ 3,671 | $ 518 | 45,585 |
Plus: Current liabilities excluding current maturities of long-term debt | 239,738 | ||
Plus: Non-interest bearing noncurrent liabilities | 185,228 | ||
Reorganization value of the reconstituted Successor | $ 1,751,407 |
Fresh Start Accounting (Reorganization Items) (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Reorganizations [Abstract] | |||||
Gain on settlement of liabilities subject to compromise | $ (1,024,864) | ||||
Fresh start accounting adjustments | 1,834,423 | ||||
Professional service provider fees and other expenses | 11,267 | ||||
Success fees for professional service providers | 9,700 | ||||
Loss on rejected contracts and leases | 10,989 | ||||
Valuation adjustments to debt classified as subject to compromise | 757 | ||||
DIP credit agreement fees | 3,107 | ||||
Acceleration of Predecessor stock compensation expense | $ 4,600 | 4,601 | |||
Total reorganization items, net | $ 0 | $ 849,980 | $ 0 | $ 0 |
Fresh Start Accounting (Net Cash Payments) (Details 4) $ in Thousands |
9 Months Ended |
---|---|
Sep. 18, 2020
USD ($)
| |
Reorganizations [Abstract] | |
Cash proceeds from Successor Bank Credit Agreement | $ 140,000 |
Total cash proceeds | 140,000 |
Payment in full DIP Facility and pre-petition revolving bank credit agreement | (140,000) |
Retained professional service provider fees paid to escrow account | (10,662) |
Non-retained professional service provider fees paid | (7,420) |
Accrued interest and fees on DIP Facility | (1,464) |
Debt issuance costs related to Successor Bank Credit Agreement | (8,241) |
Total cash uses | (167,787) |
Net uses | $ (27,787) |
Fresh Start Accounting (Accounts Payable and Accrued Liabilities) (Details 5) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Fresh-Start Adjustment [Line Items] | |||
Total | $ 191,598 | $ 112,671 | $ 174,320 |
Accrual of professional service provider fees | 2,826 | ||
Payment of accrued interest and fees on DIP Facility | (1,464) | ||
Reinstatement of accounts payable and accrued liabilities from liabilities subject to compromise | 101,431 | ||
Reorganization Adjustments | |||
Fresh-Start Adjustment [Line Items] | |||
Total | $ 102,793 |
Fresh Start Accounting (Successor's Common Stock and Additional Paid-In Capital) (Details 7) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Reorganizations [Abstract] | |||
Capital in excess of par value of 47, 499,999 issued and outstanding shares of New Common Stock issued to holders of the senior secured second lien note claims | $ 1,014,608 | ||
Capital in excess of par value of 2,500,000 issued and outstanding shares of New Common Stock issued to holders of the convertible senior note claims | 53,400 | ||
Fair value of series A warrants issued to convertible senior note holders | 15,683 | ||
Fair value of series B warrants issued to senior subordinated note holders | 6,398 | ||
Fair value of series B warrants issued to Predecessor equity holders | 5,330 | ||
Total change in Successor common stock and additional paid-in capital | 1,095,419 | ||
Less: Par value of Successor common stock | $ (50) | $ (50) | (50) |
Change in Successor additional paid-in capital | $ 1,095,369 |
Fresh Start Accounting (Accumulated Deficit Adjustments) (Details 8) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Fresh-Start Adjustment [Line Items] | |||
Accumulated deficit | $ 5,344 | $ (50,658) | |
Cancellation of Predecessor common stock, paid-in capital in excess of par, and treasury stock | $ 2,763,824 | ||
Gain on settlement of liabilities subject to compromise | 1,024,864 | ||
Acceleration of Predecessor stock compensation expense | (4,601) | ||
Recognition of tax expenses related to reorganization adjustments | (128,556) | ||
Professional service provider fees recognized at emergence | (9,700) | ||
Issuance of series B warrants to Predecessor equity holders | (5,330) | ||
Other | (1,092) | ||
Net impact to Predecessor accumulated deficit | $ 5,344 | $ (50,658) | |
Reorganization Adjustments | |||
Fresh-Start Adjustment [Line Items] | |||
Accumulated deficit | 3,639,409 | ||
Net impact to Predecessor accumulated deficit | $ 3,639,409 |
Fresh Start Accounting (Fair Value Other Assets) (Details 9) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Fresh-Start Adjustment [Line Items] | |||
Fair value adjustments to other assets | $ 78,298 | $ 86,408 | $ 87,023 |
Fair value adjustment for CO2 and oil pipeline line-fill | (3,698) | ||
Fair value adjustments for escrow accounts | 671 | ||
Fresh Start Adjustments | |||
Fresh-Start Adjustment [Line Items] | |||
Fair value adjustments to other assets | $ (3,027) |
Fresh Start Accounting (Fair Value Accounts Payable and Accrued Liabilities) (Details 10) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Fresh-Start Adjustment [Line Items] | |||
Total | $ 191,598 | $ 112,671 | $ 174,320 |
Fair value adjustment for the current portion of an unfavorable vendor contract | 3,500 | ||
Fair value adjustment for the current portion of Predecessor asset retirement obligation | 689 | ||
Write-off accrued interest on NEJD pipeline financing | (451) | ||
Fresh Start Adjustments | |||
Fresh-Start Adjustment [Line Items] | |||
Total | $ 3,738 |
Fresh Start Accounting (Debt Adjustments) (Details 11) $ in Thousands |
Sep. 18, 2020
USD ($)
|
---|---|
Reorganizations [Abstract] | |
Fair value adjustment for Free State pipeline lease financing | $ (24,699) |
Fair value adjustment for NEJD pipeline lease financing | (88) |
Fair value adjustments to current and long-term maturities of debt | $ (24,787) |
Acquisition and Divestitures (Purchase Price Allocation) (Details) - Big Sand Draw and Beaver Creek Fields $ in Thousands |
Mar. 03, 2021
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Cash consideration | $ 10,906 |
Proved oil and natural gas properties | 60,101 |
Other property and equipment | 1,685 |
Asset retirement obligations | (39,794) |
Contingent consideration | (5,320) |
Other liabilities | (5,766) |
Fair value of net assets acquired | $ 10,906 |
Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Disaggregation of Revenue | ||||
Revenues | $ 215,903 | $ 521,693 | $ 1,242,872 | $ 1,260,360 |
Oil sales | ||||
Disaggregation of Revenue | ||||
Revenues | 199,769 | 489,251 | 1,148,022 | 1,205,083 |
Natural gas sales | ||||
Disaggregation of Revenue | ||||
Revenues | 1,339 | 2,850 | 11,933 | 6,937 |
CO2 sales and transportation fees | ||||
Disaggregation of Revenue | ||||
Revenues | 9,419 | 21,049 | 44,175 | 34,142 |
Oil marketing revenues | ||||
Disaggregation of Revenue | ||||
Revenues | $ 5,376 | $ 8,543 | $ 38,742 | $ 14,198 |
Leases (Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Leases, Operating [Abstract] | |||
Operating lease right-of-use assets | $ 19,502 | $ 20,342 | $ 1,843 |
Operating lease liabilities - current | 4,677 | 1,350 | 728 |
Operating lease liabilities - long-term | 17,094 | 19,460 | $ 525 |
Total operating lease liabilities | $ 21,771 | $ 20,810 |
Leases (Lease Term and Discount Rate) (Details 1) |
Dec. 31, 2021
Rate
|
Dec. 31, 2020
Rate
|
---|---|---|
Leases [Abstract] | ||
Weighted average remaining lease term | 5 years 2 months 12 days | 6 years 3 months 18 days |
Weighted average discount rate | 5.40% | 5.60% |
Leases (Lease Operating Costs) (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Lease Cost [Line Items] | ||||
Operating lease cost | $ 1,044 | $ 5,934 | $ 4,807 | $ 8,987 |
Lease cost | ||||
Amortization of right-of-use assets | 3 | 9 | 0 | 1,188 |
Interest on lease liabilities | 1 | 3 | 0 | 40 |
Total finance lease cost | 4 | 12 | 0 | 1,228 |
Variable lease cost | 258 | 3,688 | 670 | 4,852 |
Sublease income | 100 | 2,584 | 0 | 4,127 |
General and administrative expenses | ||||
Lease Cost [Line Items] | ||||
Operating lease cost | 872 | 5,683 | 4,102 | 8,924 |
Lease operating expenses | ||||
Lease Cost [Line Items] | ||||
Operating lease cost | 158 | 214 | 655 | 58 |
CO2 operating and discovery expenses | ||||
Lease Cost [Line Items] | ||||
Operating lease cost | $ 14 | $ 37 | $ 50 | $ 5 |
Leases (Supplemental Cash Flow Information Related to Leases) (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | $ 341 | $ 7,341 | $ 2,830 | $ 10,995 |
Operating cash flows from interest on finance leases | 1 | 3 | 0 | 40 |
Financing cash flows from finance leases | 78 | 10 | 0 | 1,275 |
Right-of-use assets obtained in exchange for lease obligations | ||||
Operating leases | 19,902 | 1,049 | 2,683 | 415 |
Finance leases | $ 0 | $ 162 | $ 0 | $ 0 |
Leases (Maturities of Lease Liabilities) (Details 4) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Leases [Abstract] | |||
2022 | $ 5,705 | ||
2023 | 4,712 | ||
2024 | 4,138 | ||
2025 | 4,177 | ||
2026 | 4,203 | ||
Thereafter | 2,326 | ||
Total minimum lease payments | 25,261 | ||
Less: Amount representing interest | (3,490) | ||
Present value of minimum lease liabilities | 21,771 | $ 20,810 | |
Derivative Liability, Noncurrent | $ 0 | $ (5,087) | $ (295) |
Leases (Details Textuals) - Maximum |
Dec. 31, 2021 |
---|---|
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 14 years |
Land | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 48 years |
Asset Retirement Obligations (Rollforward) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
|||
Asset Retirement Obligation Roll Forward [Roll Forward] | |||||
Beginning asset retirement obligations | $ 163,368 | $ 181,760 | $ 186,281 | ||
Liabilities incurred and assumed during period | 738 | 736 | 43,701 | ||
Revisions in estimated retirement obligations | 22,660 | 3,592 | 69,059 | ||
Liabilities settled and sold during period | (3,439) | (10,041) | (10,783) | ||
Accretion expense | 2,954 | 11,329 | 14,353 | ||
Fresh start accounting adjustment | 0 | (24,008) | 0 | ||
Ending asset retirement obligations | 186,281 | 163,368 | 302,611 | ||
Less: current asset retirement obligations | [1] | (6,943) | (4,930) | (18,373) | |
Long-term asset retirement obligations | $ 179,338 | $ 158,438 | $ 284,238 | ||
|
Asset Retirement Obligations (Details Textuals) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Asset Retirement Obligation Disclosure [Abstract] | ||
Balance in escrow accounts | $ 55.6 | $ 55.2 |
Unevaluated Property (Summary of Unevaluated Properties Excluded from Amortization) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 18, 2020 |
Dec. 31, 2020 |
Dec. 31, 2021 |
||||
Summary of unevaluated properties excluded from oil and natural gas properties being amortized | ||||||
Property acquisition costs | $ 68,103 | [1] | $ 0 | $ 0 | ||
Exploration and development | 0 | 46 | 39,481 | |||
Capitalized interest | 0 | 963 | 3,576 | |||
Total | 68,103 | [1] | 1,009 | 43,057 | ||
Property acquisition costs | 68,103 | |||||
Exploration and development | 39,527 | |||||
Capitalized interest | 4,539 | |||||
Total | $ 111,983 | $ 85,304 | $ 112,169 | |||
|
Unevaluated Property (Details Textuals) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Maximum | |
Capitalized Costs of Unproved Properties Excluded from Amortization | |
Anticipated timing of inclusion of costs in amortization calculation | 10 years |
Minimum | |
Capitalized Costs of Unproved Properties Excluded from Amortization | |
Anticipated timing of inclusion of costs in amortization calculation | 5 years |
Long-Term Debt (Components of Long-Term Debt) (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Debt and Lease Obligation [Abstract] | |||
Senior Secured Bank Credit Agreement | $ 35,000 | $ 70,000 | |
Pipeline financings | 0 | 68,008 | |
Total debt principal balance | 35,000 | 138,008 | |
Less: current maturities of long-term debt | 0 | (68,008) | $ (73,563) |
Long-term debt | $ 35,000 | $ 70,000 | $ 157,459 |
Long-Term Debt (Debt Maturity Schedule) (Details 1) $ in Thousands |
Dec. 31, 2021
USD ($)
|
---|---|
Indebtedness repayment schedule | |
2022 | $ 0 |
2023 | 0 |
2024 | 35,000 |
2025 | 0 |
2026 | 0 |
Thereafter | 0 |
Total indebtedness | $ 35,000 |
Income Taxes (Income Tax Provision (Benefit)) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Current income tax expense (benefit) | ||||
Federal | $ 0 | $ (6,407) | $ 0 | $ 2,645 |
State | 30 | (853) | 403 | 1,236 |
Total current income tax expense (benefit) | 30 | (7,260) | 403 | 3,881 |
Deferred income tax expense (benefit) | ||||
Federal | 0 | (319,011) | 0 | 89,950 |
State | (2,556) | (89,858) | 364 | 10,521 |
Total deferred income tax expense (benefit) | (2,556) | (408,869) | 364 | 100,471 |
Total income tax expense (benefit) | $ (2,526) | $ (416,129) | $ 767 | $ 104,352 |
Income Taxes (Summary of Changes in Valuation Allowance) (Details 1) - Tax Valuation Allowance - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Valuation Allowance [Line Items] | ||||
Beginning balance | $ 129,840 | $ 77,215 | $ 129,408 | $ 51,093 |
Charges | 2,269 | 77,138 | 29,345 | 26,122 |
Deductions | (2,701) | (24,513) | (33,291) | 0 |
Ending balance | $ 129,408 | $ 129,840 | $ 125,462 | $ 77,215 |
Income Taxes (Components of Deferred Tax Assets and Liabilities) (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred tax assets | ||
Loss and tax credit carryforwards - state | $ 54,943 | $ 55,979 |
Derivative contracts | 30,892 | 13,090 |
Accrued liabilities and other reserves | 19,567 | 15,632 |
Business credit carryforwards | 18,066 | 0 |
Loss carryforwards - federal | 10,310 | 0 |
Lease liabilities | 4,523 | 6,354 |
Property and equipment | 2,613 | 59,207 |
Other | 4,206 | 4,092 |
Valuation allowances | (125,462) | (129,408) |
Total deferred tax assets | 19,658 | 24,946 |
Deferred tax liabilities | ||
CO2 and other contracts | (17,208) | (20,030) |
Operating lease right-of-use assets | (4,088) | (6,190) |
Total deferred tax liabilities | (21,296) | (26,220) |
Total net deferred tax liability | $ (1,638) | $ (1,274) |
Income Taxes (Schedule of Effective Tax Rate Reconciliation) (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Effective Income Tax Rate Reconciliation, Amount | ||||
Income tax provision calculated using the federal statutory income tax rate | $ (11,169) | $ (388,228) | $ 11,921 | $ 67,475 |
State income taxes, net of federal income tax benefit | (2,532) | (86,937) | 450 | 7,435 |
Tax shortfall (windfall) on stock-based compensation deduction | 0 | (1,502) | (267) | 1,912 |
Nondeductible compensation | 0 | 0 | 5,057 | 0 |
Change in valuation allowance | 9,653 | 19,344 | (2,928) | 26,122 |
Enhanced oil recovery credits generated | 0 | 0 | (14,272) | 0 |
Tax attributes reduction - net of CODI exclusion | 0 | 31,667 | 0 | 0 |
Other | 1,522 | 9,527 | 806 | 1,408 |
Total income tax expense (benefit) | $ (2,526) | $ (416,129) | $ 767 | $ 104,352 |
Income Taxes (Details Textuals) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Valuation Allowance [Line Items] | ||
Federal net operating loss carryforwards | $ 10,310,000 | $ 0 |
Business credit carryforwards | 18,066,000 | 0 |
Alternative minimum tax credits | 600,000 | |
Loss and tax credit carryforwards - state | 54,943,000 | $ 55,979,000 |
Unrecognized tax benefits | 0 | |
Income tax interest or penalties | 0 | |
Louisiana, Mississippi, Montana, North Dakota and Alabama | ||
Valuation Allowance [Line Items] | ||
State deferred tax assets | $ 74,100,000 |
Stockholders' Equity (Details Textuals) - 401(k) Plan - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Defined Contribution Benefit Plans Disclosures [Line Items] | ||||
Employer contribution rate | 100.00% | |||
Employer's matching contributions | $ 1.1 | $ 4.4 | $ 5.1 | $ 6.3 |
Maximum | ||||
Defined Contribution Benefit Plans Disclosures [Line Items] | ||||
Employee contribution rate | 6.00% |
Stock Compensation (Schedule of Share-Based Compensation) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Abstract] | ||||
Stock-based compensation expense included in G&A | $ 8,212 | $ 4,111 | $ 25,322 | $ 12,470 |
Stock-based compensation capitalized | 695 | 1,660 | 1,883 | 4,018 |
Total cost of stock-based compensation arrangements | 8,907 | 5,771 | 27,205 | 16,488 |
Income tax benefit recognized for stock-based compensation arrangements | $ 2,053 | $ 1,028 | $ 6,331 | $ 3,118 |
Stock Compensation (Summary of Vesting Date Fair Value of RSU Awards) (Details 2) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Restricted Stock Units | |
Stock Compensation | |
Vesting date fair value | $ 31,073 |
Stock Compensation (Summary of Restricted Stock Unit Activity) (Details 3) - Restricted Stock Units |
12 Months Ended |
---|---|
Dec. 31, 2021
$ / shares
shares
| |
Stock Compensation | |
Nonvested at beginning of period | shares | 1,219,867 |
Weighted average grant-date fair value, beginning of period | $ / shares | $ 24.67 |
Granted | shares | 56,236 |
Weighted average grant-date fair value, granted | $ / shares | $ 31.87 |
Vested | shares | (405,311) |
Weighted average grant-date fair value, vested | $ / shares | $ 24.80 |
Forfeited | shares | (20,885) |
Weighted average grant-date fair value, forfeited | $ / shares | $ 24.67 |
Nonvested at end of period | shares | 849,907 |
Weighted average grant-date fair value, end of period | $ / shares | $ 25.08 |
Stock Compensation (PSU Award Valuation Assumptions) (Details 4) - Performance Share Units - $ / shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Stock Compensation | ||
Weighted average grant-date fair value, granted | $ 24.19 | $ 0 |
Risk-free interest rate | 0.21% | |
Expected life | 2 months 23 days | |
Expected volatility | 110.00% | |
Dividend yield | 0.00% |
Stock Compensation (Summary of PSU Activity) (Details 5) - Performance Share Units - $ / shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Stock Compensation | ||
Nonvested at beginning of period | 1,021,222 | |
Weighted average grant-date fair value, beginning of period | $ 24.19 | |
Granted | 0 | |
Weighted average grant-date fair value, granted | $ 24.19 | $ 0 |
Vested | (1,021,222) | |
Weighted average grant-date fair value, vested | $ 24.19 | |
Forfeited | 0 | |
Weighted average grant-date fair value, forfeited | $ 0 | |
Nonvested at end of period | 1,021,222 | 0 |
Weighted average grant-date fair value, end of period | $ 24.19 | $ 0 |
Stock Compensation (Summary of Vesting Date Fair Value of PSU Awards) (Details 6) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Performance Share Units | |
Stock Compensation | |
Vesting date fair value | $ 45,077 |
Stock Compensation (Summary of Vesting Date Fair Value of Awards - Restricted Stock) (Details 7) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 18, 2020 |
Dec. 31, 2019 |
|
Restricted Stock | ||
Stock Compensation | ||
Fair value of restricted stock vested | $ 707 | $ 5,743 |
Stock Compensation (TSR Award Assumptions) (Details 8) - Performance-Based TSR Awards - $ / shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 18, 2020 |
Dec. 31, 2019 |
|
Stock Compensation | ||
Weighted average fair value of Performance-Based TSR Awards granted | $ 0.15 | $ 1.95 |
Risk-free interest rate | 0.27% | 2.27% |
Expected life | 3 years | 3 years |
Expected volatility | 89.60% | 77.20% |
Dividend yield | 0.00% | 0.00% |
Stock Compensation (Summary of Vesting Date Fair Value of Awards) (Details 9) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 18, 2020 |
Dec. 31, 2019 |
|
Performance-Based Operational Awards | ||
Stock Compensation | ||
Vesting date fair value | $ 0 | $ 0 |
Performance-Based TSR Awards | ||
Stock Compensation | ||
Vesting date fair value | $ 79 | $ 2,783 |
Fair Value Measurements (Details Textuals) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Fair value of debt | $ 35.0 | $ 70.0 |
Additional Balance Sheet Details (Details) - Trade and Other Receivables, Net - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Valuation Allowance [Line Items] | ||||
Beginning balance | $ 22,146 | $ 17,137 | $ 23,206 | $ 17,070 |
Provision for doubtful accounts | 1,060 | 5,297 | 826 | 68 |
Write-offs | 0 | (288) | (5,085) | (1) |
Ending balance | $ 23,206 | $ 22,146 | $ 18,947 | $ 17,137 |
Additional Balance Sheet Details (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 18, 2020 |
---|---|---|---|
Text Block [Abstract] | |||
Accrued lease operating expenses | $ 27,901 | $ 21,294 | |
Accrued derivative settlements | 27,336 | 3,908 | |
Accounts payable | 25,700 | 18,629 | |
Accrued compensation | 23,735 | 7,512 | |
Accrued exploration and development costs | 18,936 | 1,861 | |
Accrued asset retirement obligations - current | 18,373 | 6,943 | |
Taxes payable | 14,453 | 17,221 | |
Accrued general and administrative expenses | 2,250 | 21,825 | |
Other | 32,914 | 13,478 | |
Total | $ 191,598 | $ 112,671 | $ 174,320 |
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Dec. 31, 2020 |
Sep. 18, 2020 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Supplemental Cash Flow Information [Abstract] | ||||
Cash paid for interest, expensed | $ 813 | $ 29,357 | $ 4,227 | $ 72,842 |
Cash paid for interest, capitalized | 1,261 | 22,885 | 4,585 | 36,671 |
Cash paid for interest, treated as a reduction of debt | 0 | 46,417 | 0 | 85,303 |
Cash paid for income taxes | 0 | 453 | 184 | 2,361 |
Cash received from income tax refunds | 10,457 | 1,932 | 3 | 9,820 |
Noncash investing and financing activities | ||||
Increase in asset retirement obligations | 23,398 | 4,328 | 112,760 | 13,560 |
Increase (decrease) in liabilities for capital expenditures | 1,867 | (12,809) | 35,679 | (17,740) |
Conversion of convertible senior notes into common stock | $ 0 | $ 11,501 | $ 0 | $ 0 |