Fresh Start Accounting (Tables)

12 Months Ended

Dec. 31, 2019

Reconciliation of the Enterprise Value to the Reorganization Value

The following table is a reconciliation of the enterprise value to the reorganization value of the Successor assets at the Effective Date (in thousands):

Enterprise value	$	800,000
Plus: Cash and cash equivalents		20,140
Plus: Other working capital liabilities		63,817
Plus: Other long-term liabilities		97,470
Reorganization value of Successor assets	$	981,427

Schedule of Reorganization and Fresh Start Adjustments

The adjustments included in the following condensed consolidated balance sheet reflected the effect of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine the fair values and significant assumptions.

	As of May 4, 2017
			Reorganization				Fresh Start
	Predecessor		Adjustments (1)				Adjustments				Successor
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	83,050	$	(62,910	)	(2)	$	—			$	20,140
Restricted cash		—		7,411		(3)		—				7,411
Accounts receivable		33,560		—				—				33,560
Short-term derivative instruments		51,329		—				—				51,329
Prepaid expenses and other current assets		10,229		675		(4)		—				10,904
Total current assets		178,168		(54,824	)			—				123,344
Property and equipment, net		1,551,500		—				(894,164	)	(11)		657,336
Long-term derivative instruments		33,800		—				—				33,800
Restricted investments		156,443		—				—				156,443
Other long-term assets		1,929		8,575		(5)		—				10,504
Total assets	$	1,921,840	$	(46,249	)		$	(894,164	)		$	981,427

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,501	$	1,389		(6)	$	—			$	2,890
Revenues payable		22,747		—				—				22,747
Accrued liabilities		36,954		2,939		(7)		(1,713	)	(12)		38,180
Current portion of long-term debt		454,799		(454,799	)	(8)		—				—
Total current liabilities		516,001		(450,471	)			(1,713	)			63,817
Liabilities subject to compromise		1,162,437		(1,162,437	)	(9)		—				—
Long-term debt		—		430,000		(8)		—				430,000
Asset retirement obligations		158,114		—				(62,928	)	(13)		95,186
Deferred tax liabilities		2,206		—				—				2,206
Other long-term liabilities		2,481		—				(2,403	)	(12)		78
Total liabilities		1,841,239		(1,182,908	)			(67,044	)			591,287
Commitments and contingencies (see Note 18)
Stockholders'/partners' equity:
Predecessor common units		80,601		(80,601	)	(10)		—				—
Successor warrants		—		4,788		(10)		—				4,788
Successor common stock		—		3		(10)		—				3
Successor additional paid-in capital		—		1,212,469		(10)		(827,120	)	(14)		385,349
Total stockholders'/ partners' equity		80,601		1,136,659				(827,120	)			390,140
Total liabilities and equity	$	1,921,840	$	(46,249	)		$	(894,164	)		$	981,427

Reorganization Adjustments

(1)

Reflected amounts recorded as of the Effective Date for the implementation of the Plan, including among other items, settlement of the Predecessor’s liabilities subject to compromise, cancellation of the Predecessor’s equity, issuance of the Successor New Common Shares and the Warrants, repayment of certain of Predecessor’s debt and settlement with holders of the Notes.

(2)	Reflected the changes in cash and cash equivalents, including the following (in thousands):

Payment on the Predecessor's revolving credit facility	$	(24,799	)
Payment to holders of the Notes (1)		(16,446	)
Payment of fees related to Emergence Credit Facility		(8,575	)
Funding of the professional fees escrow account		(7,411	)
Payment of professional fees		(4,295	)
Other		(1,384	)
Changes in cash and cash equivalents	$	(62,910	)

(1)

The total cash settlement to the holders of the Notes was approximately $24.6 million, of which $16.4 million was paid upon emergence and $8.2 million was paid post-emergence and is reflected in accrued liabilities in the above condensed consolidated balance sheet.

(3)	Reflected the transfer to restricted cash to fund the professional fees escrow account.

(4)	Reflected the pre-payment of certain professional fees.

(5)	Reflected the deferred financing costs related to the Emergence Credit Facility.

(6)	Reflected the recognition of payables for general unsecured claims.

(7)	Net increase in accrued liabilities reflected the following (in thousands):

Recognition of liability for settlement with holders of the Notes	$	8,193
Payment of professional fees		(4,295	)
Recognition of contribution from management		(1,500	)
Recognition of settlement with Predecessor common unitholders		1,250
Other		(709	)
Net increase in accrued liabilities due to reorganization items	$	2,939

(8)	Reflected a repayment of $24.8 million on the Predecessor’s revolving credit facility and the reclassification of $430.0 million in borrowings under the Emergence Credit Facility to long-term debt.

(9)	Settlement of liabilities subject to compromise and the resulting net gain were determined as follows (in thousands):

Accounts payable	$	1,389
Accrued interest payable		49,796
Debt		1,111,252
Total liabilities subject to compromise of Predecessor		1,162,437
Recognition of payables for general unsecured claims		(1,389	)
Recognition of settlement with holders of the Notes		(24,639	)
Issuance of common stock to holders of the Notes		(377,645	)
Gain on settlement of liabilities subject to compromise	$	758,764

(10)	Net increase in our stockholders’/partners’ equity reflects the following (in thousands):

Issuance of common stock to holders of the Notes	$	377,645
Issuance of common stock to Predecessor common unitholders		7,707
Cancellation of the Predecessor's units issued and outstanding		80,601
Recognition on gain on settlement of liabilities subject to compromise		758,764
Recognition of issuance of common stock to Predecessor common unitholders		(7,707	)
Recognition of issuance of warrants to Predecessor common unitholders		(4,788	)
Recognition of contribution from management		1,500
Recognition of settlement with Predecessor common unitholders		(1,250	)
Par value of common stock		(3	)
Change in Successor additional paid-in capital		1,212,469
Issuance of warrants to Predecessor common unitholders		4,788
Par value of common stock		3
Predecessor units issued and outstanding		(80,601	)
Net increase in capital accounts	$	1,136,659

Fresh Start Adjustments

(11)	Reflected a decrease of property and equipment, net based on the methodology discussed above and the elimination of accumulated depreciation, depletion and impairment. The fresh start adjustments to property and equipment, net are as follow:

	Predecessor			Fresh Start Adjustments			Successor
	(In thousands)
Property and equipment at cost:
Proved oil and natural gas properties	$	3,124,137		$	(2,615,076	)	$	509,061
Support equipment and facilities		199,463			(101,883	)		97,580
Unproved oil and natural gas properties		—			44,688			44,688
Other		15,420			(9,413	)		6,007
Property and equipment		3,339,020			(2,681,684	)		657,336
Accumulated depreciation, depletion and impairment		(1,787,520	)		1,787,520			—
Property and equipment, net	$	1,551,500		$	(894,164	)	$	657,336

(12)	Reflected the write-off of the deferred rent and loss on sublease liabilities.

(13)

Reflected a decrease of $62.9 million for asset retirement obligations. The fair value of asset retirement obligations was estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plugging and abandonment costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors; and (iv) a credit-adjusted risk free rate.

(14)	Reflected the cumulative impact of our fresh start accounting adjustments discussed above.

Schedule of Reorganization Items, Net

The following table summarizes the components of reorganization items, net included in the accompanying Statements of Consolidated Operations (in thousands):

				Successor						Predecessor
	For the			For the			Period from			Period from
	Year Ended			Year Ended			May 5, 2017			January 1, 2017
	December 31,			December 31,			through			through
	2019			2018			December 31, 2017			May 4, 2017
Gain on settlement of liabilities subject to compromise	$	—		$	—		$	—		$	758,764
Fresh start valuation adjustments		—			—			—			(827,120	)
Professional fees		(430	)		(864	)		(724	)		(19,824	)
Other		(627	)		(1,283	)		(395	)		(594	)
Reorganization items, net	$	(1,057	)	$	(2,147	)	$	(1,119	)	$	(88,774	)