Delaware | 47-5381253 | |
(State of Incorporation) | (I.R.S. Employer Identification Number) | |
1001 Seventeenth Street, Suite 1800, Denver, Colorado | 80202 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer ý (Do not check if a smaller reporting company) | Smaller reporting company o | Emerging growth company ý |
Page | |||
• | our business strategy; |
• | our reserves; |
• | our drilling prospects, inventories, projects and programs; |
• | our ability to replace the reserves we produce through drilling and property acquisitions; |
• | our financial strategy, liquidity and capital required for our development program; |
• | our realized oil, natural gas and natural gas liquids (“NGL”) prices; |
• | the timing and amount of our future production of oil, natural gas and NGLs; |
• | our hedging strategy and results; |
• | our future drilling plans; |
• | our competition and government regulations; |
• | our ability to obtain permits and governmental approvals; |
• | our pending legal or environmental matters; |
• | our marketing of oil, natural gas and NGLs; |
• | our leasehold or business acquisitions; |
• | our costs of developing our properties; |
• | general economic conditions; |
• | credit markets; |
• | uncertainty regarding our future operating results; and |
• | our plans, objectives, expectations and intentions contained in this Form 10-Q that are not historical. |
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | — | $ | 134,083 | |||
Accounts receivable, net | 34,809 | 14,734 | |||||
Derivative instruments | 1,516 | 431 | |||||
Prepaid and other current assets | 2,431 | 2,078 | |||||
Total current assets | 38,756 | 151,326 | |||||
Oil and natural gas properties, successful efforts method | |||||||
Unproved properties | 2,122,262 | 1,905,661 | |||||
Proved properties | 1,006,202 | 605,853 | |||||
Accumulated depreciation, depletion and amortization | (73,687 | ) | (14,436) | ||||
Total oil and natural gas properties, net | 3,054,777 | 2,497,078 | |||||
Other property and equipment, net | 3,647 | 2,193 | |||||
Total property and equipment, net | 3,058,424 | 2,499,271 | |||||
Noncurrent assets | |||||||
Derivative instruments | 131 | — | |||||
Other noncurrent assets | 1,258 | 1,045 | |||||
Total assets | $ | 3,098,569 | $ | 2,651,642 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable and accrued expenses | $ | 119,508 | $ | 86,100 | |||
Derivative instruments | 185 | 5,361 | |||||
Total current liabilities | 119,693 | 91,461 | |||||
Noncurrent liabilities | |||||||
Revolving credit facility | 35,000 | — | |||||
Asset retirement obligations | 8,855 | 7,226 | |||||
Deferred tax liability | 9,069 | — | |||||
Derivative instruments | — | 20 | |||||
Total liabilities | 172,617 | 98,707 | |||||
Shareholders’ equity | |||||||
Preferred stock, $.0001 par value, 1,000,000 shares authorized: | |||||||
Series A: 1 share issued and outstanding | — | — | |||||
Series B: no shares issued and outstanding at June 30, 2017 and 104,400 shares issued and outstanding at December 31, 2016 | — | — | |||||
Common stock, $0.0001 par value, 620,000,000 shares authorized: | |||||||
Class A: 257,244,767 shares issued and 256,670,839 shares outstanding at June 30, 2017 and 201,091,646 shares issued and 200,835,049 shares outstanding at December 31, 2016 | 26 | 20 | |||||
Class C: 19,155,921 shares issued and outstanding | 2 | 2 | |||||
Additional paid-in capital | 2,700,473 | 2,364,049 | |||||
Retained earnings (accumulated deficit) | 21,656 | (8,929 | ) | ||||
Total shareholders’ equity | 2,722,157 | 2,355,142 | |||||
Noncontrolling interest | 203,795 | 197,793 | |||||
Total equity | 2,925,952 | 2,552,935 | |||||
Total liabilities and shareholders’ equity | $ | 3,098,569 | $ | 2,651,642 |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||||||||||
Net revenues | |||||||||||||||||
Oil sales | $ | 70,735 | $ | 20,361 | $ | 117,416 | $ | 33,587 | |||||||||
Natural gas sales | 12,133 | 1,775 | 20,374 | 3,088 | |||||||||||||
NGL sales | 8,196 | 1,211 | 14,371 | 1,793 | |||||||||||||
Total net revenues | 91,064 | 23,347 | 152,161 | 38,468 | |||||||||||||
Operating expenses | |||||||||||||||||
Lease operating expenses | 8,273 | 2,597 | 15,551 | 6,639 | |||||||||||||
Severance and ad valorem taxes | 4,723 | 1,247 | 7,910 | 2,091 | |||||||||||||
Gathering, processing and transportation expenses | 7,403 | 1,459 | 12,647 | 2,589 | |||||||||||||
Depreciation, depletion and amortization | 34,300 | 21,182 | 60,460 | 42,485 | |||||||||||||
Abandonment expense and impairment of unproved properties | — | 897 | (29 | ) | 897 | ||||||||||||
Exploration expense | 2,470 | 262 | 2,470 | 517 | |||||||||||||
General and administrative expenses | 10,641 | 2,607 | 22,706 | 4,888 | |||||||||||||
Total operating expenses | 67,810 | 30,251 | 121,715 | 60,106 | |||||||||||||
Total operating income (loss) | 23,254 | (6,904 | ) | 30,446 | (21,638 | ) | |||||||||||
Other income (expense) | |||||||||||||||||
Gain (loss) on sale of oil and natural gas properties | 7,191 | — | 7,357 | (4 | ) | ||||||||||||
Interest expense | (707 | ) | (1,798 | ) | (1,117 | ) | (3,439 | ) | |||||||||
Net gain (loss) on derivative instruments | 2,529 | (7,843 | ) | 6,288 | (5,925 | ) | |||||||||||
Other income | — | 6 | — | 6 | |||||||||||||
Other income (expense) | 9,013 | (9,635 | ) | 12,528 | (9,362 | ) | |||||||||||
Income (loss) before income taxes | 32,267 | (16,539 | ) | 42,974 | (31,000 | ) | |||||||||||
Income tax (expense) benefit | (9,069 | ) | 406 | (9,069 | ) | 406 | |||||||||||
Net income (loss) | 23,198 | (16,133 | ) | $ | 33,905 | $ | (30,594 | ) | |||||||||
Less: Net income attributable to noncontrolling interest | 2,436 | — | 3,320 | — | |||||||||||||
Net income (loss) attributable to common shareholders | $ | 20,762 | $ | (16,133 | ) | $ | 30,585 | $ | (30,594 | ) | |||||||
Income per share: | |||||||||||||||||
Basic | $ | 0.09 | $ | 0.14 | |||||||||||||
Diluted | $ | 0.09 | $ | 0.14 |
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||
Class A | Class C | Series A | Series B | Additional Paid-In Capital | (Accumulated Deficit) Retained Earnings | Total Shareholders’ Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | 201,092 | $ | 20 | 19,156 | $ | 2 | — | $ | — | 104 | $ | — | $ | 2,364,049 | $ | (8,929 | ) | $ | 2,355,142 | $ | 197,793 | $ | 2,552,935 | ||||||||||||||||||||||||
Warrants exercised | 6,236 | 1 | — | — | — | — | — | — | (1 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||
Restricted stock issued | 324 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Restricted stock forfeited | (7 | ) | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Conversion of Series B preferred shares to Class A common shares | 26,100 | 3 | — | — | — | — | (104 | ) | — | (3 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||
Sale of unregistered Class A common shares | 23,500 | 2 | — | — | — | — | — | — | 340,748 | 340,750 | — | 340,750 | |||||||||||||||||||||||||||||||||||
Underwriters' discount and offering expense | — | — | — | — | — | — | — | — | (7,233 | ) | — | (7,233 | ) | — | (7,233 | ) | |||||||||||||||||||||||||||||||
Equity based compensation | — | — | — | — | — | — | — | — | 5,595 | — | 5,595 | 5,595 | |||||||||||||||||||||||||||||||||||
Change in equity due to issuance of shares by Centennial Resource Production, LLC | — | — | — | — | — | — | — | — | (2,682 | ) | — | (2,682 | ) | 2,682 | — | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | 30,585 | 30,585 | 3,320 | 33,905 | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2017 | 257,245 | $ | 26 | 19,156 | $ | 2 | — | $ | — | — | $ | — | $ | 2,700,473 | $ | 21,656 | $ | 2,722,157 | $ | 203,795 | $ | 2,925,952 |
Successor | Predecessor | |||||||
For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 33,905 | $ | (30,594 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 60,460 | 42,485 | ||||||
Equity based compensation expense | 5,595 | — | ||||||
Abandonment expense and impairment of unproved properties | (29 | ) | 897 | |||||
Deferred tax expense (benefit) | 9,069 | (406 | ) | |||||
(Gain) loss on sale of oil and natural gas properties | (7,357 | ) | 4 | |||||
Non-cash portion of derivative (gain) loss | (6,412 | ) | 20,596 | |||||
Amortization of debt issuance costs | 214 | 244 | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | (20,567 | ) | 1,782 | |||||
Increase in prepaid and other assets | (172 | ) | (632 | ) | ||||
Increase in accounts payable and other liabilities | 18,434 | 1,228 | ||||||
Net cash provided by operating activities | 93,140 | 35,604 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of oil and natural gas properties | (405,244 | ) | (52,378 | ) | ||||
Drilling and development capital expenditures | (198,299 | ) | (33,044 | ) | ||||
Purchases of other property and equipment | (2,457 | ) | (33 | ) | ||||
Proceeds from sales of oil and natural gas properties | 10,675 | — | ||||||
Net cash used in investing activities | (595,325 | ) | (85,455 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of Class A common shares | 340,750 | — | ||||||
Underwriters discount and offering costs | (7,233 | ) | — | |||||
Proceeds from revolving credit facility | 50,000 | 55,000 | ||||||
Repayment of revolving credit facility | (15,000 | ) | (5,000 | ) | ||||
Financing obligation | — | (1,233 | ) | |||||
Debt issuance costs | (415 | ) | — | |||||
Net cash provided by financing activities | 368,102 | 48,767 | ||||||
Net decrease in cash and cash equivalents | (134,083 | ) | (1,084 | ) | ||||
Cash and cash equivalents, beginning of period | 134,083 | 1,768 | ||||||
Cash and cash equivalents, end of period | $ | — | $ | 684 | ||||
Supplemental cash flow information | ||||||||
Cash paid for interest | $ | 723 | $ | 3,089 | ||||
Supplemental non-cash activity | ||||||||
Accrued capital expenditures included in accounts payable and accrued expenses | $ | 80,651 | $ | 4,574 | ||||
Asset retirement obligations incurred, including changes in estimate | $ | 649 | $ | 134 |
(in thousands) | Silverback Acquisition | ||
Purchase price | $ | 867,772 | |
Allocation of purchase price: | |||
Unproved properties | 753,763 | ||
Proved properties | 116,700 | ||
Other property and equipment | 56 | ||
Liabilities | (2,747 | ) | |
Total | $ | 867,772 |
(in thousands) | June 30, 2017 | December 31, 2016 | |||||
Accrued oil and gas sales | $ | 26,742 | $ | 11,596 | |||
Joint interest billings | 7,713 | 2,942 | |||||
Hedge settlements | 292 | 194 | |||||
Other | 62 | 2 | |||||
Accounts receivable, net | $ | 34,809 | $ | 14,734 |
(in thousands) | June 30, 2017 | December 31, 2016 | |||||
Accounts payable | $ | 44,478 | $ | 11,210 | |||
Accrued capital expenditures | 56,228 | 24,038 | |||||
Revenues payable | 9,922 | 3,815 | |||||
Payable to Silverback | — | 32,293 | |||||
Accrued underwriting fees | — | 7,719 | |||||
Other | 8,880 | 7,025 | |||||
Accounts payable and accrued expenses | $ | 119,508 | $ | 86,100 |
2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||
Long-term debt | — | — | 35,000 | — | — |
(in thousands) | Six Months Ended June 30, 2017 | ||
Asset retirement obligations, beginning of period | $ | 7,226 | |
Additional liabilities incurred | 1,443 | ||
Liabilities settled | (29 | ) | |
Accretion expense | 233 | ||
Revision to estimated cash flows | (18 | ) | |
Asset retirement obligations, end of period | $ | 8,855 |
(in thousands) | For the Three Months Ended June 30, 2017 | For the Six Months Ended June 30, 2017 | |||||
Restricted stock awards | $ | 1,018 | $ | 1,874 | |||
Stock option awards | 1,967 | 3,721 | |||||
Total equity based compensation expense | $ | 2,985 | $ | 5,595 |
Awards | Weighted Average Grant-Date Fair Value | |||||
Service-based stock awards: | ||||||
Outstanding as of December 31, 2016 | 256,597 | $ | 20.03 | |||
Vested | — | $ | — | |||
Granted | 324,010 | $ | 18.77 | |||
Canceled | (6,679 | ) | $ | 18.81 | ||
Outstanding as of June 30, 2017 | 573,928 | $ | 19.33 |
Six Months Ended June 30, 2017 | |||
Weighted average grant-date fair value | $ | 7.15 | |
Expected term (in years) | 6 | ||
Expected stock volatility | 38.1 | % | |
Dividend yield | — | % | |
Risk-free interest rate | 2.0 | % |
Options | Weighted Average Exercise Price | Weighted Average Remaining Term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding as of December 31, 2016 | 2,735,500 | $ | 14.67 | 5.8 | $ | 13,804 | |||||||
Exercised | — | $ | — | — | $ | — | |||||||
Granted | 1,547,500 | $ | 17.97 | 5.6 | $ | 36 | |||||||
Forfeited | (223,000 | ) | $ | 14.54 | 5.3 | $ | 289 | ||||||
Outstanding as of June 30, 2017 | 4,060,000 | $ | 15.94 | 5.5 | $ | 3,018 | |||||||
Exercisable as of June 30, 2017 | — | $ | — | — | $ | — |
Period | Volume (Bbl) | Weighted Average Fixed Price ($/Bbl) | ||||||
Crude oil swaps | July 2017 - December 2017 | 340,400 | $ | 50.41 | ||||
January 2018 - December 2018 | 36,500 | $ | 55.95 | |||||
Crude oil basis swaps | July 2017 - November 2017 | 51,742 | $ | (0.20 | ) | |||
Period | Volume (MMBtu) | Weighted Average Fixed Price ($/MMBtu) | ||||||
Natural gas swaps | July 2017 - December 2017 | 736,000 | $ | 2.94 |
Successor | Predecessor | Successor | Predecessor | |||||||||||||||
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||||||||||
Net gain (loss) on derivative instruments | $ | 2,529 | $ | (7,843 | ) | $ | 6,288 | $ | (5,925 | ) |
June 30, 2017 | |||||||||||||
(in thousands) | Balance Sheet Classification | Gross Asset/Liability Amounts | Gross Amounts Offset (1) | Net Recognized Fair Value Assets/Liabilities | |||||||||
Derivative Assets | |||||||||||||
Derivative instruments | Current assets | $ | 1,675 | $ | (159 | ) | $ | 1,516 | |||||
Derivative instruments | Noncurrent assets | 131 | — | 131 | |||||||||
Total derivative assets | $ | 1,806 | $ | (159 | ) | $ | 1,647 | ||||||
Derivative Liabilities | |||||||||||||
Derivative instruments | Current liabilities | $ | 344 | $ | (159 | ) | $ | 185 | |||||
Total derivative liabilities | $ | 344 | $ | (159 | ) | $ | 185 |
(1) | The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination. |
December 31, 2016 | |||||||||||||
(in thousands) | Balance Sheet Classification | Gross Asset/Liability Amounts | Gross Amounts Offset (1) | Net Recognized Fair Value Assets/Liabilities | |||||||||
Derivative Assets | |||||||||||||
Derivative instruments | Current assets | $ | 739 | $ | (308 | ) | $ | 431 | |||||
Total derivative assets | $ | 739 | $ | (308 | ) | $ | 431 | ||||||
Derivative Liabilities | |||||||||||||
Derivative instruments | Current liabilities | $ | 5,669 | $ | (308 | ) | $ | 5,361 | |||||
Derivative instruments | Noncurrent Liabilities | 20 | — | 20 | |||||||||
Total derivative liabilities | $ | 5,689 | $ | (308 | ) | $ | 5,381 |
(1) | The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination. |
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||
Commodity derivative asset (liability) | |||||||||||
June 30, 2017 | $ | — | $ | 1,462 | $ | — | |||||
December 31, 2016 | — | (4,950 | ) | — |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | |||||||||||||
Net income attributable to noncontrolling interest | $ | 2,436 | $ | — | $ | 3,320 | $ | — |
(in thousands, except per share data) | For the Three Months Ended June 30, 2017 | For the Six Months Ended June 30, 2017 | |||||
Net income attributable to common shareholders | $ | 20,762 | $ | 30,585 | |||
Add: Income from conversion of Class C Common Stock | 1,477 | 1,995 | |||||
Adjusted net income attributable to common shareholders | 22,239 | 32,580 | |||||
Basic net earnings per share | $ | 0.09 | $ | 0.14 | |||
Diluted net earnings per share | $ | 0.09 | $ | 0.14 | |||
Basic weighted average shares outstanding | 223,623 | 212,759 | |||||
Add: Dilutive effects of equity awards | 925 | 2,046 | |||||
Add: Dilutive effects of conversion | 19,156 | 19,156 | |||||
Diluted weighted average shares outstanding | 243,704 | 233,961 |
2015 | 2016 | 2017 | |||||||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||||||||||||||||||||||||
Crude oil (per Bbl) | $ | 48.62 | $ | 57.84 | $ | 46.60 | $ | 42.16 | $ | 33.59 | $ | 45.70 | $ | 45.00 | $ | 49.27 | $ | 51.82 | $ | 48.32 | |||||||||||||||||||
Natural gas (per MMBtu) | $ | 2.81 | $ | 2.74 | $ | 2.73 | $ | 2.24 | $ | 1.98 | $ | 2.25 | $ | 2.80 | $ | 3.17 | $ | 3.06 | $ | 3.14 |
Successor | Predecessor | Increase/(Decrease) | |||||||||||||
For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | $ | % | ||||||||||||
Net revenues (in thousands): | |||||||||||||||
Oil sales | $ | 70,735 | $ | 20,361 | $ | 50,374 | 247 | % | |||||||
Natural gas sales | 12,133 | 1,775 | 10,358 | 584 | % | ||||||||||
NGL sales | 8,196 | 1,211 | 6,985 | 577 | % | ||||||||||
Total net revenues | $ | 91,064 | $ | 23,347 | $ | 67,717 | 290 | % | |||||||
Average sales prices: | |||||||||||||||
Oil (per Bbl) | $ | 44.57 | $ | 41.64 | $ | 2.93 | 7 | % | |||||||
Effect of derivative settlements on average price (per Bbl) | 0.24 | 12.36 | (12.12 | ) | (98 | )% | |||||||||
Oil net of hedging (per Bbl) | $ | 44.81 | $ | 54.00 | $ | (9.19 | ) | (17 | )% | ||||||
Average NYMEX price for oil (per Bbl) | $ | 48.32 | $ | 45.70 | $ | 2.62 | 6 | % | |||||||
Natural gas (per Mcf) | $ | 2.78 | $ | 2.04 | $ | 0.74 | 36 | % | |||||||
Effect of derivative settlements on average price (per Mcf) | (0.02 | ) | — | (0.02 | ) | 100 | % | ||||||||
Natural gas net of hedging (per Mcf) | $ | 2.76 | $ | 2.04 | $ | 0.72 | 35 | % | |||||||
Average NYMEX price for natural gas (per Mcf) | $ | 3.14 | $ | 2.25 | $ | 0.89 | 40 | % | |||||||
NGL (per Bbl) | $ | 21.34 | $ | 15.33 | $ | 6.01 | 39 | % | |||||||
Net production: | |||||||||||||||
Oil (MBbls) | 1,587 | 489 | 1,098 | 225 | % | ||||||||||
Natural gas (MMcf) | 4,372 | 869 | 3,503 | 403 | % | ||||||||||
NGLs (MBbls) | 384 | 79 | 305 | 386 | % | ||||||||||
Total (MBoe) (1) | 2,700 | 713 | 1,987 | 279 | % | ||||||||||
Average daily net production volume: | |||||||||||||||
Oil (Bbls/d) | 17,435 | 5,374 | 12,061 | 224 | % | ||||||||||
Natural gas (Mcf/d) | 48,042 | 9,549 | 38,493 | 403 | % | ||||||||||
NGLs (Bbls/d) | 4,222 | 868 | 3,354 | 386 | % | ||||||||||
Total (Boe/d) (1) | 29,664 | 7,833 | 21,831 | 279 | % |
(1) | Calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil. |
Successor | Predecessor | Increase/(Decrease) | |||||||||||||
For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | $ | % | ||||||||||||
Operating expenses (in thousands): | |||||||||||||||
Lease operating expenses | $ | 8,273 | $ | 2,597 | $ | 5,676 | 219 | % | |||||||
Severance and ad valorem taxes | 4,723 | 1,247 | 3,476 | 279 | % | ||||||||||
Gathering, processing and transportation expenses | 7,403 | 1,459 | 5,944 | 407 | % | ||||||||||
Production costs per Boe: | |||||||||||||||
Lease operating expenses | $ | 3.06 | $ | 3.64 | $ | (0.58 | ) | (16 | )% | ||||||
Severance and ad valorem taxes | 1.75 | 1.75 | — | — | % | ||||||||||
Gathering, processing and transportation expenses | 2.74 | 2.05 | 0.69 | 34 | % |
Successor | Predecessor | |||||||
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | ||||||
Depreciation, depletion and amortization | $ | 34,300 | $ | 21,182 | ||||
Depreciation, depletion and amortization per Boe | 12.70 | 29.71 |
Successor | Predecessor | |||||||
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | ||||||
Equity based compensation expense | $ | 667 | $ | — | ||||
Geological and geophysical costs | 1,803 | 262 | ||||||
Exploration expense | $ | 2,470 | $ | 262 |
Successor | Predecessor | |||||||
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | ||||||
Equity based compensation expense | $ | 2,318 | $ | — | ||||
Cash general and administrative expenses | 8,323 | 2,607 | ||||||
General and administrative expenses | $ | 10,641 | $ | 2,607 |
Successor | Predecessor | |||||||
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | ||||||
Other income (expense) | ||||||||
Gain on sale of oil and natural gas properties | $ | 7,191 | $ | — | ||||
Interest expense | (707 | ) | (1,798 | ) | ||||
Net gain (loss) on derivative instruments | 2,529 | (7,843 | ) | |||||
Other income | $ | — | $ | 6 | ||||
Total other income (expense) | $ | 9,013 | $ | (9,635 | ) | |||
Income tax (expense) benefit | $ | (9,069 | ) | $ | 406 |
Successor | Predecessor | Increase/(Decrease) | |||||||||||||
For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | $ | % | ||||||||||||
Net revenues (in thousands): | |||||||||||||||
Oil sales | $ | 117,416 | $ | 33,587 | $ | 83,829 | 250 | % | |||||||
Natural gas sales | 20,374 | 3,088 | 17,286 | 560 | % | ||||||||||
NGL sales | 14,371 | 1,793 | 12,578 | 702 | % | ||||||||||
Total net revenues | $ | 152,161 | $ | 38,468 | $ | 113,693 | 296 | % | |||||||
Average sales prices: | |||||||||||||||
Oil (per Bbl) | $ | 46.39 | $ | 35.02 | $ | 11.37 | 32 | % | |||||||
Effect of derivative settlements on average price (per Bbl) | 0.05 | 15.30 | (15.25 | ) | (100 | )% | |||||||||
Oil net of hedging (per Bbl) | $ | 46.44 | $ | 50.32 | $ | (3.88 | ) | (8 | )% | ||||||
Average NYMEX price for oil (per Bbl) | $ | 50.05 | 39.69 | 10.36 | 26 | % | |||||||||
Natural gas (per Mcf) | $ | 2.83 | $ | 1.97 | $ | 0.86 | 44 | % | |||||||
Effect of derivative settlements on average price (per Mcf) | (0.04 | ) | — | (0.04 | ) | 100 | % | ||||||||
Natural gas net of hedging (per Mcf) | $ | 2.79 | $ | 1.97 | $ | 0.82 | 42 | % | |||||||
Average NYMEX price for natural gas (per Mcf) | $ | 3.10 | 2.11 | 0.99 | 47 | % | |||||||||
NGL (per Bbl) | $ | 22.81 | $ | 12.03 | $ | 10.78 | 90 | % | |||||||
Net production: | |||||||||||||||
Oil (MBbls) | 2,531 | 959 | 1,572 | 164 | % | ||||||||||
Natural gas (MMcf) | 7,205 | 1,567 | 5,638 | 360 | % | ||||||||||
NGLs (MBbls) | 630 | 149 | 481 | 323 | % | ||||||||||
Total (MBoe) (1) | 4,362 | 1,369 | 2,993 | 219 | % | ||||||||||
Average daily net production volume: | |||||||||||||||
Oil (Bbls/d) | 13,982 | 5,269 | 8,713 | 165 | % | ||||||||||
Natural gas (Mcf/d) | 39,807 | 8,610 | 31,197 | 362 | % | ||||||||||
NGLs (Bbls/d) | 3,481 | 819 | 2,662 | 325 | % | ||||||||||
Total (Boe/d) (1) | 24,097 | 7,523 | 16,574 | 220 | % |
(1) | Calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil. |
Successor | Predecessor | Increase/(Decrease) | |||||||||||||
For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | $ | % | ||||||||||||
Operating Expenses (in thousands): | |||||||||||||||
Lease operating expenses | $ | 15,551 | $ | 6,639 | $ | 8,912 | 134 | % | |||||||
Severance and ad valorem taxes | 7,910 | 2,091 | 5,819 | 278 | % | ||||||||||
Gathering, processing and transportation expenses | 12,647 | 2,589 | 10,058 | 388 | % | ||||||||||
Production costs per Boe: | |||||||||||||||
Lease operating expenses | $ | 3.57 | $ | 4.85 | $ | (1.28 | ) | (26 | )% | ||||||
Severance and ad valorem taxes | 1.81 | 1.53 | 0.28 | 18 | % | ||||||||||
Gathering, processing and transportation expenses | 2.90 | 1.89 | 1.01 | 53 | % |
Successor | Predecessor | |||||||
(in thousands) | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||
Depreciation, depletion and amortization | $ | 60,460 | $ | 42,485 | ||||
Depreciation, depletion and amortization per Boe | 13.86 | 31.03 |
Successor | Predecessor | |||||||
(in thousands) | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||
Equity based compensation expense | $ | 667 | $ | — | ||||
Geological and geophysical costs | 1,803 | 517 | ||||||
Exploration expense | $ | 2,470 | $ | 517 |
Successor | Predecessor | |||||||
(in thousands) | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||
Equity based compensation expense | $ | 4,928 | $ | — | ||||
Cash general and administrative expenses | 17,778 | 4,888 | ||||||
General and administrative expenses | $ | 22,706 | $ | 4,888 |
Successor | Predecessor | |||||||
(in thousands) | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||
Other income (expense): | ||||||||
Gain (loss) on sale of oil and natural gas properties | 7,357 | (4 | ) | |||||
Interest expense | $ | (1,117 | ) | $ | (3,439 | ) | ||
Net gain (loss) on derivative instruments | 6,288 | (5,925 | ) | |||||
Other income | — | 6 | ||||||
Total other income (expense) | $ | 12,528 | $ | (9,362 | ) | |||
Income tax (expense) benefit | $ | (9,069 | ) | $ | 406 |
(in millions) | Six Months Ended June 30, 2017 | ||
Drilling and completion capital expenditures | $ | 235.1 | |
Land and other | 26.3 | ||
Facilities, seismic and other | 9.0 | ||
Total capital expenditures | 270.4 |
Successor | Predecessor | |||||||
(in thousands) | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||
Net cash provided by operating activities | $ | 93,140 | $ | 35,604 | ||||
Net cash used in investing activities | (595,325 | ) | (85,455 | ) | ||||
Net cash provided by financing activities | 368,102 | 48,767 |
Description & Production Period | Volume (Bbl) | Weighted Average Fixed Price ($/Bbl) (1) | ||||
Crude Oil Swaps: | ||||||
July 2017 - December 2017 | 46,000 | $ | 64.05 | |||
July 2017 - December 2017 | 18,400 | 54.65 | ||||
July 2017 - December 2017 | 18,400 | 43.50 | ||||
July 2017 - December 2017 | 18,400 | 44.85 | ||||
July 2017 - December 2017 | 18,400 | 45.10 | ||||
July 2017 - December 2017 | 55,200 | 44.80 | ||||
July 2017 - December 2017 | 18,400 | 47.27 | ||||
July 2017 - December 2017 | 18,400 | 49.00 | ||||
July 2017 - December 2017 | 92,000 | 49.80 | ||||
July 2017 - December 2017 | 36,800 | 52.35 | ||||
January 2018 - December 2018 | 36,500 | 55.95 | ||||
Crude Oil Basis Swaps: | ||||||
July 2017 - November 2017 | 36,958 | $ | (0.20 | ) | ||
July 2017 - November 2017 | 14,784 | (0.20 | ) |
(1) | The oil swap contracts are settled based on the month’s average daily NYMEX price of West Texas Intermediate Light Sweet Crude. The oil basis derivative contracts are settled based on the difference between the arithmetic average of WTI MIDLAND ARGUS and WTI ARGUS during the relevant calculation period. |
Description & Production Period | Volume (MMBtu) | Weighted Average Fixed Price ($/MMBtu) (1) | ||||
Natural Gas Swaps: | ||||||
July 2017 - December 2017 | 736,000 | $ | 2.94 |
(1) | The natural gas derivative contracts are settled based on the month’s average daily NYMEX price of Henry Hub Natural Gas. |
Exhibit Number | Description of Exhibit | |
2.1 | Purchase and Sale Agreement, dated April 28, 2017, between GMT Exploration Company LLC and Centennial Resource Production, LLC (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2017). | |
3.1 | Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 11, 2016). | |
3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 7, 2016). | |
3.3 | Fifth Amended and Restated Limited Liability Company Agreement of Centennial Resource Production, LLC dated as of October 11, 2016 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 11, 2016). | |
3.4 | Amendment No. 1 to Fifth Amended and Restated Limited Liability Company Agreement of Centennial Resource Production, LLC dated as of December 28, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 29, 2016). | |
3.5 | Amendment No. 2 to Fifth Amended and Restated Limited Liability Company Agreement of Centennial Resource Production, LLC dated as of March 20, 2017 (incorporated by reference to Exhibit 3.5 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 23, 2017). | |
10.1 | Fourth Amendment to Amended and Restated Credit Agreement, dated as of April 28, 2017, by and among Centennial Resource Production, LLC, as borrower, and JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2017). | |
10.2 | Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 5, 2017). | |
31.1* | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | |
32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. | |
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema Document. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
CENTENNIAL RESOURCE DEVELOPMENT, INC. | ||
By: | /s/ GEORGE S. GLYPHIS | |
George S. Glyphis Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer) | ||
Date: | August 8, 2017 |
1. | I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Centennial Resource Development, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
CENTENNIAL RESOURCE DEVELOPMENT, INC. | ||
By: | /s/ MARK G. PAPA | |
Mark G. Papa Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Centennial Resource Development, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
CENTENNIAL RESOURCE DEVELOPMENT, INC. | ||
By: | /s/ GEORGE S. GLYPHIS | |
George S. Glyphis Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer) |
CENTENNIAL RESOURCE DEVELOPMENT, INC. | ||
By: | /s/ MARK G. PAPA | |
Mark G. Papa Chief Executive Officer (Principal Executive Officer) |
CENTENNIAL RESOURCE DEVELOPMENT, INC. | ||
By: | /s/ GEORGE S. GLYPHIS | |
George S. Glyphis Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 07, 2017 |
|
Document And Entity Information [Line Items] | ||
Entity Registrant Name | Centennial Resource Development, Inc. | |
Entity Central Index Key | 0001658566 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Stock Class A | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 256,670,839 | |
Common Stock Class C | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 19,155,921 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Common stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (shares) | 620,000,000 | 620,000,000 |
Series A Preferred Stock | ||
Preferred stock, shares issued (shares) | 1 | 1 |
Preferred stock, shares outstanding (shares) | 1 | 1 |
Series B Preferred Stock | ||
Preferred stock, shares issued (shares) | 0 | 104,400 |
Preferred stock, shares outstanding (shares) | 0 | 104,400 |
Common Stock Class A | ||
Common stock, shares issued (shares) | 257,244,767 | 201,091,646 |
Common stock, shares outstanding (shares) | 256,670,839 | 200,835,049 |
Common Stock Class C | ||
Common stock, shares issued (shares) | 19,155,921 | 19,155,921 |
Common stock, shares outstanding (shares) | 19,155,921 | 19,155,921 |
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) Statement - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands |
Total |
Common Stock Class A |
Common Stock Class C |
Series A Preferred Stock |
Series B Preferred Stock |
Common Stock
Common Stock Class A
|
Common Stock
Common Stock Class C
|
Preferred Stock
Series A Preferred Stock
|
Preferred Stock
Series B Preferred Stock
|
Additional Paid-In Capital |
Additional Paid-In Capital
Common Stock Class A
|
(Accumulated Deficit) Retained Earnings |
Total Shareholders’ Equity |
Total Shareholders’ Equity
Common Stock Class A
|
Noncontrolling Interest |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common shares outstanding at beginning of period (in shares) at Dec. 31, 2016 | 200,835,049 | 19,155,921 | 201,092,000 | 19,156,000 | |||||||||||
Balance at beginning of period at Dec. 31, 2016 | $ 2,552,935 | $ 20 | $ 2 | $ 0 | $ 0 | $ 2,364,049 | $ (8,929) | $ 2,355,142 | $ 197,793 | ||||||
Preferred shares outstanding at beginning of period (in shares) at Dec. 31, 2016 | 1 | 104,400 | 0 | 104,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Warrants exercised (in shares) | 6,236,000 | ||||||||||||||
Warrants exercised | 0 | $ 1 | (1) | ||||||||||||
Restricted stock issued (in shares) | 324,000 | ||||||||||||||
Restricted stock forfeited (in shares) | (7,000) | ||||||||||||||
Conversion of class b preferred to class a common (in shares) | 26,100,000 | (104,000) | |||||||||||||
Conversion of class b preferred to class a common | $ 3 | (3) | |||||||||||||
Sale of unregistered class a common shares (in shares) | 23,500,000 | ||||||||||||||
Sale of unregistered class a common shares | $ 340,750 | $ 2 | $ 340,748 | $ 340,750 | |||||||||||
Underwriters discount and offering costs | (7,233) | (7,233) | (7,233) | ||||||||||||
Equity based compensation | 5,595 | 5,595 | 5,595 | ||||||||||||
Change in equity due to issuance of shares by Centennial Resource Production, LLC | 0 | (2,682) | (2,682) | 2,682 | |||||||||||
Net income (loss) | 33,905 | 30,585 | 30,585 | 3,320 | |||||||||||
Common shares outstanding at end of period (in shares) at Jun. 30, 2017 | 256,670,839 | 19,155,921 | 257,245,000 | ||||||||||||
Balance at end of period at Jun. 30, 2017 | $ 2,925,952 | $ 26 | $ 2 | $ 0 | $ 0 | $ 2,700,473 | $ 21,656 | $ 2,722,157 | $ 203,795 | ||||||
Preferred shares outstanding at end of period (in shares) at Jun. 30, 2017 | 1 | 0 | 0 | 0 |
Basis of Presentation and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1—Basis of Presentation and Summary of Significant Accounting Policies Description of Business Centennial Resource Development, Inc. (the “Company” or “Centennial”) was originally incorporated in Delaware on November 4, 2015 as a special purpose acquisition company under the name Silver Run Acquisition Corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses. On February 29, 2016, the Company consummated its initial public offering of Units each consisting of one share of Class A Common Stock and one-third of one Public Warrant. On October 11, 2016, the Company consummated the acquisition of approximately 89% of the outstanding membership interests in Centennial Resource Production, LLC, a Delaware limited liability company (“CRP” and such acquisition, the “Business Combination”). In connection with the closing of the Business Combination, the Company changed its name from "Silver Run Acquisition Corporation" to "Centennial Resource Development, Inc." CRP was formed in August 2012 by an affiliate of NGP Energy Capital Management, a family of energy-focused private equity investment funds, in connection with the acquisition of all of the oil and natural gas properties and certain other assets of Celero, which was formed in 2006 to focus on the development and acquisition of oil and natural gas properties in Texas and New Mexico, primarily in the Permian Basin in West Texas. Until the closing of the Business Combination, CRP operated as a privately-held independent oil and natural gas company. The Company’s Class A Common Stock trades on The NASDAQ Capital Market (“NASDAQ”) under the ticker symbol “CDEV.” The Units automatically separated into their component securities prior to or upon closing of the Business Combination and, as a result, no longer trade as a separate security. All of the Company’s Public Warrants were either exercised for shares of Class A Common Stock or, following March 31, 2017, redeemed for $0.01 per Public Warrant and, as a result, the Public Warrants no longer trade on NASDAQ. The consolidated financial statements include the accounts of the Company and CRP and its wholly-owned subsidiaries. Unless otherwise specified or the context otherwise requires, all references in these notes to “Centennial” or the “Company” are to Centennial Resource Development, Inc. and its consolidated subsidiaries. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. Accordingly, certain disclosures required by U.S. GAAP and normally included in an Annual Report on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with our 2016 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. Certain prior period amounts have been reclassified to conform to the current presentation on the accompanying condensed consolidated financial statements. The Company has evaluated subsequent events through the date of this filing. As a result of the Business Combination, the Company is the acquirer for accounting purposes, and CRP is the acquiree and accounting Predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for CRP for periods prior to the Business Combination. The Company is the “Successor” for periods after the Business Combination, which includes consolidation of CRP subsequent to the Business Combination on October 11, 2016. The Business Combination was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. As a result of the application of the acquisition method of accounting as of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on a different basis of accounting. Principles of Consolidation The consolidated financial statements included herein have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and its majority owned subsidiary CRP, and CRP’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the Company’s consolidated and combined financial statements requires the Company’s management to make various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts previously established. The more significant areas requiring the use of assumptions, judgments and estimates include: (1) oil and natural gas reserves; (2) cash flow estimates used in impairment tests of long-lived assets; (3) depreciation, depletion and amortization; (4) asset retirement obligations; (5) determining fair value and allocating purchase price in connection with business combinations; (6) valuation of derivative instruments; and (7) accrued revenue and related receivables. Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This update affects all reporting entities and the objective of the guidance is to assist with evaluation of whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The mandatory effective date for this update is for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied prospectively on or after the effective date and disclosures are not required at transition. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company early adopted ASU 2017-01 in the second quarter of 2017. Refer to Note 2—Property Acquisitions for details of the GMT Acquisition. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. This update applies to all entities that are required to present a statement of cash flows. This update provides guidance on eight specific cash flow issues: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. This update will be effective for financial statements issued for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years with early adoption permitted. This update should be applied using the retrospective transition method. Adoption of this standard will only affect the presentation of the Company’s cash flows and will not have a material impact on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. This update clarifies two principles of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers: identifying performance obligations and the licensing implementation guidance. This standard has the same effective date as ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), the revenue recognition standard discussed below. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation. This update applies to all entities that issue equity-based payment awards to their employees. Under this update, there were several areas that were simplified including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early adoption permitted. The Company elected to early adopt this guidance in October 2016 in conjunction with the issuance of its equity awards. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net). Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for annual and interim reporting periods beginning after December 15, 2017, with early application not permitted. This update allows for either full retrospective adoption, meaning this update is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning this update is applied only to the most current period presented. The Company is currently evaluating the impact, if any, that the adoption of this update will have on its financial position, results of operations and liquidity. In February 2016, the FASB issued ASU 2016-02, Leases. This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Although the Company is still in the process of evaluating the effect of adopting ASU 2016-02, the adoption is expected to result in the recognition of assets and liabilities on its consolidated balance sheet for current operating leases. As of December 31, 2016, the Company had approximately $17.0 million of contractual obligations related to its non-cancelable leases, and it will evaluate those contracts as well as other existing arrangements to determine if they qualify for lease accounting under ASU 2016-02. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. In addition, new qualitative and quantitative disclosure requirements aim to enable financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for one year to fiscal years beginning after December 15, 2017. In May 2016, the FASB issued ASU 2016-11, which rescinds guidance from the SEC on accounting for gas balancing arrangements and will eliminate the use of the entitlements method. The standards permit retrospective application using either of the following methodologies: (i) restatement of each prior reporting period presented or (ii) recognition of a cumulative-effect adjustment as of the date of initial application. The Company plans to adopt these ASUs effective January 1, 2018. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. |
Property Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Property Acquisitions | Note 2—Property Acquisitions 2017 Acquisition On June 8, 2017, the Company completed the GMT Acquisition and acquired interests in 36 producing horizontal wells plus undeveloped acreage on approximately 11,850 net acres (14,770 gross acres) in Lea County, New Mexico for an unadjusted purchase price of $350.0 million. The Company operates approximately 79% of, and has an approximate 85% average working interest, in this acreage. The acquired acres are located in the Northern Delaware Basin with drilling locations in the Avalon Shale, 2nd Bone Spring Sand, 3rd Bone Spring Sand and Wolfcamp A formations. The GMT Acquisition was recorded as an asset acquisition under ASU 2017-01. Accordingly, the GMT purchase consideration has been allocated to the GMT oil and natural gas properties based on their relative fair values measured as of the acquisition date. After settlement statement adjustments of $0.9 million, the Company paid a net purchase price of $349.1 million. On a relative fair value basis, $296.2 million was allocated to unproved properties and $53.2 million to proved properties. Transaction costs as they relate to the GMT Acquisition mainly consist of advisory, legal and accounting fees and are capitalized as incurred, and the Company has incurred $0.4 million in capitalized transaction costs related to this acquisition as of June 30, 2017. 2016 Acquisition In December 2016, the Company acquired interests in 31 producing horizontal wells plus undeveloped acreage on approximately 35,500 net acres (43,500 gross acres) in Reeves County, Texas for an unadjusted purchase price of $855.0 million, which consisted of cash consideration paid by the Company and a $32.3 million payable at December 31, 2016 that was settled in 2017 when title issues relating to the purchased acreage were satisfied. The Company operates approximately 90% of, and has an approximate 90% working interest in this acreage. The Wolfcamp A and Wolfcamp B are producing horizons on this acreage, and the Company believes that this acreage may be prospective for the Wolfcamp C and Avalon and Bone Spring shale formations. The Silverback Acquisition was recorded using the acquisition method of accounting for business combinations. The allocation of the purchase price is based upon management’s estimates and assumptions related to the fair value of assets acquired and liabilities assumed on the acquisition date using currently available information. Transaction costs relating to this purchase were expensed as incurred. The initial accounting for the Silverback Acquisition is preliminary, and adjustments to provisional amounts (such as certain accrued liabilities) or recognition of additional assets acquired or liabilities assumed, may occur as additional information is obtained about facts and circumstances that existed as of the acquisition date. Since the acquisition date, the Company has recorded adjustments to provisional amounts totaling $0.3 million. These adjustments did not have a material impact on the Company’s previously reported consolidated financial statements, and therefore the Company has not retrospectively adjusted those financial statements. The table below summarizes the allocation of the $867.8 million adjusted purchase price, based on the acquisition date fair value of the assets acquired and the liabilities assumed as of June 30, 2017:
The pro forma effects of the Silverback Acquisition were insignificant to the Company’s 2016 results of operations. |
Accounts Receivable, Accounts Payable and Accrued Expenses |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Accounts Payable and Accrued Expenses | Note 3—Accounts Receivable, Accounts Payable and Accrued Expenses Accounts receivable are comprised of the following:
Accounts payable and accrued expenses are comprised of the following:
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Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 4—Long-Term Debt Credit Agreement CRP, the Company’s consolidated subsidiary, has a credit agreement with a syndicate of banks that as of June 30, 2017 had a borrowing base of $350.0 million, which has been committed by lenders and is available for borrowing. A portion of the revolving credit facility in an aggregate amount not to exceed $15.0 million may be used to issue letters of credit for the account of CRP or other designated subsidiaries of the Company. As of June 30, 2017, the Company had $314.1 million in available borrowing capacity, which was net of $35.0 million in borrowings and $0.9 million in letters of credit outstanding. The amount available to be borrowed under CRP's revolving credit facility is subject to a borrowing base that is redetermined semi-annually each April 1 and October 1 by the lenders in their sole discretion. CRP's credit agreement also allows for two optional borrowing base redeterminations on January 1 and July 1. The borrowing base depends on, among other things, the volumes of CRP’s proved oil and natural gas reserves and estimated cash flows from these reserves and its commodity hedge positions. The borrowing base will automatically be decreased by an amount equal to 25% of the aggregate notional amount of issued permitted senior unsecured notes unless such decrease is waived by the lenders. Upon a redetermination of the borrowing base, if borrowings in excess of the revised borrowing capacity are outstanding, CRP could be required to immediately repay a portion of its debt outstanding under its credit agreement. The credit facility provides for interest only payments until October 15, 2019, when the credit agreement expires and all outstanding borrowings are due. The following table shows five succeeding fiscal years of scheduled maturities for the Company’s long-term debt as of June 30, 2017 (in thousands):
Interest and commitment fees are accrued based on a borrowing base utilization grid set forth in the credit agreement and are discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” later in this report. Commitment fees are accrued on the unused portion of the aggregate lender commitment amount and are included in interest expense in the accompanying statements of operations. CRP’s credit agreement contains restrictive covenants that limit its ability to, among other things: incur additional indebtedness; make investments and loans; enter into mergers; make or declare dividends; enter into commodity hedges exceeding a specified percentage of our expected production; enter into interest rate hedges exceeding a specified percentage of our outstanding indebtedness; incur liens; sell assets; and engage in transactions with affiliates. CRP’s credit agreement also requires it to maintain compliance with the following financial ratios: (1) a current ratio, which is the ratio of CRP’s consolidated current assets (including unused commitments under its revolving credit facility and excluding non-cash assets under Financial Accounting Standards Board FASB Accounting Standard Codification ASC Topic 815, Derivatives and Hedging and certain restricted cash) to its consolidated current liabilities (excluding the current portion of long-term debt under our credit agreement and non-cash liabilities under ASC 815), of not less than 1.0 to 1.0; and (2) a leverage ratio, which is the ratio of Total Funded Debt (as defined in CRP’s credit agreement) to consolidated EBITDAX (as defined in CRP’s credit agreement) for the rolling four fiscal quarter period ending on such day, of not greater than 4.0 to 1.0. CRP was in compliance with the covenants and the financial ratios described above as of June 30, 2017 and through the filing of this report. |
Asset Retirement Obligations |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Asset Retirement Obligations | Note 5—Asset Retirement Obligations The following table summarizes the changes in the Company’s asset retirement obligations (“AROs”) for the six months ended June 30, 2017:
Asset retirement obligations reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage and land restoration in accordance with applicable local, state and federal laws. Inherent in the fair value calculation of the AROs are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates and timing of settlement. To the extent future revisions to these assumptions impact the value of the existing ARO liability, a corresponding adjustment is made to the oil and natural gas property balance. |
Equity Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Based Compensation | Note 6—Equity Based Compensation The Company has recognized stock-based compensation cost as shown below. Historical amounts may not be representative of future amounts as the value of future awards may vary from historical amounts.
Equity Incentive Plan On October 7, 2016, the stockholders of the Company approved the Centennial Resource Development, Inc. 2016 Long Term Incentive Plan (the “LTIP”). An aggregate of 16,500,000 shares of Class A Common Stock were authorized for issuance under the LTIP, and as of June 30, 2017, the Company had 11,866,072 shares of Class A Common Stock available for future grants. The LTIP provides for grants of stock options, including incentive stock options (“ISOs”) and nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash based awards. Restricted Stock The following table provides information about restricted stock awards granted during the six months ended June 30, 2017:
Compensation cost for the service-based vesting restricted shares is based upon the grant-date market value of the award. Such costs are recognized ratably over the applicable vesting period. Unrecognized compensation cost related to unvested restricted shares at June 30, 2017 was $8.8 million. The Company expects to recognize that cost over a weighted average period of 2.4 years. Stock Options Options that have been granted under the LTIP expire ten years from the grant date and have service-based vesting schedules of three years. The exercise price for an option under the LTIP is the closing price of the Company’s Class A Common Stock as reported by NASDAQ on the date of grant. Compensation cost related to stock options is based on the grant-date fair value of the award, recognized ratably over the applicable vesting period. The Company estimates the fair value using the Black-Scholes option-pricing model. Expected volatilities are based on the re-levered asset volatility implied by a set of comparable companies. Expected term is based on the simplified method, and is estimated as the average of the weighted average vesting term and the time to expiration as of the grant date. The Company uses U.S. Treasury bond rates in effect at the grant date for its risk-free interest rates. The following table summarizes the assumptions and related information used to determine the grant date fair value of stock options awarded during the six months ended June 30, 2017:
Information about outstanding stock options is summarized in the table below:
As of June 30, 2017, there was $21.2 million of unrecognized compensation cost related to non-vested stock options. The Company expects to recognize that cost on a pro rata basis over a weighted average period of 2.5 years. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Note 7—Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations, and it uses derivative instruments mainly to manage its commodity price risk. Commodity Derivative Contracts Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. The Company periodically uses derivative instruments, such as costless collars and swaps, to mitigate its exposure to declines in commodity prices and to the corresponding negative impacts such declines can have on its cash flow available for reinvestment. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes. The following table summarizes the approximate volumes and average contract prices of swap contracts the Company had in place as of June 30, 2017:
Commodity Swap Contracts. In a typical commodity swap agreement, if the agreed upon published third-party index price (“index price”) is lower than the swap fixed price, the Company receives the difference between the index price and the agreed upon swap fixed price. If the index price is higher than the swap fixed price, the Company pays the difference. In addition, the Company has entered into basis swap contracts in order to hedge the difference between the NYMEX index price and a local index price. When the actual differential exceeds the fixed price provided by the basis swap contract, the Company receives the difference from the counterparty; when the differential is less than the fixed price provided by the basis swap contract, the Company pays the difference to the counterparty. Derivative Instrument Reporting. The Company’s oil and natural gas derivative instruments have not been designated as hedges for accounting purposes; therefore, all gains and losses are recognized in the Company’s condensed consolidated statements of operations. All derivative instruments are recorded at fair value in the condensed consolidated balance sheets, other than derivative instruments that meet the “normal purchase normal sale” exclusion, and any gains and losses are recognized in current period earnings. The following table presents gains and losses for derivative instruments not designated as hedges for accounting purposes for the periods presented:
Offsetting of Derivative Assets and Liabilities. The Company’s commodity derivatives are measured at fair value and are included in the accompanying condensed consolidated balance sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the condensed consolidated balance sheets:
Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are lenders under CRP’s credit agreement. The Company uses only credit agreement participants to hedge with, since these institutions are secured equally with the holders of any CRP bank debt, which eliminates the potential need to post collateral when Centennial is in a derivative liability position. As a result, the Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations. In addition, the Company is exposed to credit risk associated with its derivative contracts from non-performance by its counterparties. The Company mitigates its exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and is a member of CRP’s credit facility as referenced above. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 8—Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has categorized its assets and liabilities measured at fair value, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. The following table is a listing of the Company’s netted asset or liability positions that have been measured at fair value and where they have been classified within the fair value hierarchy as of June 30, 2017 and December 31, 2016:
Both financial and non-financial assets and liabilities are categorized within the above fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used by the Company as well as the general classification of such instruments pursuant to the above fair value hierarchy. There were no transfers between Level 1, Level 2 or Level 3 during any period presented. Derivatives The Company uses Level 2 inputs to measure the fair value of oil and natural gas commodity derivatives. The Company uses industry-standard models that consider various assumptions including current market and contractual prices for the underlying instruments, implied market volatility, time value, nonperformance risk, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument and can be supported by observable data. The Company utilizes its counterparties’ valuations to assess the reasonableness of its own valuations. Nonrecurring Fair Value Measurements The fair value measurements of assets acquired and liabilities assumed are measured on a nonrecurring basis on the acquisition date using an income valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs to the valuation of acquired oil and natural gas properties include estimates of: (i) reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices, including price differentials; (v) future cash flows; and (vi) a market participant-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation. Refer to Note 2—Property Acquisitions for additional information on the fair value of assets acquired during 2016 and 2017. Other Financial Instruments The carrying amounts of the Company’s cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. The carrying values of the amounts outstanding under CRP’s credit agreement approximate fair value because the variable interest rates are reflective of current market conditions. |
Shareholders' Equity and Noncontrolling Interest |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Noncontrolling Interest | Note 9—Shareholders' Equity and Noncontrolling Interest Shareholders’ Equity Class A Common Stock On May 25, 2017, the Company’s stockholders approved at a special meeting the issuance of 26,100,000 shares of Class A Common Stock upon the conversion of 104,400 shares of Series B Preferred Stock issued and sold to affiliates of Riverstone Investment Group LLC in a private placement. The proceeds of the Series B Preferred Stock issuance were used to fund a portion of the cash consideration for the December 2016 Silverback Acquisition. On May 4, 2017, the Company entered into subscription agreements with certain investors, pursuant to which such investors agreed to purchase, in the aggregate, 23,500,000 shares of Class A Common Stock at a purchase price of $14.50 per share, for gross proceeds of approximately $340.8 million. The closing under the subscription agreements occurred concurrently with the closing of the GMT Acquisition on June 8, 2017 and the proceeds were used to fund a majority of the purchase price of that acquisition. Warrants On March 1, 2017, the Company delivered a notice of redemption to holders of the Public Warrants originally sold as part of the Units in the IPO announcing its intention to redeem any Public Warrants that remained unexercised and outstanding after March 31, 2017 for $0.01 per Public Warrant. As permitted under the warrant agreement, the notice of redemption required all holders exercising their Public Warrants prior to March 31, 2017 to do so on a “cashless basis” and surrender their Public Warrants for a number of shares of Class A Common Stock equal to the product of (a) the quotient of (i) the difference between $11.50 and $18.44 (the average last sale price of the Class A Common Stock for the ten trading days ending on February 24, 2017) divided by (ii) $18.44, or approximately 0.376, multiplied by (b) the number of Public Warrants held by such holder, rounded down to the nearest whole share. As of June 30, 2017, all of the Company’s Public Warrants have been either exercised for shares of Class A Common Stock or redeemed for $0.01 per Public Warrant. As a result of all such Warrants exercised, the Company issued in aggregate 6,235,790 shares of Class A common stock to holders of Public Warrants. As of June 30, 2017, 8,000,000 Private Placement warrants were outstanding. Private Placement Warrants are non-redeemable so long as they are held by the Company’s Sponsor or its permitted transferees. Noncontrolling Interest The noncontrolling interest in CRP is represented by 19.2 million shares of Class C Common Stock issued to the Centennial Contributors in connection with the Business Combination and is held by holders other than the Company. As of June 30, 2017, the Company’s noncontrolling interest was 6.9%, which declined from 7.6% as of March 31, 2017, due to the issuance of 23.5 million shares of Class A Common Stock on June 8, 2017. The Company has consolidated the financial position and results of operations of CRP and reflected that portion retained by the other holders as a noncontrolling interest. The following table summarizes the activity for the equity attributable to the noncontrolling interest income:
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Income Taxes |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10—Income Taxes CRP is treated as a partnership for U.S. federal and most applicable state and local income tax purposes, and Centennial consolidates the financial results of CRP. As a partnership, CRP is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by CRP is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of CRP, as well as any stand-alone income or loss generated by the Company. Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and six months ended June 30, 2017 and 2016 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 35% to pre-tax income primarily because of state income taxes and estimated permanent differences. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. However, no uncertain tax positions were identified as of any date on or before June 30, 2017. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 11—Earnings Per Share Basic earnings per share (“EPS”) is calculated by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Dilutive net EPS is calculated by dividing adjusted net income available to common shareholders by the weighted average number of diluted common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for the diluted EPS calculation consists of (i) unvested restricted stock awards, outstanding stock options and warrants using the treasury stock method, and (ii) the Company’s Class C common stock using the “if-converted” method. The Company’s shares of Series B Preferred Stock were converted into shares of Class A Common Stock on May 25, 2017 as a result of shareholder vote. As such, the Company no longer has any participating shares and therefore does not utilize the two-class method. Shares of the Company’s unvested restricted stock are eligible to receive dividends; however, dividend rights will be forfeited if the award does not vest. Accordingly, these shares are not considered participating securities. Shares of the Company’s Class C Common Stock and warrants do not share in the earnings or losses and are therefore not participating securities. The following table reflects the allocation of net income to common shareholders and EPS computations for the periods indicated based on a weighted average number of common stock outstanding for the period:
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Transactions With Related Parties |
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Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Note 12—Transactions with Related Parties Customer and Supplier Relationships Riverstone Affiliated Companies. From time to time, the Company obtains services related to its drilling and completion activities from affiliates of Riverstone. In particular, the Company has paid the following amounts to the following affiliates of Riverstone for such services: (i) approximately $27.7 million and $40.2 million during the three and six months ended June 30, 2017 (Successor), respectively, to Liberty Oilfield Services, LLC (“Liberty”); and (ii) approximately $1.3 million and $2.4 million during the three and six months ended June 30, 2017 (Successor), respectively, to Permian Tank and Manufacturing, Inc. (“Permian”). At June 30, 2017, included in Accounts payable and accrued expenses was $10.1 million and $0.4 million due to Liberty and Permian, respectively. Other Affiliated Companies. Mark G. Papa, our President, Chief Executive Officer and Chairman of the Board, serves as a director and Chairman of the Board of Oil States International, Inc., an energy services company publicly traded on the New York Stock Exchange (“Oil States”). From time to time, the Company obtains services related to drilling and completion activities from Oil States. During the three and six months ended June 30, 2017 (Successor), the Company paid approximately $3.2 million and $3.9 million, respectively, to Oil States. At June 30, 2017, included in Accounts payable and accrued expenses was $0.9 million due to Oil States. NGP Affiliated Companies. Beginning December 28, 2016, NGP and entities affiliated with NGP were no longer considered related parties of the Company and any expenses incurred on or after December 28, 2016 with NGP and entities affiliated with NGP are no longer classified as related party expenses. However, expenses incurred before December 28, 2016 with NGP and entities affiliated with NGP were classified as related party expenses and are detailed below. In May 2016, the Company acquired acreage in close proximity to its operating area in Reeves County, Texas and wellbore only rights in an uncompleted horizontal wellbore for approximately $9.8 million from Caird DB, LLC, an affiliate of NGP. In addition, the Company has paid approximately $2.1 million and $3.3 million during the three and six months ended June 30, 2016 (Predecessor), respectively, to RockPile Energy Services, LLC (“Rockpile”). On July 3, 2017, Rockpile was acquired by an unrelated third party and is no longer an affiliate of NGP. The Company is party to a 15-year natural gas gathering agreement with PennTex Permian, LLC (“PennTex”), an NGP-affiliated company, which terminates on April 1, 2029 and is subject to one-year extensions at either party’s election. Under the agreement, PennTex gathers and processes the Company’s natural gas. PennTex purchases the extracted natural gas liquids from the Company, net of gathering fees and an agreed percentage of the actual proceeds from the sale of the residue natural gas and natural gas liquids. Net payments received from PennTex for the three and six months ended June 30, 2016 (Predecessor) were$0.4 million and $0.5 million, respectively. In the third quarter of 2016, PennTex sold its assets related to this agreement to an unrelated third party. |
Commitments and Contingencies |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13—Commitments and Contingencies Commitments In June 2017, the Company entered into a transportation service agreement by which the Company is required to deliver 40,000 MMBtu per day for a term of one year. This delivery commitment is tied to natural gas production in Reeves and Ward Counties, Texas. Other than the above, there have been no material changes in commitments during the six months ended June 30, 2017. Please refer to Note 13—Commitment and Contingencies included in Part II, Item 8. in our 2016 Annual Report. Contingencies In the ordinary course of business, the Company may at times be subject to claims and legal actions. Management believes it is remote that the impact of such matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Management is unaware of any pending litigation brought against the Company requiring the reserve of a contingent liability as of the date of these condensed consolidated financial statements. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. Accordingly, certain disclosures required by U.S. GAAP and normally included in an Annual Report on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with our 2016 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. Certain prior period amounts have been reclassified to conform to the current presentation on the accompanying condensed consolidated financial statements. The Company has evaluated subsequent events through the date of this filing. As a result of the Business Combination, the Company is the acquirer for accounting purposes, and CRP is the acquiree and accounting Predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for CRP for periods prior to the Business Combination. The Company is the “Successor” for periods after the Business Combination, which includes consolidation of CRP subsequent to the Business Combination on October 11, 2016. The Business Combination was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. As a result of the application of the acquisition method of accounting as of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on a different basis of accounting. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements included herein have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and its majority owned subsidiary CRP, and CRP’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated and combined financial statements requires the Company’s management to make various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts previously established. The more significant areas requiring the use of assumptions, judgments and estimates include: (1) oil and natural gas reserves; (2) cash flow estimates used in impairment tests of long-lived assets; (3) depreciation, depletion and amortization; (4) asset retirement obligations; (5) determining fair value and allocating purchase price in connection with business combinations; (6) valuation of derivative instruments; and (7) accrued revenue and related receivables. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This update affects all reporting entities and the objective of the guidance is to assist with evaluation of whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The mandatory effective date for this update is for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied prospectively on or after the effective date and disclosures are not required at transition. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company early adopted ASU 2017-01 in the second quarter of 2017. Refer to Note 2—Property Acquisitions for details of the GMT Acquisition. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. This update applies to all entities that are required to present a statement of cash flows. This update provides guidance on eight specific cash flow issues: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. This update will be effective for financial statements issued for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years with early adoption permitted. This update should be applied using the retrospective transition method. Adoption of this standard will only affect the presentation of the Company’s cash flows and will not have a material impact on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. This update clarifies two principles of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers: identifying performance obligations and the licensing implementation guidance. This standard has the same effective date as ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), the revenue recognition standard discussed below. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation. This update applies to all entities that issue equity-based payment awards to their employees. Under this update, there were several areas that were simplified including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early adoption permitted. The Company elected to early adopt this guidance in October 2016 in conjunction with the issuance of its equity awards. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net). Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for annual and interim reporting periods beginning after December 15, 2017, with early application not permitted. This update allows for either full retrospective adoption, meaning this update is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning this update is applied only to the most current period presented. The Company is currently evaluating the impact, if any, that the adoption of this update will have on its financial position, results of operations and liquidity. In February 2016, the FASB issued ASU 2016-02, Leases. This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Although the Company is still in the process of evaluating the effect of adopting ASU 2016-02, the adoption is expected to result in the recognition of assets and liabilities on its consolidated balance sheet for current operating leases. As of December 31, 2016, the Company had approximately $17.0 million of contractual obligations related to its non-cancelable leases, and it will evaluate those contracts as well as other existing arrangements to determine if they qualify for lease accounting under ASU 2016-02. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. In addition, new qualitative and quantitative disclosure requirements aim to enable financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for one year to fiscal years beginning after December 15, 2017. In May 2016, the FASB issued ASU 2016-11, which rescinds guidance from the SEC on accounting for gas balancing arrangements and will eliminate the use of the entitlements method. The standards permit retrospective application using either of the following methodologies: (i) restatement of each prior reporting period presented or (ii) recognition of a cumulative-effect adjustment as of the date of initial application. The Company plans to adopt these ASUs effective January 1, 2018. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. |
Property Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The table below summarizes the allocation of the $867.8 million adjusted purchase price, based on the acquisition date fair value of the assets acquired and the liabilities assumed as of June 30, 2017:
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Accounts Receivable, Accounts Payable and Accrued Expenses (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Accounts receivable are comprised of the following:
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Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued expenses are comprised of the following:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Schedule Long Term Debt Maturities | The following table shows five succeeding fiscal years of scheduled maturities for the Company’s long-term debt as of June 30, 2017 (in thousands):
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Asset Retirement Obligations (Tables) |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Asset Retirement Obligations | The following table summarizes the changes in the Company’s asset retirement obligations (“AROs”) for the six months ended June 30, 2017:
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Equity Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Expense | The Company has recognized stock-based compensation cost as shown below. Historical amounts may not be representative of future amounts as the value of future awards may vary from historical amounts.
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Nonvested Restricted Stock Shares Activity | The following table provides information about restricted stock awards granted during the six months ended June 30, 2017:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table summarizes the assumptions and related information used to determine the grant date fair value of stock options awarded during the six months ended June 30, 2017:
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Derivative Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The following table summarizes the approximate volumes and average contract prices of swap contracts the Company had in place as of June 30, 2017:
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Derivative Instruments, Gain (Loss) | The following table presents gains and losses for derivative instruments not designated as hedges for accounting purposes for the periods presented:
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the condensed consolidated balance sheets:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis | The following table is a listing of the Company’s netted asset or liability positions that have been measured at fair value and where they have been classified within the fair value hierarchy as of June 30, 2017 and December 31, 2016:
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Shareholders' Equity and Noncontrolling Interest (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest | The following table summarizes the activity for the equity attributable to the noncontrolling interest income:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table reflects the allocation of net income to common shareholders and EPS computations for the periods indicated based on a weighted average number of common stock outstanding for the period:
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Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Millions |
Feb. 29, 2016 |
Mar. 01, 2017 |
Dec. 31, 2016 |
Oct. 11, 2016 |
---|---|---|---|---|
Entity Information [Line Items] | ||||
Contractual obligation | $ 17.0 | |||
Predecessor | Common Stock Class A | IPO | ||||
Entity Information [Line Items] | ||||
Shares issued in transaction (in shares) | 1 | |||
Centennial Resource Production, LLC | ||||
Entity Information [Line Items] | ||||
Ownership interest acquired | 89.00% | |||
Warrants to Purchase Class A Common Stock, IPO | Predecessor | IPO | ||||
Entity Information [Line Items] | ||||
Public warrants issued per IPO Unit | 0.3333 | |||
Public Warrants | ||||
Entity Information [Line Items] | ||||
Warrant exercise price (in dollars per share) | $ 0.01 |
Property Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - Undeveloped Acreage and Oil and Gas Producing Properties From Silverback Exploration, LLC - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended |
---|---|---|
Dec. 31, 2016 |
Mar. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Purchase price | $ 855,000 | $ 867,772 |
Unproved properties | 753,763 | |
Proved properties | 116,700 | |
Other property and equipment | 56 | |
Liabilities | $ (2,747) |
Accounts Receivable, Accounts Payable and Accrued Expenses - Accounts Receivable (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued oil and gas sales | $ 26,742 | $ 11,596 |
Joint interest billings | 7,713 | 2,942 |
Hedge settlements | 292 | 194 |
Other | 62 | 2 |
Accounts receivable, net | $ 34,809 | $ 14,734 |
Accounts Receivable, Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable | $ 44,478 | $ 11,210 |
Accrued capital expenditures | 56,228 | 24,038 |
Revenues payable | 9,922 | 3,815 |
Payable to Silverback | 0 | 32,293 |
Accrued underwriting fees | 0 | 7,719 |
Other | 8,880 | 7,025 |
Accounts payable and accrued expenses | $ 119,508 | $ 86,100 |
Long-Term Debt (Details) - Line of Credit |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Current borrowing capacity | $ 350,000,000 |
Remaining borrowing capacity | 314,100,000 |
Outstanding line of credit | $ 35,000,000 |
Automatic decrease in borrowing base | 25.00% |
Covenant compliance, minimum required current ratio | 100.00% |
Covenant compliance, maximum allowable leverage ratio | 400.00% |
Letter of Credit | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 15,000,000.0 |
Letters of credit outstanding | $ 900,000 |
Long-Term Debt - Summary of Long-term Debt Maturities (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2017 | $ 0 |
2018 | 0 |
2019 | 35,000 |
2020 | 0 |
2021 | $ 0 |
Asset Retirement Obligations (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |
Asset retirement obligations, beginning of period | $ 7,226 |
Additional liabilities incurred | 1,443 |
Liabilities settled | (29) |
Accretion expense | 233 |
Revision to estimated cash flows | (18) |
Asset retirement obligations, end of period | $ 8,855 |
Equity Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total equity based compensation expense | $ 2,985 | $ 5,595 |
Restricted stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total equity based compensation expense | 1,018 | 1,874 |
Stock option awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total equity based compensation expense | $ 1,967 | $ 3,721 |
Equity Based Compensation - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Oct. 07, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation costs | $ 21.2 | |
Stock option awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation costs, period for recognition | 2 years 6 months | |
2016 Long Term Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 16,500,000 | |
Number of shares available for grant (in shares) | 11,866,072 | |
2016 Long Term Incentive Plan | Stock option awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Option expiration period | 10 years | |
Vesting period | 3 years |
Equity Based Compensation - Restricted Stock (Details) - Restricted stock awards $ / shares in Units, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
$ / shares
shares
| |
Awards | |
Outstanding, beginning of period (in shares) | shares | 256,597 |
Vested (in shares) | shares | 0 |
Granted (in shares) | shares | 324,010 |
Canceled (in shares) | shares | (6,679) |
Outstanding, end of period (in shares) | shares | 573,928 |
Weighted Average Grant-Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 20.03 |
Vested (in dollars per share) | $ / shares | 0.00 |
Granted (in dollars per share) | $ / shares | 18.77 |
Canceled (in dollar per share) | $ / shares | 18.81 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 19.33 |
Unrecognized compensation costs | $ | $ 8.8 |
Unrecognized compensation costs, period for recognition | 2 years 4 months 24 days |
Equity Based Compensation - Assumptions Used (Details) - Stock option awards |
6 Months Ended |
---|---|
Jun. 30, 2017
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average grant date fair value (in dollars per share) | $ 7.15 |
Expected term (in years) | 6 years |
Expected stock volatility | 38.10% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.00% |
Derivative Instruments (Details) - Not Designated as Hedging Instrument |
6 Months Ended |
---|---|
Jun. 30, 2017
MMBTU
$ / MMBTU
$ / bbl
bbl
| |
Crude Oil Swap - Oil Remainder of Current Year | |
Derivative [Line Items] | |
Volume (Bbl) | bbl | 340,400 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / bbl | (50.41) |
Crude Oil Swap - Oil Next Year | |
Derivative [Line Items] | |
Volume (Bbl) | bbl | 36,500 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / bbl | (55.95) |
Crude Oil Basis Swap - Oil Remainder of Current Year | |
Derivative [Line Items] | |
Volume (Bbl) | bbl | 51,742 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / bbl | (0.20) |
Natural Gas Swap - Remainder of Current Year | |
Derivative [Line Items] | |
Volume (MMBtu) | MMBTU | 736,000 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / MMBTU | (2.94) |
Derivative Instruments - Gain (Loss) On Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) on derivative instruments | $ 2,529 | $ 6,288 | ||
Predecessor | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) on derivative instruments | $ (7,843) | $ (5,925) |
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset (liability), net | $ 0 | $ 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset (liability), net | 1,462 | (4,950) |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset (liability), net | $ 0 | $ 0 |
Shareholders' Equity and Noncontrolling Interest - Class A Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions |
May 25, 2017 |
May 04, 2017 |
---|---|---|
Subscription Agreements | Common Stock Class A | ||
Class of Stock [Line Items] | ||
Shares issued in transaction (in shares) | 23,500,000 | |
Sale of stock price per share (in usd per share) | $ 14.50 | |
Gross proceeds | $ 340.8 | |
Conversion of Class B Preferred Stock to Class A Common Stock | Common Stock Class A | ||
Class of Stock [Line Items] | ||
Conversion of class b preferred to class a common (in shares) | 26,100,000 | |
Conversion of Class B Preferred Stock to Class A Common Stock | Preferred Class B | ||
Class of Stock [Line Items] | ||
Conversion of class b preferred to class a common (in shares) | (104,400) |
Income Taxes (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Effective income tax rate | 35.00% |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||
Net income attributable to common shareholders | $ 20,762 | $ 30,585 |
Add: Income from conversion of Class C Common Stock | 1,477 | 1,995 |
Adjusted net income attributable to common shareholders | $ 22,239 | $ 32,580 |
Basic net income per share (USD per share) | $ 0.09 | $ 0.14 |
Diluted net income per share (USD per share) | $ 0.09 | $ 0.14 |
Basic weighted average share outstanding (in shares) | 223,623 | 212,759 |
Add: Dilutive effects of stock options and RSUs (in shares) | 925 | 2,046 |
Add: Dilutive effects of conversion (in shares) | 19,156 | 19,156 |
Diluted weighted average shares outstanding (in shares) | 243,704 | 233,961 |
Commitments and Contingencies Additional Information (Details) - Transportation Service Agreement [Member] |
1 Months Ended |
---|---|
Jun. 30, 2017
MMBTU
| |
Supply Commitment [Line Items] | |
Energy commitment per day (in MMbtus) | 40,000 |
Supply commitment term | 1 year |
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