Fresh-Start Accounting (Tables)

12 Months Ended

Dec. 31, 2020

Reorganizations [Abstract]

Schedule of Enterprise Value

Although the Company believes the assumptions and estimates used to develop enterprise value and reorganization value are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and resulting conclusions. The assumptions used in estimating these values are inherently uncertain and require judgment. The following table reconciles the Company’s Enterprise value to the estimated fair value of the Successor’s common stock as of November 30, 2020:

In thousands	As of November 30, 2020
Enterprise value	$	353,000
Plus: Cash and cash equivalents and restricted cash (excluding funds held in the professional fee escrow of $6.8 million)	11,970
Less: Fair value of debt	(272,007)
Fair Value of Successor equity	$	92,963

The following table reconciles the enterprise value to its reorganization value of Successor’s assets to be allocated to the Company’s individual assets as of the Effective Date:

In thousands	As of November 30, 2020
Enterprise value	$	353,000
Plus: Cash and cash equivalents and restricted cash (excluding funds held in the professional fee escrow of $6.8 million)	11,970
Current liabilities (excluding current portion of long-term debt)	41,459
Non-current liabilities excluding long-term debt	4,846
Mortgage obligations related to Boland Building LLC	8,328
Reorganization value of Successor's assets to be allocated	$	419,603

Schedule of Fresh-Start Adjustments

The adjustments included in the following fresh start consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and executed by the Company on the Effective Date (reflected in the column “Reorganization Adjustments”) as well as fair value and other required accounting adjustments resulting from the implementation 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 estimated fair values and significant assumptions.

	As of November 30, 2020
In thousands	Predecessor		Reorganization Adjustments		(1)	Fresh Start Adjustments			Successor
Current assets
Cash and cash equivalents	$	40,565	$	(30,752)	(2)	$	—		$	9,813
Restricted Cash	2,157		6,815		(3)	—			8,972
Accounts receivable
Oil, natural gas liquid and natural gas sales	10,354		—			—			10,354
Joint interest owners and other, net	1,458		—			—			1,458
Derivative financial instruments	916		—			—			916
Prepaid expenses and other	8,403		100		(4)	—			8,503
Total current assets	63,853		(23,837)			—			40,016
Property and equipment
Oil and gas properties, using the successful efforts method of accounting
Proved properties	1,100,211		—			(786,239)		(16)	313,972
Unproved properties	77,382		—			(42,457)		(16)	34,925
Other property and equipment	21,862		—			(2,188)		(16)	19,674
Less accumulated depreciation, depletion, amortization and impairment	(734,231)		—			734,231		(16)	—
Property and equipment, net	465,224		—			(96,653)			368,571
Accounts receivable	6,053		—			—			6,053
Derivative financial instruments	216		—			—			216
Other non-current assets	209		4,538		(5)	—			4,747
Total assets	$	535,555	$	(19,299)		$	(96,653)		$	419,603

	As of November 30, 2020
In thousands	Predecessor		Reorganization Adjustments		(1)	Fresh Start Adjustments			Successor
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	8,606	$	(1,898)	(6)	$	—		$	6,708
Oil, natural gas liquid and natural gas sales payable	17,507		—			—			17,507
Accrued liabilities	8,972		3,951		(7)	—			12,923
Derivative financial instruments	4,321		—			—			4,321
Current maturities of long-term debt	286,759		(264,602)		(8)	—			22,157
Total current liabilities	326,165		(262,549)			—			63,616
Long-term liabilities
Long-term debt	8,991		249,602		(9)	(402)		(17)	258,191
Asset retirement obligations	7,327		—			(2,969)		(18)	4,358
Deferred tax liability, net	—		—			—			—
Equity warrant liability	—		—			—			—
Derivative financial instruments	485		—			—			485
Other non-current liabilities	(10)		—			—			(10)
Total long-term liabilities	16,793		249,602			(3,371)			263,024
Liabilities subject to compromise	271,110		(271,110)		(10)	—			—
Total liabilities	614,068		(284,057)			(3,371)			326,640
Stockholders’ equity
Predecessor common stock	142,655		(142,655)		(11)	—			—
Predecessor preferred stock	—		—		(11)	—			—
Predecessor additional paid-in capital	176,012		138,980		(12)	(314,992)		(19)	—
Successor common stock	—		10		(13)	—			10
Successor additional paid-in capital	—		92,953		(14)	—			92,953
Accumulated deficit	(397,180)		175,470		(15)	221,710		(19)	—
Total stockholders’ equity	(78,513)		264,758			(93,282)			92,963
Total liabilities and stockholders’ equity	$	535,555	$	(19,299)		$	(96,653)		$	419,603

	Reorganization Adjustments
		Increase / (Decrease)
(1)	Represent amounts recorded as of the Effective Date for the implementation of the Plan, including, among other items, issuance of new debt, settlement Predecessor’s liabilities subject to compromise and issuance of the Successor’s common stock and warrants.
(2)	Changes in cash and cash equivalents include the following :
	Proceeds from Successor Senior Secured Credit Facility	$	224,602
	Proceeds from Successor Second Out Term Loan	60,000
	Payment of Predecessor Senior Secured Credit Facility	(284,602)
	Payment of Successor Senior Secured Credit Facility	(15,000)
	Payment of Predecessor Senior Secured Credit Facility interest and fees	(764)
	Payment of deferred financing fees for the Successor Senior Secured Credit Facility and Successor Second-Out Term Loan	(4,710)
	Payment to fund professional fee escrow	(6,815)
	Payment of professional fees including success fees	(3,373)
	Payment of bank fees	(90)
	Net change in cash and cash equivalents	$	(30,752)
(3)	Represents the funding of the professional fee escrow associated with the Chapter 11 Proceedings.
(4)	Represents the overpayment of professional fees.
(5)	Changes in other non-current assets include the following :
	Payment of deferred financing fees for the Senior Secured Credit Facility and Successor Second Out Term Loan	$	4,710
	Elimination of deferred financing fees on the Predecessor Senior Secured Credit Facility	(172)
	Net change in other non-current assets	$	4,538
(6)	The decrease in accounts payable represents the payment of previously accrued professional fees.
(7)	Net change in accrued liabilities include the following :
	Accrual of professional fees (success fees)	$	4,715
	Payment of Predecessor Senior Secured Credit Facility interest and fees	(764)
	Net change in other current liabilities	$	3,951
(8)	Net change in current maturities of long-term debt includes the following :
	Proceeds from Successor Second-Out Term Loan (current portion)	$	20,000
	Payment of Predecessor Senior Secured Credit Facility	(284,602)
	Net change in current maturities of long-term debt	$	(264,602)
(9)	Net change in long-term debt includes the following :
	Borrowings under Successor Senior Secured Credit Facility	$	224,602
	Borrowings under Successor Second-Out Term Loan (long-term portion)	40,000
	Payment of Successor Senior Secured Credit Facility	(15,000)
	Net change in long-term debt	$	249,602

		Increase / (Decrease)
(10)	Liabilities subject to compromise was settled in accordance with the Plan and the resulting gain were determined as follows:
	Liabilities subject to compromise consist of:
	11.25% Senior Notes	$	(250,000)
	Interest on 11.25% Senior Notes	(21,094)
	Stock compensation liability	(15)
	Acceleration of unvested predecessor stock compensation on the Effective Date	(21)
	Predecessor warrant liability	(1)
	Total liabilities subject to compromise	$	(271,131)
	Liabilities subject to compromise were settled as follows:
	Total liabilities subject to compromise	$	(271,131)
	Less: Distribution of Successor ordinary shares to creditors	88,199
	Less: Distribution of Successor warrants to creditors	1,089
	Gain on settlement of liabilities subject to compromise	$	(181,843)
(11)	Represents the cancellation of Predecessor ordinary and preferred shares at par value pursuant to the Plan.
(12)	Net change in Predecessor additional paid-in capital include the following :
	Cancellation of Predecessor ordinary and preferred shares	$	142,655
	Issuance of Successor ordinary shares to Predecessor preferred shareholders	(2,756)
	Issuance of Successor ordinary shares to Predecessor ordinary shareholders	(919)
	Net change in Predecessor additional paid-in capital	$	138,980
(13)	Represents the issuance of Successor ordinary shares to creditors, prior ordinary and preferred shareholders at par value.
(14)	Successor additional paid-in capital consists of:
	Issuance of Successor ordinary shares to creditors	$	88,189
	Issuance of Successor warrant to holders of the Predecessor Senior Secured Credit Facility	1,089
	Issuance of Successor ordinary shares to Predecessor preferred shareholders	2,756
	Issuance of Successor ordinary shares to Predecessor ordinary shareholders	919
	Total Successor additional paid in capital	$	92,953

		Increase / (Decrease)
(15)	Net change in accumulated deficit consists of the following :
	Gain on settlement of liabilities subject to compromise	$	181,843
	Acceleration of Predecessor stock compensation awards	(21)
	Accrual of professional fees (success fee)	(4,715)
	Payment of professional fees (success fee)	(1,375)
	Elimination of deferred financing fees on the Predecessor Senior Secured Credit Facility	(172)
	Payment of bank fees	(90)
	Net change in accumulated deficit	$	175,470
Fresh Start Adjustments
(16)	Reflects adjustments to present the proved oil and gas properties, unproved acreage and other property and equipment at their estimated fair values based on the valuation methodology discussed below as well as the elimination of accumulated depreciation, depletion, amortization and impairment. The following table summarizes the components of property, plant and equipment as of the Effective Date:
		Successor Fair Value		Predecessor Historical Value
	Proved properties	$	313,972	$	1,100,211
	Unproved properties	34,925		77,382
	Other property and equipment	19,674		21,862
		368,571		1,199,455
	Less accumulated depreciation, depletion, amortization and impairment	—		(734,231)
	Property and equipment, net	$	368,571	$	465,224
	For purposes of estimating the fair value of its other operating property and equipment, the Company used a combination of the market and cost approaches. A market approach was relied upon to value land and vehicles, and in this valuation approach, recent transactions of similar assets were utilized to determine the value from a market participant perspective. For the remaining other operating assets, a cost approach was used. The estimation of fair value under the cost approach was based on current replacement costs of the assets, less depreciation based on the estimated economic useful lives of the assets, age of the assets, physical deterioration, and obsolescence.
(17)	Reflects the fair value adjustment to the Boland LLC mortgage liability. The fair value of the Successor’s mortgage obligations related to Boland Building LLC (“Mortgages”) was estimated based on the DCF approach, which relies upon assumptions about the amount and timing of principal and interest payments and current market rates. In this analysis, the remaining interest and principal payments were discounted to present value using a pre-tax discount rate deemed to be reflective of a market yield for the Mortgages as of the Effective Date.
(18)	Adjustment to present at fair value the Company's asset retirement obligations (“ARO”) using assumptions as of the Effective Date, including an inflation factor of 2.5% and an estimated 30-year credit-adjusted risk-free rate of 10.5%.
		Increase / (Decrease)
(19)	The table below reflects the cumulative impact of Fresh Start Adjustments discussed above and the elimination of Predecessor capital in excess of par value and Predecessor accumulated deficit:
	Fresh start valuation adjustments	$	(93,282)
	Elimination of Predecessor Accumulated Deficit to Additional Paid In Capital	314,992
	Net Change in Accumulated Deficit	$	221,710