XML 28 R18.htm IDEA: XBRL DOCUMENT v3.20.4
REVENUE FROM CONTRACTS WITH CUSTOMERS REVENUE FROM CONTACTS WITH CUSTOMERS
 3 Months Ended
Dec. 31, 2020
Revenue from Contract with Customer [Abstract]  
REVENUE FROM CONTRACTS WITH CUSTOMERS REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue

    The following tables provides information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition for the three months ended December 31, 2020 and 2019.
Three months ended December 31, 2020
Oil and natural gasContract drillingLand investmentOtherTotal
Revenue streams:
Oil$1,380,000 $— $— $— $1,380,000 
Natural gas375,000 — — — 375,000 
Natural gas liquids132,000 — — — 132,000 
Drilling and pump— 1,942,000 — — 1,942,000 
Contingent residual payments— — 485,000 — 485,000 
Other— — — 73,000 73,000 
Total revenues before interest income$1,887,000 $1,942,000 $485,000 $73,000 $4,387,000 
Geographical regions:
United States$— $1,942,000 $485,000 $— $2,427,000 
Canada1,887,000 — — 73,000 1,960,000 
Total revenues before interest income$1,887,000 $1,942,000 $485,000 $73,000 $4,387,000 
Timing of revenue recognition:
Goods transferred at a point in time$1,887,000 $— $485,000 $73,000 $2,445,000 
Services transferred over time— 1,942,000 — — 1,942,000 
Total revenues before interest income$1,887,000 $1,942,000 $485,000 $73,000 $4,387,000 

Three months ended December 31, 2019
Oil and natural gasContract drillingLand investmentOtherTotal
Revenue streams:
Oil$1,725,000 $— $— $— $1,725,000 
Natural gas322,000 — — — 322,000 
Natural gas liquids94,000 — — — 94,000 
Drilling and pump— 2,646,000 — — 2,646,000 
Contingent residual payments— — — — — 
Other— — — 56,000 56,000 
Total revenues before interest income$2,141,000 $2,646,000 $— $56,000 $4,843,000 
Geographical regions:
United States$— $2,646,000 $— $7,000 $2,653,000 
Canada2,141,000 — — 49,000 2,190,000 
Total revenues before interest income$2,141,000 $2,646,000 $— $56,000 $4,843,000 
Timing of revenue recognition:
Goods transferred at a point in time$2,141,000 $— $— $56,000 $2,197,000 
Services transferred over time— 2,646,000 — — 2,646,000 
Total revenues before interest income$2,141,000 $2,646,000 $— $56,000 $4,843,000 
Contract Balances
    The following table provides information about accounts receivables, contract assets and contract liabilities from contracts with customers:
December 31, 2020September 30, 2020
Accounts receivables from contracts with customers$1,625,000 $1,772,000 
Contract assets385,000 413,000 
Contract liabilities751,000 1,097,000 

    Accounts receivables from contracts with customers are included in "Accounts and other receivables, net of allowance for doubtful accounts," and contract assets, which includes costs and estimated earnings in excess of billings and retainage, are included in “Other current assets.” Contract liabilities, which includes billings in excess of costs and estimated earnings are included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

    Retainage, included in contract assets, represents amounts due from customers, but where payments are withheld contractually until certain construction milestones are met. Amounts retained typically range from 5% to 10% of the total invoice, up to contractually-specified maximums. The Company classifies as a current asset those retainages that are expected to be collected in the next twelve months.

    Contract assets represent the Company’s rights to consideration in exchange for services transferred to a customer that have not been billed as of the reporting date. The Company’s rights are generally unconditional at the time its performance obligations are satisfied.

    When the Company receives consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, the Company records deferred revenue, which represents a contract liability. Such deferred revenue typically results from billings in excess of costs and estimated earnings on uncompleted contracts. As of December 31, 2020 and September 30, 2020, the Company had $751,000 and $1,097,000, respectively, included in “Other current liabilities” on the balance sheet for those performance obligations expected to be completed in the next twelve months.

During the three months ended December 31, 2020 and 2019, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $573,000 and $1,480,000, respectively.

    Contracts are sometimes modified for a change in scope or other requirements. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company’s contract modifications are for goods and services that are not distinct from the existing performance obligations. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or decrease) on a cumulative catchup basis.
Performance Obligations

    The Company’s remaining performance obligations for drilling and pump installation contracts (hereafter referred to as “backlog”) represent the unrecognized revenue value of the Company’s contract commitments. The Company’s backlog may vary significantly each reporting period based on the timing of major new contract commitments. In addition, our customers have the right, under some infrequent circumstances, to terminate contracts or defer the timing of the Company’s services and their payments to us. Nearly all of the Company's contract drilling segment contracts have original expected durations of one year or less. At December 31, 2020, the Company had three contract drilling jobs with original expected durations of greater than one year. For these contracts, approximately 7% of the remaining performance obligation of $2,615,000 is expected to be recognized as revenue in the next twelve months and the remaining, thereafter.

Contract Fulfillment Costs

Preconstruction costs, which include costs such as set-up and mobilization, are capitalized and allocated across all performance obligations and deferred and amortized over the contract term on a progress towards completion basis. As of December 31, 2020 and September 30, 2020, the Company had $147,000 and $145,000, respectively, in unamortized preconstruction costs related to contracts that were not completed. During the three months ended December 31, 2020 and 2019, the amortization of preconstruction costs related to contracts were not material and were included in the accompanying Condensed Consolidated Statements of Operations. Additionally, no impairment charges in connection with the Company’s preconstruction costs were recorded during the three months ended December 31, 2020 and 2019.

Water Well Re-drill
    In the quarter ended December 31, 2019, the Company experienced the failure of a hole opener which broke apart leaving pieces in the bottom of a water well being drilled in Hawaii. Efforts to remove the items from the well were unsuccessful through the quarter ended March 31, 2020 and subsequently the Company determined that the well should be abandoned and a new well drilled at no incremental cost to the customer as per the terms of the contract. Accordingly, all the costs to drill and abandon the first well, which are all wasted costs, were excluded from the measurement of progress toward contract completion and all such costs were fully accrued in the quarter ended March 31, 2020, as this contract was determined to be a loss job. In September 2020, while making progress towards the drilling of a replacement well in different location, the drill string twisted off and became lodged in the well borehole, which required a stoppage of drilling and the need to dislodge and retrieve the broken drill string. Accordingly, the estimated total rework costs to remediate the situation was accrued at September 30, 2020. In January 2021, the broken drill string was retrieved from the well borehole and drilling of the replacement well recommenced.