Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2016

Concentrations of Credit Risk

Concentrations of Credit Risk

15. Concentrations of Credit Risk

        Financial instruments which potentially subject the Company to credit risk consist primarily of cash balances, accounts receivable and, historically, derivative financial instruments.

        The Company maintains cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limits. The Company has not experienced any significant losses from such investments.

        The Company normally sells production to a relatively small number of purchasers, as is customary in the exploration, development and production business. The Company typically sells a substantial portion of production under short-term (usually one-month) contracts tied to a local index. The Company does not have any long-term, fixed-price sales contracts. For the Successor Period, two purchasers accounted for 40% and 29%, respectively, of the Company's revenue. For the Predecessor Period, two purchasers accounted for 46% and 29%, respectively, of the Company's revenue. For the year ended December 31, 2015, two purchasers accounted for 43% and 25%, respectively, of the Company's revenue. For the year ended December 31, 2014, four purchasers accounted for 28%, 18%, 15% and 12% respectively, of the Company's revenue.

        Substantially all of the Company's accounts receivable result from the sale of oil, natural gas and natural gas liquids. At December 31, 2016, two purchasers accounted for approximately 44% and 26%, respectively, of the accounts receivable balance. At December 31, 2015, three purchasers accounted for approximately 33%, 29%, and 14%, respectively, of the accounts receivable balance.

        Derivative financial instruments are generally executed with major financial institutions that expose the Company to market and credit risks and which may, at times, be concentrated with certain counterparties. The credit worthiness of the counterparties is subject to continual review. The Company also has netting arrangements in place with counterparties to reduce credit exposure. The Company has not experienced any losses from such instruments and had no derivative instruments in place at December 31, 2016 or 2015.