DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

Alta Mesa Resources, Inc. (“AMR”), together with its consolidated subsidiaries (“we”, “us”, “our” or “the Company”), is an independent exploration and production company focused on the development of unconventional onshore oil and natural gas reserves in the eastern portion of the Anadarko Basin in Oklahoma. We operate in two reportable business segments - Upstream and Midstream. Alta Mesa Holdings, LP (“Alta Mesa”) conducts our Upstream activities and owns our proved and unproved oil and gas properties located in an area of the Anadarko Basin commonly referred to as the STACK. We generate upstream revenue principally by the production and sale of oil, gas and NGLs. Kingfisher Midstream, LLC (“KFM”) conducts our Midstream operations. KFM has a gas and oil gathering network, a cryogenic gas processing plant with offtake capacity, field compression facilities and a produced water disposal system in the Anadarko Basin that generates revenue primarily through long-term, fee-based contracts.

We were originally incorporated in Delaware in November 2016 as a special purpose acquisition company under the name Silver Run Acquisition Corporation II. On March 29, 2017, we consummated our initial public offering (“IPO”). Proceeds from the IPO and a private sale of warrants were placed in a trust account and were used on February 9, 2018, to acquire the interests in Alta Mesa, Alta Mesa Holdings GP, LLC (“Alta Mesa GP”) and KFM through a newly formed subsidiary, SRII Opco, LP (“SRII Opco”) in a transaction referred to as the “Business Combination” at which time we changed our name from “Silver Run Acquisition Corporation II” to “Alta Mesa Resources, Inc.”.

On September 11, 2019, AMR, Alta Mesa and all of its subsidiaries (the “AMH Debtors” and together with AMR, the “Initial Debtors”) filed voluntary petitions (“Initial Bankruptcy Petitions”) for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”).

On January 12, 2020, KFM and all of its subsidiaries (collectively, the “KFM Debtors”) filed voluntary petitions (“ KFM Bankruptcy Petitions”) for relief under the Bankruptcy Code. On January 13, 2020, SRII Opco GP, LLC and SRII Opco (collectively, the “SRII Debtors” and, together with the KFM Debtors, the “Additional Debtors”) filed voluntary petitions (“SRII Bankruptcy Petitions and, together with the KFM Bankruptcy Petitions, the “Additional Bankruptcy Petitions”) for relief under the Bankruptcy Code. The Additional Debtors’ Chapter 11 cases are being jointly administered with the Initial Debtors’ Chapter 11 cases.

The Initial and Additional Debtors continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.

On December 31, 2019, the Initial Debtors entered into a Purchase and Sale Agreement (as amended and restated in January 2020, the “AMH PSA”) with BCE-Mach III LLC (the “Buyer”) pursuant to which the AMH Debtors agreed to sell to the Buyer substantially all of our upstream assets for an unadjusted purchase price of $232.0 million in cash, subject to customary purchase price adjustments (such transaction, the “AMH Sale Transaction”). On December 31, 2019, the KFM Debtors entered into a Purchase and Sale Agreement (as amended and restated in January 2020, the “KFM PSA” and, together with the AMH PSA, the “PSAs”) with the Buyer pursuant to which the KFM Debtors agreed to sell to the Buyer substantially all of our midstream assets for an unadjusted purchase price of $88.0 million in cash, subject to customary purchase price adjustments (such transaction, the “KFM Sale Transaction” and, together with the AMH Sale Transaction, the “Sale Transactions”).

The Sale Transactions are expected to close no later than mid-April 2020, after which we will no longer own any operating assets. Following the expected sale, we intend to provide certain transition services to the Buyer for a limited period of time and expect to wind down our remaining business during the first half of 2020, which will result in the dissolution of AMR and its subsidiaries.

In March 2020, AMR, the AMH Debtors and the SRII Debtors expect to file a Chapter 11 plan (collectively, the “AMR Plan”). The AMR Plan will generally provide for the distribution of the proceeds of the AMH Sale Transaction to AMH’s creditors and transfer any remaining assets of the Initial Debtors and SRII Opco Debtors into a liquidating trust to administer and monetize such assets and to reconcile creditor claims against such debtors for the benefit of their respective creditors. Pursuant to the AMR Plan, all outstanding shares of class A common stock and class C common stock in the Company are expected to be canceled.

The AMR Plan will be subject to approval by the Bankruptcy Court and the Initial Debtors and the SRII Debtors are expected to solicit votes on the AMR Plan from certain of their creditors entitled to vote thereon pursuant to the requirements of the Bankruptcy Code. We expect the Bankruptcy Court to hold a hearing to consider confirmation of the AMR Plan in April 2020. To the extent that the AMR Plan is confirmed by the Bankruptcy Court, AMR expects the AMR Plan to become effective and be consummated shortly thereafter.

In March 2020, the KFM Debtors filed a Chapter 11 plan (the “KFM Plan”). The KFM Plan will generally provide for the (i) distribution of the proceeds of the KFM Sale Transaction to creditors, (ii) liquidation of any remaining assets of the KFM Debtors, and (iii) orderly wind-down of the KFM Debtors’ estates. Under the KFM Plan, the KFM Debtors will appoint a plan administrator who will, among other things, oversee the wind-down of the KFM Debtors and implement all provisions of the KFM Plan, including controlling and effectuating claims reconciliation.

The KFM Plan is subject to approval by the Bankruptcy Court and the KFM Debtors are expected to solicit votes on the KFM Plan from certain of the KFM Debtors’ creditors pursuant to the requirements of the Bankruptcy Code. We expect the Bankruptcy Court to hold a hearing to consider confirmation of the KFM Plan in April 2020. To the extent that the KFM Plan is confirmed by the Bankruptcy Court, KFM expects the KFM Plan to become effective and be consummated shortly thereafter.

Our Class A Common Stock and public warrants to purchase Class A Common Stock, sold as part of the shares issued in the IPO, were initially traded on the NASDAQ Capital Market (“NASDAQ”), but due to our failure to continue to meet the NASDAQ’s listing requirements, trading in our stock and public warrants was suspended in September 2019, and are now traded over the counter on the OTC Pink Marketplace under the symbols “AMRQQ” and “AMRWQ”, respectively. In February 2020, we filed forms with the Securities and Exchange Commission to deregister our Class A Common Stock and warrants under Section 12(g) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and suspend our reporting obligations under Sections 13 and 15(d) of the Exchange Act.

In connection with the closing of the Business Combination, Alta Mesa distributed its non-STACK oil and gas assets and related liabilities to High Mesa Holdings, LP (“High Mesa”). The results of operations of the non-STACK assets and related liabilities are reflected as discontinued operations in the Predecessor portion of our financial statements.