Fresh Start Accounting (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Enterprise value to estimated fair value per share

The following table presents the estimated fair value of the Company's stock as of the Effective Date (in thousands, except per share value):

	As of October 21, 2016
Enterprise value	$	600,000
Plus: Cash and cash equivalents		76,540
Less: Fair value of debt		(128,059	)
Less: Fair value of warrants		(37,329	)

Fair value of stock on the Effective Date	$	511,152


Total shares issuable under the Plan		25,000
Restricted shares granted under 2016 LTIP at October 21, 2016		686

Total shares		25,686
Per share value(1)	$	19.90

(1) The per share value shown above is calculated based upon the financial information determined using US GAAP at the Effective Date. The fair value per share agreed upon by the parties to the Chapter 11 Cases at the Effective Date was determined to be $19.66 per common share.

Schedule of assumptions used to estimate the fair value of the Warrants

	Third Lien Notes Warrants			Unsecured Creditor Warrants
Risk-free interest rate(1)		1.04	%		1.04	%
Dividend yield		—			—
Expected life(2)		3.50			3.50
Expected volatility(3)		55.0	%		55.0	%
Strike Price	$	24.00		$	46.00
Calculated fair value	$	6.74		$	3.42

(1) U.S. Treasury yields as of the grant date were utilized for the risk-free interest rate assumption, matching the treasury yield terms to the expected life of the option.

(2) The expected life assumption was based upon the years until expiration of the Warrants.

(3) The Company utilized six peer companies of comparable size and industry to estimate asset volatility utilizing a period that is commensurate with the expected Warrant life. The Company weighted historical volatility and implied volatility 50/50 for those peer companies where both were available, with asset volatility ranging in the peer companies from 30.1% to 54.2%. The derived asset volatility was selected based upon the midpoint of the average and the third quartile of the peer group, and then relevered the utilizing the Company's asset and equity information as of the Effective Date.

Schedule of Enterprise value to reorganization value

The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date (in thousands):

	As of October 21, 2016
Enterprise value	$	600,000
Plus: cash and cash equivalents		76,540
Plus: other working capital liabilities		60,118
Plus: other long-term liabilities		14,600

Reorganization value	$	751,258

Schedule of reorganization balance sheet and fresh start accounting adjustments

This consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column "Reorganization Adjustments") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments") as of the Effective Date (in thousands):

	Predecessor			Reorganization Adjustments				Fresh Start Adjustments				Successor
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	274,530		$	(197,990	)	{a}	$	—			$	76,540
Accounts receivable:
Oil and gas sales		33,895			—				—				33,895
Joint interest billing		4,739			—				—				4,739
Other		26			—				—				26
Other current assets		8,425			(2,748	)	{b}		—				5,677

Total current assets		321,615			(200,738	)			—				120,877
PROPERTY AND EQUIPMENT:
Oil and gas properties, on the basis of full-cost accounting		3,795,943			—				(3,176,723	)	{h}		619,220
Other property and equipment		12,175			—				(5,965	)	{h}		6,210
Less accumulated depreciation, depletion, amortization and impairment		(3,449,241	)		—				3,449,241		{h}		—

Net property and equipment		358,877			—				266,553				625,430
OTHER NONCURRENT ASSETS		3,701			1,250		{c}{a}		—				4,951

TOTAL	$	684,193		$	(199,488	)		$	266,553			$	751,258


LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	10,294		$	—			$	—			$	10,294
Accrued liabilities		65,240			(15,416	)	{a}		—				49,824
Debt classified as current		249,384			(249,384	)	{a}{d}		—				—

Total current liabilities		324,918			(264,800	)			—				60,118
ASSET RETIREMENT OBLIGATIONS		20,368			—				(6,385	)	{h}		13,983
OTHER LONG-TERM LIABILITIES		617			128,059		{d}		—				128,676
LIABILITIES SUBJECT TO COMPROMISE		1,882,187			(1,882,187	)	{e}{a}		—				—
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY/(DEFICIT):
Preferred stock		—			—				—				—
Warrants		—			37,329		{e}		—				37,329
Common stock—predecessor		104			(104	)	{f}		—				—
Common stock—successor		—			247		{f}		—				247
Treasury stock		(3,134	)		3,134		{f}		—				—
Additional paid-in-capital—predecessor		891,292			(891,292	)	{f}		—				—
Additional paid-in-capital—successor		—			510,905		{f}		—				510,905
Retained deficit		(2,432,159	)		2,159,221		{g}		272,938		{i}		—

Total stockholders' equity/(deficit)		(1,543,897	)		1,819,440				272,938				548,481

TOTAL	$	684,193		$	(199,488	)		$	266,553			$	751,258

Reorganization Adjustments

{a} Adjustments reflect the following net cash payments recorded as of the Effective Date from implementation of the Plan (in thousands):

Uses:
Cash pay down of RBL	$	81,324
Cash payment to holders of Second Lien Notes Claims		60,000
Cash payment to the RBL lenders in consideration of a temporary reduction in the amount available to be drawn under the Exit Facility		40,000
Payment to escrow for professional fees related to the Plan incurred through the Effective Date		15,416
Debt issuance costs associated with the Exit Facility		1,250

Total uses	$	197,990

{b} Adjustment reflects the write off of unamortized debt issuance costs associated with the RBL.

{c} Adjustment reflects the debt issuance costs associated with the Exit Facility.

{d} Adjustment represents the establishment of Exit Facility, which superceded the RBL.

{e} As part of the Plan, the Bankruptcy Court approved the settlement of certain allowable claims, reported as liabilities subject to compromise in the Company's historical consolidated balance sheet. As a result, a gain of $1.3 billion was recognized on the settlement of liabilities subject to compromise. The gain was calculated as follows (in thousands):

	Predecessor
Liabilities subject to compromise	$	1,882,187
Cash paid to holders of Second Lien Notes Claims		(60,000	)
Warrants issued to holders of Third Lien Notes Claims		(29,753	)
Warrants issued to holders of Unsecured Notes Claims		(7,575	)
Write-off of unamortized debt costs associated with RBL		(2,748	)
Common stock issued		(511,152	)

Gain on settlement	$	1,270,959

{f} Adjustments represent (i) the cancellation of predecessor stock that was authorized and outstanding prior to the Effective Date and (ii) the issuance of 24,687,500 shares of new common stock upon emergence on the Effective Date.

{g} This adjustment reflects the cumulative impact of the following reorganization adjustments (in thousands):

	Predecessor
Gain on settlement of liabilities subject to compromise	$	1,270,959
Common stock—predecessor		104
Treasury stock		(3,134	)
Additional paid-in-capital—predecessor		891,292

Net impact to Predecessor accumulated deficit	$	2,159,221

Fresh Start Adjustments

{h} The adjustments primarily represent (i) the removal of $3.4 billion of accumulated depreciation, depletion, amortization and impairment due to fresh start accounting, (ii) the $269.7 million increase in oil and gas properties due to the application of fresh start accounting, (iii) the $6.4 million decrease in the asset retirement obligation due to the application of fresh start accounting and (iv) an increase in other property and equipment.

{i} This adjustment reflects the cumulative impact of the fresh start adjustments discussed herein.

Schedule of net cash payments recorded from implementation of the Plan

Adjustments reflect the following net cash payments recorded as of the Effective Date from implementation of the Plan (in thousands):

Uses:
Cash pay down of RBL	$	81,324
Cash payment to holders of Second Lien Notes Claims		60,000
Cash payment to the RBL lenders in consideration of a temporary reduction in the amount available to be drawn under the Exit Facility		40,000
Payment to escrow for professional fees related to the Plan incurred through the Effective Date		15,416
Debt issuance costs associated with the Exit Facility		1,250

Total uses	$	197,990

Schedule of Liabilities subject to compromise, settled

The gain was calculated as follows (in thousands):

	Predecessor
Liabilities subject to compromise	$	1,882,187
Cash paid to holders of Second Lien Notes Claims		(60,000	)
Warrants issued to holders of Third Lien Notes Claims		(29,753	)
Warrants issued to holders of Unsecured Notes Claims		(7,575	)
Write-off of unamortized debt costs associated with RBL		(2,748	)
Common stock issued		(511,152	)

Gain on settlement	$	1,270,959

Schedule of cumulative effect of the reorganization adjustments

This adjustment reflects the cumulative impact of the following reorganization adjustments (in thousands):

	Predecessor
Gain on settlement of liabilities subject to compromise	$	1,270,959
Common stock—predecessor		104
Treasury stock		(3,134	)
Additional paid-in-capital—predecessor		891,292

Net impact to Predecessor accumulated deficit	$	2,159,221

Schedule of the gain on reorganization items, net in the consolidated statements of operations

The following table summarizes the gain on reorganization items, net, in the consolidated statements of operations (in thousands):

	Predecessor
	For the Period January 1, 2016 through October 20, 2016
Professional fees incurred	$	(38,835	)
Adjustment to unamortized debt issuance costs associated with 2020 Senior Notes		(10,738	)
Adjustment to unamortized debt issuance costs associated with 2021 Senior Notes		(12,671	)
Adjustment to unamortized gain on troubled debt restructuring associated with Second Lien Notes		39,599
Adjustment to unamortized gain on troubled debt restructuring associated with Third Lien Notes		71,808
Gain on settlement of liabilities subject to compromise		1,270,959
Fresh start adjustments		272,938
Other reorganization items(1)		1,221

Gain on reorganization items, net	$	1,594,281

(1) Other reorganization items recorded for October 20, 2016 primarily included $0.2 million related to Houston office fixed assets, which were abandoned, as well as a $1.6 million decrease in the liability previously recorded for the abandonment of the Houston office lease.