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SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited)
 12 Months Ended
Dec. 31, 2019
Supplemental Oil and Natural Gas Disclosures [Abstract]  
SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited) SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited)

We determined for 2018 reporting that it was not probable that we would have the necessary capital to develop our PUD reserves. Thus, we have concluded that we do not satisfy the ability-to-drill threshold under the SEC’s reserve recognition rule with respect to our available drilling locations.

The unaudited reserve and other information presented below is provided as supplemental information.  The information presented during the 2018 Predecessor Period includes amounts related to discontinued operations.

Reserve estimates are inherently imprecise and estimates of new discoveries are less precise than those of producing oil and gas properties. Accordingly, these estimates are expected to change as future information becomes available.

Reserve estimates incorporate assumptions regarding future prices and costs at the date estimates are made. Actual future prices and costs may be materially higher or lower. Actual future net revenue will also be affected by factors such as actual production, supply and demand for oil and gas, curtailments or increases in consumption by gas purchasers, changes in governmental regulations or taxation and the impact of inflation on costs.

Oil and gas producing activities are conducted onshore within the continental United States and all of our proved reserves are located within the United States.

Estimated Quantities of Proved Reserves

The following table sets forth our net proved reserves as of December 31, 2019 and 2018 and February 8, 2018, and the changes therein during the periods then ended.

 
Oil
(Mbbls)
 
Gas
(MMcf)
 
NGL’s
(Mbbls)
 
Boe
(Mbbls)
Total Proved Reserves:
 

 
 

 
 

 
 
Balance at December 31, 2017 (Predecessor)
73,518

 
433,519

 
36,887

 
182,658

Production
(521
)
 
(1,984
)
 
(161
)
 
(1,012
)
Sales of reserves in place (1)
(1,667
)
 
(24,239
)
 
(771
)
 
(6,478
)
Revisions of previous quantity estimates and other
375

 
3,506

 
289

 
1,248

Balance at February 8, 2018 (Predecessor)
71,705

 
410,802

 
36,244

 
176,416

Production(2)
(5,053
)
 
(16,913
)
 
(2,268
)
 
(10,140
)
Purchases in place(2)
2,658

 
13,331

 
1,751

 
6,631

Discoveries and extensions(2)
30,026

 
155,306

 
19,646

 
75,557

Revisions of previous quantity estimates and other(2)
(74,064
)
 
(418,378
)
 
(35,581
)
 
(179,375
)
Balance at December 31, 2018 (Successor)
25,272

 
144,148

 
19,792

 
69,089

Production
(5,885
)
 
(24,802
)
 
(2,760
)
 
(12,779
)
Discoveries and extensions
4,265

 
24,351

 
2,835

 
11,159

Revisions of previous quantity estimates and other(3)
(6,736
)
 
(29,254
)
 
(9,352
)
 
(20,964
)
Balance at December 31, 2019 (Successor)
16,916

 
114,443

 
10,515

 
46,505

 
 
 
 
 
 
 
 
Proved Developed Reserves:
 
 
 
 
 
 
 
Balance at December 31, 2017
20,347

 
150,183

 
12,180

 
57,557

Balance at February 8, 2018
19,345

 
126,231

 
11,348

 
51,731

Balance at December 31, 2018
25,272

 
144,148

 
19,792

 
69,089

Balance at December 31, 2019
16,916

 
114,443

 
10,515

 
46,505

Proved Undeveloped Reserves:
 
 
 
 
 
 
 
Balance at December 31, 2017
53,171

 
283,336

 
24,707

 
125,101

Balance at February 8, 2018
52,360

 
284,571

 
24,896

 
124,685

Balance at December 31, 2018
—

 
—

 
—

 
—

Balance at December 31, 2019
—

 
—

 
—

 
—

_________________
(1)
Sales of reserves in place during the 2018 Predecessor Period represent amounts related to our non-STACK properties that were distributed to High Mesa and are classified as discontinued operations in our financial statements.
(2)
An analysis of changes in our reserves from February 8, 2018 to December 31, 2018 follows:
 
MBoe
Description
Proved Developed Reserves
 
Proved Undeveloped Reserves
 
Total
Balance at February 8, 2018
51,731

 
124,685

 
176,416

Production
(10,140
)
 
—

 
(10,140
)
Purchases in place, discoveries and extensions
35,096

 
47,092

 
82,188

Revisions of previous quantity estimates and other:
 
 
 
 
 
Lower estimated recoveries identified as a result of 2018 drilling program
(31,964
)
 
(69,534
)
 
(101,498
)
Higher average commodity prices in Successor Period compared to 2017
5,367

 
5,829

 
11,196

Transfers of PUDs to proved developed reserves
18,999

 
(18,999
)
 
—

Derecognition of PUDs due to significant concerns about ability to fund development of those reserves
—

 
(89,073
)
 
(89,073
)
Balance at December 31, 2018
69,089

 
—

 
69,089

(3)
Revisions decreased our estimated recovery of proved reserves and is ratably due to lower average commodity prices in 2019 as compared to 2018, the decision to report ethane rejection rather than ethane recovery, and decreases in volume estimates based on the overall performance of our wells.

Results of Operations for Oil and Gas Producing Activities - Upstream Segment

Successor
 
 
Predecessor
(in thousands)
Year Ended December 31, 2019
 
February 9, 2018
Through
December 31, 2018
 
 
January 1, 2018
Through
February 8, 2018
Operating revenue
$
423,576

 
$
414,507

 
 
$
40,136

Production expense (1)
232,212

 
247,748

 
 
30,743

Depreciation, depletion and amortization
120,617

 
133,554

 
 
11,670

Exploration expense
52,354

 
34,085

 
 
7,003

Impairment expense
556,427

 
2,033,712

 
 
—

Income tax expense (benefit)
—

 
4

 
 
—

Results of operations
$
(538,034
)
 
$
(2,034,596
)
 
 
$
(9,280
)
_________________
(1)
Production expense consists of direct lease operating expense, transportation and marketing expense, production taxes, workover expense and allocated general and administrative expense.
Capitalized Costs Relating to Oil and Gas Producing Activities

December 31,
(in thousands)
2019
 
2018
Capitalized costs:
 

 
 
Proved properties
$
2,239,444

 
$
2,110,346

Unproved properties
813,310

 
816,282

Total
3,052,754

 
2,926,628

Accumulated depreciation, depletion, amortization and impairment
(2,837,402
)
 
(2,163,291
)
Net capitalized costs
$
215,352

 
$
763,337

Costs Incurred in Oil and Gas Acquisition, Exploration and Development Activities
Acquisition costs in the table below include costs incurred to purchase, lease or otherwise acquire property. Exploration expenses include additions to exploratory wells and other exploration expenses, such as geological and geophysical costs. Development costs include drilling and completion costs plus additions to production facilities and equipment.
 
Successor
 
 
Predecessor
(in thousands)
Year Ended December 31, 2019
 
February 9, 2018
Through
December 31, 2018
 
 
January 1, 2018
Through
February 8, 2018
Costs incurred during the period: (1)
 
 
 
 
 
 

Property acquisition
 
 
 
 
 
 
Unproved (2)
$
—

 
$
54,587

 
 
$
4,240

Proved
—

 
16,300

 
 
327

Exploration
7,305

 
32,130

 
 
3,678

Development (3)
134,908

 
664,138

 
 
37,672


$
142,213

 
$
767,155

 
 
$
45,917

_________________
(1)
Costs incurred in the 2018 Predecessor Period include amounts related to non-STACK oil and gas assets, which were distributed in connection with the Business Combination.
(2)
Property acquisition costs for unproved properties include the acquisition of unevaluated leasehold portion from an unaffiliated third party of approximately $22.3 million for the 2018 Successor Period.
(3)
Includes asset retirement additions (revisions) of $0.9 million and $5.6 million for the 2019 and the 2018 Successor Period, respectively. For the 2018 Predecessor Period, there were no material asset retirement additions (revisions).

Standardized Measure of Discounted Future Net Cash Flows
The following information utilizes reserve and production data prepared by us. Future cash inflows were calculated using the average price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month, for the year ended December 31, 2019, the 2018 Successor Period, and for the 2018 Predecessor Period. Well costs, operating costs, production and ad valorem taxes and future development costs are based on current costs with no escalation. 
The following table sets forth the components of the standardized measure of discounted future net cash flows:

Successor
 
 
Predecessor
(in thousands, except per unit data)
December 31, 2019
 
December 31, 2018
 
 
February 8, 2018
Future cash inflows
$
1,326,490

 
$
2,446,888

 
 
$
5,798,886

Future production costs
(825,300
)
 
(1,214,479
)
 
 
(2,556,361
)
Future development costs
(25,251
)
 
(23,183
)
 
 
(965,780
)
Future income taxes
(26,707
)
 
(146,632
)
 
 
—

Future net cash flows(1)
449,232

 
1,062,594

 
 
2,276,745

Discount to present value at 10 percent per annum
(122,321
)
 
(348,311
)
 
 
(1,096,859
)
Standardized measure of discounted future net cash flows
$
326,911

 
$
714,283

 
 
$
1,179,886

Base price for crude oil, per barrel, in the above computation
$
55.69

 
$
65.56

 
 
$
52.89

Base price for gas, per Mcf, in the above computation
$
2.58

 
$
3.10

 
 
$
2.99

Realized price for NGLs, per barrel, in the above computation
$
14.60

 
$
22.44

 
 
$
27.48



Changes in Standardized Measure of Discounted Future Net Cash Flows

Successor
 
 
Predecessor
(in thousands)
Year Ended December 31, 2019
 
February 9, 2018
Through
December 31, 2018
 
 
January 1, 2018
Through
February 8, 2018
Balance at beginning of period
$
714,283

 
$
1,179,886

 
 
$
1,105,922

Sales and transfers of oil and gas produced, net of production costs
(253,582
)
 
(278,091
)
 
 
(30,391
)
Net changes in prices and production costs
(270,712
)
 
38,963

 
 
71,334

Revisions of previous quantity estimates
(129,305
)
 
(1,120,097
)
 
 
10,887

Purchases of reserves in-place
—

 
24,376

 
 
—

Sales of reserves in-place(1)
—

 
—

 
 
(4,807
)
Current year discoveries and extensions, less related costs
134,451

 
684,700

 
 
—

Changes in estimated future development costs
473

 
(39,069
)
 
 
491

Development costs incurred during the period
84

 
160,583

 
 
—

Accretion of discount
81,285

 
117,989

 
 
110,592

Net change in income taxes
79,134

 
(98,568
)
 
 
—

Change in production rate (timing) and other
(29,200
)
 
43,611

 
 
(84,142
)
Net change
(387,372
)
 
(465,603
)
 
 
73,964

Balance at end of period
$
326,911

 
$
714,283

 
 
$
1,179,886

_________________
(1)
The sale of reserves in-place during the 2018 Predecessor Period includes the sale of non-STACK properties.