Industry Segment Information

9 Months Ended

Sep. 30, 2020

INDUSTRY SEGMENT INFORMATION

We have three main business segments offering different products and services within the energy industry:

•Oil and natural gas,

•Contract drilling, and

•Mid-stream

Our oil and natural gas segment is engaged in the acquisition, development, and production of oil, NGLs, and natural gas properties. The contract drilling segment is engaged in the land contract drilling of oil and natural gas wells and the mid-stream segment is engaged in the buying, selling, gathering, processing, and treating of natural gas and NGLs.

We evaluate each segment’s performance based on its operating income, which is defined as operating revenues less operating expenses and depreciation, depletion, amortization, and impairment. We have no oil and natural gas production outside the United States.

The following tables provide certain information about the operations of each of our segments:


	Successor
	One Month Ended September 30, 2020
	Oil and Natural Gas		Contract Drilling		Mid-stream		Corporate and Other		Eliminations		Total Consolidated
	(In thousands)
Revenues: (1)
Oil and natural gas	$	13,644	$	—	$	—	$	—	$	(1)	$	13,643
Contract drilling	—		4,414		—		—		—		4,414
Gas gathering and processing	—		—		17,284		—		(2,495)		14,789
Total revenues	13,644		4,414		17,284		—		(2,496)		32,846
Expenses:
Operating costs:
Oil and natural gas	6,892		—		—		—		(218)		6,674
Contract drilling	—		2,989		—		—		—		2,989
Gas gathering and processing	—		—		12,130		—		(2,278)		9,852
Total operating costs	6,892		2,989		12,130		—		(2,496)		19,515
Depreciation, depletion, and amortization	4,199		526		2,658		84		—		7,467
Impairments	13,237		—		—		—		—		13,237
Total expenses	24,328		3,515		14,788		84		(2,496)		40,219

General and administrative	—		—		—		1,582		—		1,582
Gain on disposition of assets	(10)		(212)		—		—		—		(222)
Income (loss) from operations	(10,674)		1,111		2,496		(1,666)		—		(8,733)
Gain on derivatives	—		—		—		3,939		—		3,939
Reorganization items, net	—		—		—		(1,155)		—		(1,155)
Interest, net	—		—		(137)		(689)		—		(826)
Other	29		1		8		1		—		39
Income (loss) before income taxes	$	(10,645)	$	1,112	$	2,367	$	430	$	—	$	(6,736)

_______________________

1.The revenues for oil and natural gas occur at a point in time. The revenues for contract drilling and gas gathering and processing occur over time.


	Predecessor
	Two Months Ended August 31, 2020
	Oil and Natural Gas		Contract Drilling		Mid-stream			Corporate and Other		Eliminations		Total Consolidated
	(In thousands)
Revenues: (1)
Oil and natural gas	$	27,962	$	—	$	—		$	—	$	(1)	$	27,961
Contract drilling	—		7,685		—			—		—		7,685
Gas gathering and processing	—		—		34,132			—		(4,204)		29,928
Total revenues	27,962		7,685		34,132			—		(4,205)		65,574
Expenses:
Operating costs:
Oil and natural gas	15,895		—		—			—		(407)		15,488
Contract drilling	—		5,410		—			—		—		5,410
Gas gathering and processing	—		—		21,620			—		(3,798)		17,822
Total operating costs	15,895		5,410		21,620			—		(4,205)		38,720
Depreciation, depletion, and amortization	9,975		853		6,750			341		—		17,919
Impairments	16,572		—		—			—		—		16,572
Total expenses	42,442		6,263		28,370			341		(4,205)		73,211
Loss on abandonment of assets	87		1,092		—			—		—		1,179
General and administrative	—		—		—			5,399		—		5,399
Gain on disposition of assets	(102)		(1,251)		(3)		0	—		—		(1,356)
Income (loss) from operations	(14,465)		1,581		5,765			(5,740)		—		(12,859)
Loss on derivatives	—		—		—			(4,250)		—		(4,250)

Reorganization items, net	15,504		(183,664)		(71,016)			380,178		—		141,002
Interest, net	—		—		(828)			(1,131)		—		(1,959)
Other	428		1,426		11			66		—		1,931
Income (loss) before income taxes	$	1,467	$	(180,657)	$	(66,068)		$	369,123	$	—	$	123,865

_______________________

1.The revenues for oil and natural gas occur at a point in time. The revenues for contract drilling and gas gathering and processing occur over time.


	Predecessor
	Three Months Ended September 30, 2019
	Oil and Natural Gas		Contract Drilling		Mid-stream		Corporate and Other		Eliminations		Total Consolidated
	(In thousands)
Revenues: (1)
Oil and natural gas	$	78,045	$	—	$	—	$	—	$	—	$	78,045
Contract drilling	—		38,626		—		—		(1,030)		37,596
Gas gathering and processing	—		—		48,585		—		(8,787)		39,798
Total revenues	78,045		38,626		48,585		—		(9,817)		155,439
Expenses:
Operating costs:
Oil and natural gas	36,621		—		—		—		(1,257)		35,364
Contract drilling	—		29,913		—		—		(1,117)		28,796
Gas gathering and processing	—		—		36,023		—		(7,530)		28,493
Total operating costs	36,621		29,913		36,023		—		(9,904)		92,653
Depreciation, depletion, and amortization	43,587		12,845		11,847		1,935		—		70,214
Impairments	169,806		62,809		2,265		—		—		234,880
Total expenses	250,014		105,567		50,135		1,935		(9,904)		397,747
General and administrative	—		—		—		10,094		—		10,094
(Gain) loss on disposition of assets	(28)		288		(28)		(1)		—		231
Income (loss) from operations	(171,941)		(67,229)		(1,522)		(12,028)		87		(252,633)
Gain on derivatives	—		—		—		4,237		—		4,237
Interest, net	—		—		(448)		(9,086)		—		(9,534)
Other	—		(627)		—		5		—		(622)
Income (loss) before income taxes	$	(171,941)	$	(67,856)	$	(1,970)	$	(16,872)	87		$	(258,552)

_______________________

1.The revenues for oil and natural gas occur at a point in time. The revenues for contract drilling and gas gathering and processing occur over time.


	Predecessor
	Eight Months Ended August 31, 2020
	Oil and Natural Gas		Contract Drilling		Mid-stream		Corporate and Other		Eliminations		Total Consolidated
	(In thousands)
Revenues: (1)
Oil and natural gas	$	103,443	$	—	$	—	$	—	$	(4)	$	103,439
Contract drilling	—		73,519		—		—		—		73,519
Gas gathering and processing	—		—		114,531		—		(14,532)		99,999
Total revenues	103,443		73,519		114,531		—		(14,536)		276,957
Expenses:
Operating costs:
Oil and natural gas	119,664		—		—		—		(1,973)		117,691
Contract drilling	—		51,811		—		—		(1)		51,810
Gas gathering and processing	—		—		80,607		—		(12,562)		68,045
Total operating costs	119,664		51,811		80,607		—		(14,536)		237,546
Depreciation, depletion, and amortization	68,762		15,544		29,371		1,819		—		115,496
Impairments	393,726		410,126		63,962		—		—		867,814
Total expenses	582,152		477,481		173,940		1,819		(14,536)		1,220,856
Loss on abandonment of assets	17,641		1,092		—		—		—		18,733
General and administrative	—		—		—		42,766		—		42,766
(Gain) loss on disposition of assets	(160)		(1,390)		(18)		1,479		—		(89)
Loss from operations	(496,190)		(403,664)		(59,391)		(46,064)		—		(1,005,309)
Loss on derivatives	—		—		—		(10,704)		—		(10,704)
Write-off of debt issuance costs	—		—		—		(2,426)		—		(2,426)
Reorganization items, net	15,504		(183,664)		(71,016)		373,151		—		133,975
Interest, net	—		—		(1,888)		(20,936)		—		(22,824)
Other	458		1,449		50		77		—		2,034
Income (loss) before income taxes	$	(480,228)	$	(585,879)	$	(132,245)	$	293,098	$	—	$	(905,254)

_______________________ ____________________

1.The revenues for oil and natural gas occur at a point in time. The revenues for contract drilling and gas gathering and processing occur over time.


	Predecessor
	Nine Months Ended September 30, 2019
	Oil and Natural Gas		Contract Drilling		Mid-stream		Corporate and Other		Eliminations		Total Consolidated
	(In thousands)
Revenues: (1)
Oil and natural gas	$	241,955	$	—	$	—	$	—	$	—	$	241,955
Contract drilling	—		147,598		—		—		(15,810)		131,788
Gas gathering and processing	—		—		173,724		—		(37,191)		136,533
Total revenues	241,955		147,598		173,724		—		(53,001)		510,276
Expenses:
Operating costs:
Oil and natural gas	108,148		—		—		—		(3,828)		104,320
Contract drilling	—		103,688		—		—		(14,183)		89,505
Gas gathering and processing	—		—		133,702		—		(33,363)		100,339
Total operating costs	108,148		103,688		133,702		—		(51,374)		294,164
Depreciation, depletion, and amortization	118,105		39,048		35,675		5,804		—		198,632
Impairments	169,806		62,809		2,265		—		—		234,880
Total expenses	396,059		205,545		171,642		5,804		(51,374)		727,676
General and administrative	—		—		—		29,899		—		29,899
(Gain) loss on disposition of assets	(166)		1,737		(136)		(11)		—		1,424
Income (loss) from operations	(153,938)		(59,684)		2,218		(35,692)		(1,627)		(248,723)
Gain on derivatives	—		—		—		5,232		—		5,232
Interest, net	—		—		(1,129)		(25,938)		—		(27,067)
Other	—		(627)		—		16		—		(611)
Income (loss) before income taxes	$	(153,938)	$	(60,311)	$	1,089	(56,382)		$	(1,627)	$	(271,169)

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1.The revenues for oil and natural gas occur at a point in time. The revenues for contract drilling and gas gathering and processing occur over time.