Fair Value Disclosures

12 Months Ended

Dec. 31, 2018

FAIR VALUE MEASUREMENTS

Recurring measurements

We utilize the modified Black-Scholes and the Turnbull Wakeman option pricing models to estimate the fair values of oil and gas derivatives. Inputs to these models include observable inputs from the NYMEX for futures contracts, and inputs derived from NYMEX observable inputs, such as implied volatility of oil and gas prices. We have classified the inputs used to determine fair values of all our oil, gas and natural gas liquids derivative contracts as Level 2.

Non-recurring measurements

In connection with the Business Combination, we recorded the fair value of our $500.0 million unsecured senior notes (“the 2024 Notes”) at $533.6 million as of the acquisition date. We have estimated the fair value of our senior notes to be $312.5 million at December 31, 2018, based on the most recent trading values of the senior notes at or near the reporting date, which is a Level 1 determination.

Oil and gas properties are subject to impairment testing and potential impairment based largely on future estimated cash flows determined using Level 3 inputs.



	Successor						Predecessor
	December 31, 2018						December 31, 2017
(in thousands)	Original Carrying Value		Estimated Fair Value		Impairment		Original Carrying Value		Estimated Fair Value		Impairment
Unproved oil and gas properties	$	816,282	$	74,217	$	742,065	$	—	$	—	$	—
Proved oil and gas properties	1,895,670		604,023		1,291,647		3,350		2,162		1,188
Total	$	2,711,952	$	678,240	$	2,033,712	$	3,350	$	2,162	$	1,188

We estimate the fair value of additions to asset retirement obligations associated with new or acquired properties. Such estimations of fair value are based on present value techniques that utilize company-specific information for inputs such as the cost and timing of plugging and abandonment of wells and facilities. These inputs are classified as Level 3.

- Definition

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

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