FORM 10-Q |
CABOT OIL & GAS CORPORATION |
(Exact name of registrant as specified in its charter) |
DELAWARE | 04-3072771 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Page | ||
(In thousands, except share amounts) | June 30, 2016 | December 31, 2015 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 517,490 | $ | 514 | ||||
Accounts receivable, net | 118,048 | 120,229 | ||||||
Income taxes receivable | 4,187 | 4,323 | ||||||
Inventories | 14,985 | 17,049 | ||||||
Other current assets | 4,528 | 2,671 | ||||||
Total current assets | 659,238 | 144,786 | ||||||
Properties and equipment, net (Successful efforts method) | 4,762,680 | 4,976,879 | ||||||
Equity method investments | 123,623 | 103,517 | ||||||
Other assets | 24,929 | 27,856 | ||||||
$ | 5,570,470 | $ | 5,253,038 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 142,501 | $ | 160,407 | ||||
Current portion of long-term debt | 20,000 | 20,000 | ||||||
Accrued liabilities | 19,344 | 24,923 | ||||||
Interest payable | 28,144 | 30,222 | ||||||
Derivative instruments | 18,501 | — | ||||||
Total current liabilities | 228,490 | 235,552 | ||||||
Long-term debt, net | 1,519,849 | 1,996,139 | ||||||
Deferred income taxes | 745,085 | 807,236 | ||||||
Asset retirement obligations | 133,066 | 143,606 | ||||||
Postretirement benefits | 36,937 | 35,293 | ||||||
Other liabilities | 29,444 | 26,024 | ||||||
Total liabilities | 2,692,871 | 3,243,850 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Common stock: | ||||||||
Authorized — 960,000,000 shares of $0.10 par value in 2016 and 2015, respectively | ||||||||
Issued — 475,040,914 shares and 423,768,593 shares in 2016 and 2015, respectively | 47,504 | 42,377 | ||||||
Additional paid-in capital | 1,716,933 | 721,997 | ||||||
Retained earnings | 1,420,328 | 1,552,014 | ||||||
Accumulated other comprehensive income (loss) | (331 | ) | (365 | ) | ||||
Less treasury stock, at cost: | ||||||||
9,892,680 shares in 2016 and 2015, respectively | (306,835 | ) | (306,835 | ) | ||||
Total stockholders' equity | 2,877,599 | 2,009,188 | ||||||
$ | 5,570,470 | $ | 5,253,038 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
OPERATING REVENUES | ||||||||||||||||
Natural gas | $ | 223,232 | $ | 224,806 | $ | 450,811 | $ | 584,997 | ||||||||
Crude oil and condensate | 46,156 | 81,233 | 76,833 | 143,791 | ||||||||||||
Gain (loss) on derivative instruments | (27,184 | ) | (6,819 | ) | (8,190 | ) | 27,304 | |||||||||
Brokered natural gas | 2,596 | 3,813 | 5,776 | 8,640 | ||||||||||||
Other | 2,016 | 3,264 | 3,527 | 6,330 | ||||||||||||
246,816 | 306,297 | 528,757 | 771,062 | |||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Direct operations | 26,477 | 36,112 | 52,513 | 72,129 | ||||||||||||
Transportation and gathering | 107,560 | 98,295 | 217,213 | 219,531 | ||||||||||||
Brokered natural gas | 2,021 | 2,885 | 4,587 | 6,624 | ||||||||||||
Taxes other than income | 8,973 | 11,611 | 14,967 | 22,891 | ||||||||||||
Exploration | 3,738 | 5,298 | 10,121 | 14,030 | ||||||||||||
Depreciation, depletion and amortization | 147,533 | 152,513 | 309,420 | 328,009 | ||||||||||||
General and administrative | 20,247 | 19,978 | 48,621 | 42,507 | ||||||||||||
316,549 | 326,692 | 657,442 | 705,721 | |||||||||||||
Earnings (loss) on equity method investments | (73 | ) | 1,512 | 1,935 | 2,933 | |||||||||||
Gain (loss) on sale of assets | (878 | ) | (79 | ) | 477 | 59 | ||||||||||
INCOME (LOSS) FROM OPERATIONS | (70,684 | ) | (18,962 | ) | (126,273 | ) | 68,333 | |||||||||
Loss on debt extinguishment | 4,709 | — | 4,709 | — | ||||||||||||
Interest expense | 21,963 | 24,168 | 46,338 | 47,734 | ||||||||||||
Income (loss) before income taxes | (97,356 | ) | (43,130 | ) | (177,320 | ) | 20,599 | |||||||||
Income tax expense (benefit) | (34,446 | ) | (15,622 | ) | (63,216 | ) | 7,852 | |||||||||
NET INCOME (LOSS) | $ | (62,910 | ) | $ | (27,508 | ) | $ | (114,104 | ) | $ | 12,747 | |||||
Earnings (loss) per share | ||||||||||||||||
Basic | $ | (0.14 | ) | $ | (0.07 | ) | $ | (0.25 | ) | $ | 0.03 | |||||
Diluted | $ | (0.14 | ) | $ | (0.07 | ) | $ | (0.25 | ) | $ | 0.03 | |||||
Weighted-average common shares outstanding | ||||||||||||||||
Basic | 465,068 | 413,713 | 448,455 | 413,530 | ||||||||||||
Diluted | 465,068 | 413,713 | 448,455 | 414,878 | ||||||||||||
Dividends per common share | $ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.04 |
Six Months Ended June 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (114,104 | ) | $ | 12,747 | |||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 309,420 | 328,009 | ||||||
Deferred income tax expense (benefit) | (64,294 | ) | 7,160 | |||||
(Gain) loss on sale of assets | (477 | ) | (59 | ) | ||||
Exploratory dry hole cost | 18 | 178 | ||||||
(Gain) loss on derivative instruments | 8,190 | (27,304 | ) | |||||
Net cash received (paid) in settlement of derivative instruments | 11,305 | 88,730 | ||||||
Earnings on equity method investments | (1,935 | ) | (2,933 | ) | ||||
Amortization of debt issuance costs | 2,692 | 2,337 | ||||||
Stock-based compensation and other | 17,963 | 14,535 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | 2,118 | 99,897 | ||||||
Income taxes | 516 | (2,184 | ) | |||||
Inventories | 1,362 | (6,397 | ) | |||||
Other current assets | (1,858 | ) | (2,953 | ) | ||||
Accounts payable, accrued liabilities and interest payable | (24,318 | ) | (65,023 | ) | ||||
Other assets and liabilities | 646 | (2,663 | ) | |||||
Stock-based compensation tax benefit | — | (5,486 | ) | |||||
Net cash provided by operating activities | 147,244 | 438,591 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures | (159,399 | ) | (645,092 | ) | ||||
Acquisitions | — | (16,300 | ) | |||||
Proceeds from sale of assets | 49,828 | 3,002 | ||||||
Investment in equity method investments | (18,171 | ) | (10,114 | ) | ||||
Net cash used in investing activities | (127,742 | ) | (668,504 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Borrowings from debt | 90,000 | 642,000 | ||||||
Repayments of debt | (567,000 | ) | (399,000 | ) | ||||
Sale of common stock, net | 995,279 | — | ||||||
Dividends paid | (17,582 | ) | (16,537 | ) | ||||
Stock-based compensation tax benefit | — | 5,486 | ||||||
Capitalized debt issuance costs | (3,223 | ) | (7,838 | ) | ||||
Other | — | 79 | ||||||
Net cash provided by financing activities | 497,474 | 224,190 | ||||||
Net increase (decrease) in cash and cash equivalents | 516,976 | (5,723 | ) | |||||
Cash and cash equivalents, beginning of period | 514 | 20,954 | ||||||
Cash and cash equivalents, end of period | $ | 517,490 | $ | 15,231 | ||||
Supplemental non-cash transactions: | ||||||||
Change in accrued capital costs | $ | 3,167 | $ | (134,875 | ) |
(In thousands) | June 30, 2016 | December 31, 2015 | ||||||
Proved oil and gas properties | $ | 7,543,345 | $ | 8,821,146 | ||||
Unproved oil and gas properties | 325,857 | 390,434 | ||||||
Gathering and pipeline systems | 191,848 | 243,672 | ||||||
Land, building and other equipment | 80,397 | 117,848 | ||||||
8,141,447 | 9,573,100 | |||||||
Accumulated depreciation, depletion and amortization | (3,378,767 | ) | (4,596,221 | ) | ||||
$ | 4,762,680 | $ | 4,976,879 |
Constitution | Meade | Total | ||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Balance at beginning of period | $ | 90,345 | $ | 64,268 | $ | 13,172 | $ | 3,761 | $ | 103,517 | $ | 68,029 | ||||||||||||
Contributions | 6,800 | 6,000 | 11,371 | 4,114 | 18,171 | 10,114 | ||||||||||||||||||
Earnings (loss) on equity method investments | 1,937 | 2,955 | (2 | ) | (22 | ) | 1,935 | 2,933 | ||||||||||||||||
Balance at end of period | $ | 99,082 | $ | 73,223 | $ | 24,541 | $ | 7,853 | $ | 123,623 | $ | 81,076 |
(In thousands) | June 30, 2016 | December 31, 2015 | ||||||
Total Debt | ||||||||
7.33% weighted-average senior notes | $ | 20,000 | $ | 20,000 | ||||
6.51% weighted-average senior notes | 361,000 | 425,000 | ||||||
9.78% senior notes | 67,000 | 67,000 | ||||||
5.58% weighted-average senior notes | 175,000 | 175,000 | ||||||
3.65% weighted-average senior notes | 925,000 | 925,000 | ||||||
Revolving credit facility | — | 413,000 | ||||||
1,548,000 | 2,025,000 | |||||||
Unamortized debt issuance costs | (8,151 | ) | (8,861 | ) | ||||
Total debt, net(1) | $ | 1,539,849 | $ | 2,016,139 |
Collars | Basis Swaps | |||||||||||||||||||||||||||
Floor | Ceiling | Swaps | ||||||||||||||||||||||||||
Type of Contract | Volume | Contract Period | Range | Weighted-Average | Range | Weighted- Average | Weighted- Average | Weighted- Average | ||||||||||||||||||||
Natural gas | 29.9 | Bcf | Jul. 2016 - Oct. 2016 | $ | 2.51 | |||||||||||||||||||||||
Natural gas | 14.2 | Bcf | Jan. 2018 - Dec. 2019 | $ | 0.42 | |||||||||||||||||||||||
Crude oil | 0.9 | Mmbbl | Jul. 2016 - Dec. 2016 | $ | — | $ | 38.00 | $47.10-$47.50 | $ | 47.28 |
Derivative Liabilities | ||||||||||
(In thousands) | Balance Sheet Location | June 30, 2016 | December 31, 2015 | |||||||
Commodity contracts | Derivative instruments (current) | $ | 18,501 | $ | — | |||||
Commodity contracts | Other liabilities (non-current) | 994 | — | |||||||
$ | 19,495 | $ | — |
(In thousands) | June 30, 2016 | December 31, 2015 | ||||||
Derivative liabilities | ||||||||
Gross amounts of recognized liabilities | $ | 19,495 | $ | — | ||||
Gross amounts offset in the statement of financial position | — | — | ||||||
Net amounts of liabilities presented in the statement of financial position | 19,495 | — | ||||||
Gross amounts of financial instruments not offset in the statement of financial position | 236 | — | ||||||
Net amount | $ | 19,731 | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Cash received (paid) on settlement of derivative instruments | ||||||||||||||||
Gain (loss) on derivative instruments | $ | 11,305 | $ | 51,045 | $ | 11,305 | $ | 88,730 | ||||||||
Non-cash gain (loss) on derivative instruments | ||||||||||||||||
Gain (loss) on derivative instruments | (38,489 | ) | (57,864 | ) | (19,495 | ) | (61,426 | ) | ||||||||
$ | (27,184 | ) | $ | (6,819 | ) | $ | (8,190 | ) | $ | 27,304 |
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at June 30, 2016 | ||||||||||||
Assets | ||||||||||||||||
Deferred compensation plan | $ | 11,760 | $ | — | $ | — | $ | 11,760 | ||||||||
Total assets | $ | 11,760 | $ | — | $ | — | $ | 11,760 | ||||||||
Liabilities | ||||||||||||||||
Deferred compensation plan | $ | 24,522 | $ | — | $ | — | $ | 24,522 | ||||||||
Derivative instruments | — | 11,189 | 8,306 | 19,495 | ||||||||||||
Total liabilities | $ | 24,522 | $ | 11,189 | $ | 8,306 | $ | 44,017 |
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at December 31, 2015 | ||||||||||||
Assets | ||||||||||||||||
Deferred compensation plan | $ | 12,921 | $ | — | $ | — | $ | 12,921 | ||||||||
Total assets | $ | 12,921 | $ | — | $ | — | $ | 12,921 | ||||||||
Liabilities | ||||||||||||||||
Deferred compensation plan | $ | 22,371 | $ | — | $ | — | $ | 22,371 | ||||||||
Total liabilities | $ | 22,371 | $ | — | $ | — | $ | 22,371 |
Six Months Ended June 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
Balance at beginning of period | $ | — | $ | 85,958 | ||||
Total gain (loss) included in earnings | (6,499 | ) | 12,662 | |||||
Settlement (gain) loss | (1,807 | ) | (50,622 | ) | ||||
Transfers in and/or out of level 3 | — | — | ||||||
Balance at end of period | $ | (8,306 | ) | $ | 47,998 | |||
Change in unrealized gains (losses) relating to assets and liabilities still held at the end of the period | $ | (8,306 | ) | $ | (37,961 | ) |
June 30, 2016 | December 31, 2015 | |||||||||||||||
(In thousands) | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Debt, net | $ | 1,539,849 | $ | 1,519,226 | $ | 2,016,139 | $ | 1,839,530 | ||||||||
Current maturities | (20,000 | ) | (20,060 | ) | (20,000 | ) | (20,378 | ) | ||||||||
Long-term debt, excluding current maturities | $ | 1,519,849 | $ | 1,499,166 | $ | 1,996,139 | $ | 1,819,152 |
(In thousands) | Six Months Ended June 30, 2016 | |||
Balance at beginning of period | $ | 145,606 | ||
Liabilities incurred | 2,389 | |||
Liabilities settled | (135 | ) | ||
Liabilities divested | (16,353 | ) | ||
Accretion expense | 3,559 | |||
Balance at end of period | $ | 135,066 |
Grant Date | June 30, 2016 | |||||
Fair value per performance share award | $ | 18.57 | $7.03 - $10.79 | |||
Assumptions: | ||||||
Stock price volatility | 34.4 | % | 37.4% - 49.8% | |||
Risk free rate of return | 0.9 | % | 0.4% - 0.7% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||
Weighted-average shares - basic | 465,068 | 413,713 | 448,455 | 413,530 | ||||||||
Dilution effect of stock appreciation rights and stock awards at end of period | — | — | — | 1,348 | ||||||||
Weighted-average shares - diluted | 465,068 | 413,713 | 448,455 | 414,878 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||
Weighted-average stock appreciation rights and stock awards excluded from diluted EPS due to the anti-dilutive effect due to net loss | 1,569 | 1,655 | 1,168 | — | ||||||||
Weighted-average stock appreciation rights and stock awards excluded from diluted EPS due to the anti-dilutive effect calculated using the treasury stock method | — | 1 | 827 | 400 | ||||||||
Weighted-average stock appreciation rights and stock awards excluded from diluted EPS due to the anti-dilutive effect | 1,569 | 1,656 | 1,995 | 400 |
(In thousands) | June 30, 2016 | December 31, 2015 | ||||||
Accounts receivable, net | ||||||||
Trade accounts | $ | 115,463 | $ | 116,772 | ||||
Joint interest accounts | 1,517 | 2,013 | ||||||
Other accounts | 2,211 | 2,557 | ||||||
119,191 | 121,342 | |||||||
Allowance for doubtful accounts | (1,143 | ) | (1,113 | ) | ||||
$ | 118,048 | $ | 120,229 | |||||
Inventories | ||||||||
Tubular goods and well equipment | $ | 13,038 | $ | 14,685 | ||||
Natural gas in storage | 1,947 | 2,364 | ||||||
$ | 14,985 | $ | 17,049 | |||||
Other assets | ||||||||
Deferred compensation plan | $ | 11,760 | $ | 12,921 | ||||
Debt issuance costs | 13,113 | 14,871 | ||||||
Other accounts | 56 | 64 | ||||||
$ | 24,929 | $ | 27,856 | |||||
Accounts payable | ||||||||
Trade accounts | $ | 23,573 | $ | 30,038 | ||||
Natural gas purchases | 1,446 | 2,231 | ||||||
Royalty and other owners | 73,153 | 75,106 | ||||||
Accrued capital costs | 30,646 | 27,479 | ||||||
Taxes other than income | 6,078 | 14,628 | ||||||
Other accounts | 7,605 | 10,925 | ||||||
$ | 142,501 | $ | 160,407 | |||||
Accrued liabilities | ||||||||
Employee benefits | $ | 6,670 | $ | 13,870 | ||||
Taxes other than income | 9,299 | 5,073 | ||||||
Income taxes payable | 380 | — | ||||||
Asset retirement obligations | 2,000 | 2,000 | ||||||
Other accounts | 995 | 3,980 | ||||||
$ | 19,344 | $ | 24,923 | |||||
Other liabilities | ||||||||
Deferred compensation plan | $ | 24,522 | $ | 22,371 | ||||
Derivative instruments | 994 | — | ||||||
Other accounts | 3,928 | 3,653 | ||||||
$ | 29,444 | $ | 26,024 |
• | Equivalent production increased 2.7 Bcfe, or 1%, from 309.4 Bcfe, or 1.7 Bcfe per day, in 2015 to 312.1 Bcfe, or 1.7 Bcfe per day, in 2016. |
• | Natural gas production increased 7.2 Bcf, or 2%, from 290.2 Bcf in 2015 to 297.4 Bcf in 2016, as a result of drilling and completion activity in Pennsylvania, partially offset by the divestiture of certain oil and gas properties in east Texas. |
• | Crude oil/condensate/NGL production decreased 0.8 Mmbbls, or 23%, from 3.2 Mmbbls in 2015 to 2.5 Mmbbls in 2016, as result of a decrease in drilling activity in south Texas due to the current commodity price environment. |
• | Average realized natural gas price was $1.55 per Mcf, 33% lower than the $2.32 per Mcf realized in the comparable period of the prior year. |
• | Average realized crude oil price was $34.06 per Bbl, 32% lower than the $50.00 per Bbl realized in the comparable period of the prior year. |
• | Drilled 17 gross wells (17.0 net) with a success rate of 100% compared to 87 gross wells (78.5 net) with a success rate of 100% for the comparable period of the prior year. |
• | Total capital expenditures were $162.5 million compared to $526.3 million in the comparable period of the prior year. |
• | Average rig count during 2016 was approximately 1.1 rigs in the Marcellus Shale and approximately 0.2 rigs in the Eagle Ford Shale, compared to an average rig count in the Marcellus Shale of approximately 4.0 rigs and approximately 2.7 rigs in the Eagle Ford Shale in 2015. |
• | In the first quarter of 2016, we completed a public offering of our common stock and received net proceeds of $995.6 million, after deducting underwriting discounts and commissions. |
• | In the first quarter of 2016, we received proceeds of $49.8 million primarily related to the divestiture of certain proved and unproved oil and gas properties in east Texas. |
• | In the second quarter of 2016, we repurchased $64.0 million principal amount of our 6.51% weighted-average senior notes for approximately $68.3 million. |
• | Continuing to exercise discipline in our capital program by reducing our capital expenditures and number of wells drilled compared to the prior year. |
• | Continuing to optimize our drilling, completion and operational efficiencies, resulting in lower operating costs per unit of production. |
• | Continuing to manage our balance sheet, including the recent issuance of common stock in February 2016 which allowed us to pay down the outstanding balance under our revolving credit facility and certain of our senior notes, leaving us with sufficient availability under our revolving credit facility to meet our capital requirements and maintain compliance with our debt covenants. |
• | Continuing to manage price risk by strategically hedging our natural gas and crude oil production. |
Six Months Ended June 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
Cash flows provided by operating activities | $ | 147,244 | $ | 438,591 | ||||
Cash flows used in investing activities | (127,742 | ) | (668,504 | ) | ||||
Cash flows provided by financing activities | 497,474 | 224,190 | ||||||
Net increase (decrease) in cash and cash equivalents | $ | 516,976 | $ | (5,723 | ) |
(Dollars in thousands) | June 30, 2016 | December 31, 2015 | ||||||
Debt | $ | 1,539,849 | $ | 2,016,139 | ||||
Stockholders' equity | 2,877,599 | 2,009,188 | ||||||
Total capitalization | $ | 4,417,448 | $ | 4,025,327 | ||||
Debt to total capitalization | 35 | % | 50 | % | ||||
Cash and cash equivalents | $ | 517,490 | $ | 514 |
Six Months Ended June 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
Capital expenditures | ||||||||
Drilling and facilities | $ | 157,716 | $ | 494,002 | ||||
Leasehold acquisitions | 592 | 12,825 | ||||||
Property acquisitions | — | 16,300 | ||||||
Pipeline and gathering | 775 | 1,089 | ||||||
Other | 3,465 | 2,122 | ||||||
162,548 | 526,338 | |||||||
Exploration expenditures | 10,121 | 14,030 | ||||||
Total | $ | 172,669 | $ | 540,368 |
Three Months Ended June 30, | Variance | ||||||||||||||
Revenue Variances (In thousands) | 2016 | 2015 | Amount | Percent | |||||||||||
Natural gas | $ | 223,232 | $ | 224,806 | $ | (1,574 | ) | (1 | )% | ||||||
Crude oil and condensate | 46,156 | 81,233 | (35,077 | ) | (43 | )% | |||||||||
Gain (loss) on derivative instruments | (27,184 | ) | (6,819 | ) | (20,365 | ) | 299 | % | |||||||
Brokered natural gas | 2,596 | 3,813 | (1,217 | ) | (32 | )% | |||||||||
Other | 2,016 | 3,264 | (1,248 | ) | (38 | )% | |||||||||
$ | 246,816 | $ | 306,297 | $ | (59,481 | ) | (19 | )% |
Three Months Ended June 30, | Variance | Increase (Decrease) (In thousands) | |||||||||||||||||
2016 | 2015 | Amount | Percent | ||||||||||||||||
Price Variances | |||||||||||||||||||
Natural gas | $ | 1.55 | $ | 1.75 | $ | (0.20 | ) | (11 | )% | $ | (29,399 | ) | |||||||
Crude oil and condensate | $ | 40.51 | $ | 56.10 | $ | (15.59 | ) | (28 | )% | (17,742 | ) | ||||||||
Total | $ | (47,141 | ) | ||||||||||||||||
Volume Variances | |||||||||||||||||||
Natural gas (Bcf) | 144.3 | 128.4 | 15.9 | 12 | % | $ | 27,825 | ||||||||||||
Crude oil and condensate (Mbbl) | 1,139 | 1,448 | (309 | ) | (21 | )% | (17,335 | ) | |||||||||||
Total | $ | 10,490 |
Three Months Ended June 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
Cash received (paid) on settlement of derivative instruments | ||||||||
Gain (loss) on derivative instruments | $ | 11,305 | $ | 51,045 | ||||
Non-cash gain (loss) on derivative instruments | ||||||||
Gain (loss) on derivative instruments | (38,489 | ) | (57,864 | ) | ||||
$ | (27,184 | ) | $ | (6,819 | ) |
Three Months Ended June 30, | Variance | Price and Volume Variances (In thousands) | |||||||||||||||||
2016 | 2015 | Amount | Percent | ||||||||||||||||
Brokered Natural Gas Sales | |||||||||||||||||||
Sales price ($/Mcf) | $ | 2.11 | $ | 2.82 | $ | (0.71 | ) | (25 | )% | $ | (875 | ) | |||||||
Volume brokered (Mmcf) | x | 1,232 | x | 1,350 | (118 | ) | (9 | )% | (342 | ) | |||||||||
Brokered natural gas (In thousands) | $ | 2,596 | $ | 3,813 | $ | (1,217 | ) | ||||||||||||
Brokered Natural Gas Purchases | |||||||||||||||||||
Purchase price ($/Mcf) | $ | 1.64 | $ | 2.14 | $ | (0.50 | ) | (23 | )% | $ | 616 | ||||||||
Volume brokered (Mmcf) | x | 1,232 | x | 1,350 | (118 | ) | (9 | )% | 248 | ||||||||||
Brokered natural gas (In thousands) | $ | 2,021 | $ | 2,885 | $ | 864 | |||||||||||||
Brokered natural gas margin (In thousands) | $ | 575 | $ | 928 | $ | (353 | ) |
Three Months Ended June 30, | Variance | ||||||||||||||
(In thousands) | 2016 | 2015 | Amount | Percent | |||||||||||
Operating and Other Expenses | |||||||||||||||
Direct operations | $ | 26,477 | $ | 36,112 | $ | (9,635 | ) | (27 | )% | ||||||
Transportation and gathering | 107,560 | 98,295 | 9,265 | 9 | % | ||||||||||
Brokered natural gas | 2,021 | 2,885 | (864 | ) | (30 | )% | |||||||||
Taxes other than income | 8,973 | 11,611 | (2,638 | ) | (23 | )% | |||||||||
Exploration | 3,738 | 5,298 | (1,560 | ) | (29 | )% | |||||||||
Depreciation, depletion and amortization | 147,533 | 152,513 | (4,980 | ) | (3 | )% | |||||||||
General and administrative | 20,247 | 19,978 | 269 | 1 | % | ||||||||||
$ | 316,549 | $ | 326,692 | $ | (10,143 | ) | (3 | )% | |||||||
Earnings (loss) on equity method investments | $ | (73 | ) | $ | 1,512 | $ | (1,585 | ) | (105 | )% | |||||
Gain (loss) on sale of assets | (878 | ) | (79 | ) | (799 | ) | (1,011 | )% | |||||||
Loss on debt extinguishment | 4,709 | — | 4,709 | 100 | % | ||||||||||
Interest expense | 21,963 | 24,168 | (2,205 | ) | (9 | )% | |||||||||
Income tax expense (benefit) | (34,446 | ) | (15,622 | ) | (18,824 | ) | (120 | )% |
• | Direct operations decreased $9.6 million largely due to improved operational efficiencies, cost reductions from suppliers, and lower workover costs in 2016 compared to 2015. |
• | Transportation and gathering increased $9.3 million due to higher throughput as a result of higher Marcellus Shale production, higher transportation rates and the commencement of various transportation and gathering agreements in the Marcellus Shale throughout 2015. |
• | Brokered natural gas decreased $0.9 million. See the preceding table titled “Brokered Natural Gas” for further analysis. |
• | Taxes other than income decreased $2.6 million primarily due to $1.7 million lower production taxes resulting from lower natural gas and crude oil prices and lower production in south Texas and $0.8 million lower drilling impact fees as a result of drilling fewer wells during 2016 compared to 2015. The remaining increases and decreases in taxes other than income were not individually significant. |
• | Exploration decreased $1.6 million as a result of $1.0 million lower geophysical and geological costs and $0.7 million lower other exploration expenses as a result of a decrease in activity. |
• | Depreciation, depletion and amortization decreased $5.0 million, of which $17.3 million was due to a lower DD&A rate of $0.90 per Mcfe for the second quarter of 2016 compared to $1.01 per Mcfe for the second quarter of 2015, partially offset by a $13.9 million increase due to higher equivalent production volumes. The lower DD&A rate was primarily due to lower cost reserve additions and the impairment charge recorded in the fourth quarter of 2015 associated with higher DD&A rate fields. In addition, amortization of unproved properties decreased $1.3 million in the second quarter of 2016 as a result of lower lease acquisition costs in 2016. |
• | General and administrative increased $0.3 million due to $1.6 million higher legal costs and $0.9 million higher software and computer costs, partially offset by $1.3 million of lower stock-based compensation expense associated with certain of our market-based performance awards. The remaining increases and decreases in other expenses were not individually significant. |
Six Months Ended June 30, | Variance | ||||||||||||||
Revenue Variances (In thousands) | 2016 | 2015 | Amount | Percent | |||||||||||
Natural gas | $ | 450,811 | $ | 584,997 | $ | (134,186 | ) | (23 | )% | ||||||
Crude oil and condensate | 76,833 | 143,791 | (66,958 | ) | (47 | )% | |||||||||
Gain (loss) on derivative instruments | (8,190 | ) | 27,304 | (35,494 | ) | (130 | )% | ||||||||
Brokered natural gas | 5,776 | 8,640 | (2,864 | ) | (33 | )% | |||||||||
Other | 3,527 | 6,330 | (2,803 | ) | (44 | )% | |||||||||
$ | 528,757 | $ | 771,062 | $ | (242,305 | ) | (31 | )% |
Six Months Ended June 30, | Variance | Increase (Decrease) (In thousands) | |||||||||||||||||
2016 | 2015 | Amount | Percent | ||||||||||||||||
Price Variances | |||||||||||||||||||
Natural gas | $ | 1.52 | $ | 2.02 | $ | (0.50 | ) | (25 | )% | $ | (148,730 | ) | |||||||
Crude oil and condensate | $ | 34.16 | $ | 50.00 | $ | (15.84 | ) | (32 | )% | (35,608 | ) | ||||||||
Total | $ | (184,338 | ) | ||||||||||||||||
Volume Variances | |||||||||||||||||||
Natural gas (Bcf) | 297.4 | 290.2 | 7.2 | 2 | % | $ | 14,544 | ||||||||||||
Crude oil and condensate (Mbbl) | 2,249 | 2,876 | (627 | ) | (22 | )% | (31,350 | ) | |||||||||||
Total | $ | (16,806 | ) |
Six Months Ended June 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
Cash received (paid) on settlement of derivative instruments | ||||||||
Gain (loss) on derivative instruments | $ | 11,305 | $ | 88,730 | ||||
Non-cash gain (loss) on derivative instruments | ||||||||
Gain (loss) on derivative instruments | (19,495 | ) | (61,426 | ) | ||||
$ | (8,190 | ) | $ | 27,304 |
Six Months Ended June 30, | Variance | Price and Volume Variances (In thousands) | |||||||||||||||||
2016 | 2015 | Amount | Percent | ||||||||||||||||
Brokered Natural Gas Sales | |||||||||||||||||||
Sales price ($/Mcf) | $ | 2.16 | $ | 3.07 | $ | (0.91 | ) | (30 | )% | $ | (2,434 | ) | |||||||
Volume brokered (Mmcf) | x | 2,675 | x | 2,818 | (143 | ) | (5 | )% | (430 | ) | |||||||||
Brokered natural gas (In thousands) | $ | 5,776 | $ | 8,640 | $ | (2,864 | ) | ||||||||||||
Brokered Natural Gas Purchases | |||||||||||||||||||
Purchase price ($/Mcf) | $ | 1.71 | $ | 2.35 | $ | (0.64 | ) | (27 | )% | $ | 1,712 | ||||||||
Volume brokered (Mmcf) | x | 2,675 | x | 2,818 | (143 | ) | (5 | )% | 325 | ||||||||||
Brokered natural gas (In thousands) | $ | 4,587 | $ | 6,624 | $ | 2,037 | |||||||||||||
Brokered natural gas margin (In thousands) | $ | 1,189 | $ | 2,016 | $ | (827 | ) |
Six Months Ended June 30, | Variance | ||||||||||||||
(In thousands) | 2016 | 2015 | Amount | Percent | |||||||||||
Operating and Other Expenses | |||||||||||||||
Direct operations | $ | 52,513 | $ | 72,129 | $ | (19,616 | ) | (27 | )% | ||||||
Transportation and gathering | 217,213 | 219,531 | (2,318 | ) | (1 | )% | |||||||||
Brokered natural gas | 4,587 | 6,624 | (2,037 | ) | (31 | )% | |||||||||
Taxes other than income | 14,967 | 22,891 | (7,924 | ) | (35 | )% | |||||||||
Exploration | 10,121 | 14,030 | (3,909 | ) | (28 | )% | |||||||||
Depreciation, depletion and amortization | 309,420 | 328,009 | (18,589 | ) | (6 | )% | |||||||||
General and administrative | 48,621 | 42,507 | 6,114 | 14 | % | ||||||||||
$ | 657,442 | $ | 705,721 | $ | (48,279 | ) | (7 | )% | |||||||
Earnings (loss) on equity method investments | $ | 1,935 | $ | 2,933 | $ | (998 | ) | (34 | )% | ||||||
Gain (loss) on sale of assets | 477 | 59 | 418 | 708 | % | ||||||||||
Loss on debt extinguishment | 4,709 | — | 4,709 | 100 | % | ||||||||||
Interest expense | 46,338 | 47,734 | (1,396 | ) | (3 | )% | |||||||||
Income tax expense (benefit) | (63,216 | ) | 7,852 | (71,068 | ) | (905 | )% |
• | Direct operations decreased $19.6 million largely due to improved operational efficiencies, cost reductions from suppliers, and lower workover costs in 2016 compared to 2015. |
• | Transportation and gathering decreased $2.3 million due to the release of certain capacity to third parties, partially offset by higher throughput as a result of higher Marcellus Shale production, higher transportation rates and the commencement of various transportation and gathering agreements in the Marcellus Shale throughout 2015. |
• | Brokered natural gas decreased $2.0 million. See the preceding table titled “Brokered Natural Gas” for further analysis. |
• | Taxes other than income decreased $7.9 million due to $5.3 million lower production taxes primarily due to lower natural gas and crude oil prices and lower production in South Texas and the receipt of a production tax refund of $1.9 million in February 2016. Drilling impact fees also decreased $2.7 million as a result of drilling fewer wells during 2016 compared to 2015. The remaining increases and decreases in taxes other than income were not individually significant. |
• | Exploration decreased $3.9 million as a result of a decrease in charges related to the release of certain drilling rig contracts in south Texas and $1.0 million lower geophysical and geological costs. In the first six months of 2016, we recorded rig termination charges of $3.2 million compared to $5.1 million in the first six months of 2015. |
• | Depreciation, depletion and amortization decreased $18.6 million, of which $21.5 million was due to a lower DD&A rate of $0.92 per Mcfe for the first six months of 2016 compared to $0.99 per Mcfe for the first six months of 2015, partially offset by a $2.7 million increase due to higher equivalent production volumes. The lower DD&A rate was primarily due to lower cost reserve additions and the impairment charge recorded in the fourth quarter of 2015 associated with higher DD&A rate fields. |
• | General and administrative increased $6.1 million due to higher stock-based compensation expense of $3.3 million primarily due to an increase in the Company's stock price during the first six months of 2016 compared to the first six months of 2015 and $4.4 million higher legal expenses. The remaining increases and decreases in other expenses were not individually significant. |
Collars | Basis Swaps | Estimated Fair Value Asset (Liability) (In thousands) | ||||||||||||||||||||||||||||||
Floor | Ceiling | Swaps | ||||||||||||||||||||||||||||||
Type of Contract | Volume | Contract Period | Range | Weighted- Average | Range | Weighted- Average | Weighted- Average | Weighted- Average | ||||||||||||||||||||||||
Natural gas | 29.9 | Bcf | Jul. 2016 - Oct. 2016 | $ | 2.51 | $ | (14,483 | ) | ||||||||||||||||||||||||
Natural gas | 14.2 | Bcf | Jan. 2018 - Dec. 2019 | $ | 0.42 | (1,025 | ) | |||||||||||||||||||||||||
Crude oil | 0.9 | Mmbbl | Jul. 2016 - Dec. 2016 | $ | — | $ | 38.00 | $47.10-$47.50 | $ | 47.28 | (4,111 | ) | ||||||||||||||||||||
$ | (19,619 | ) |
June 30, 2016 | December 31, 2015 | |||||||||||||||
(In thousands) | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Debt, net | $ | 1,539,849 | $ | 1,519,226 | $ | 2,016,139 | $ | 1,839,530 | ||||||||
Current maturities | (20,000 | ) | (20,060 | ) | (20,000 | ) | (20,378 | ) | ||||||||
Long-term debt, excluding current maturities | $ | 1,519,849 | $ | 1,499,166 | $ | 1,996,139 | $ | 1,819,152 |
Exhibit Number | Description | |
3.1 | Amended and Restated Bylaws of Cabot Oil & Gas Corporation (Form 8-K dated July 29, 2016). | |
4.1 | Note Purchase Agreement dated as of July 16, 2008 among Cabot Oil & Gas Corporation and the Purchasers named therein (Form 8-K for July 16, 2008). | |
(a) Amendment No. 1 to Note Purchase Agreement, dated as of June 30, 2010 (Form 10-Q for the quarter ended June 30, 2010). | ||
(b) Amendment No. 2 to Note Purchase Agreement, dated as of December 31, 2015 (Form 8-K for February 9, 2016). | ||
(c) Amendment No. 3 to Note Purchase Agreement, dated as of April 6, 2016. (Form 10-Q for the quarter ended March 31, 2016). | ||
4.2 | Note Purchase Agreement dated as of December 1, 2008 among Cabot Oil & Gas Corporation and the Purchasers named therein (Form 10-K for 2008). | |
(a) Amendment No. 1 to Note Purchase Agreement, dated as of June 30, 2010 (Form 10-Q for the quarter ended June 30, 2010). | ||
(b) Amendment No. 2 to Note Purchase Agreement, dated as of December 31, 2015 (Form 8-K for February 9, 2016). | ||
(c) Amendment No. 3 to Note Purchase Agreement, dated as of April 6, 2016. (Form 10-Q for the quarter ended March 31, 2016). | ||
4.3 | Note Purchase Agreement dated as of December 30, 2010 among Cabot Oil & Gas Corporation and the Purchasers named therein (Form 10-K for 2010). | |
(a) Amendment No. 1 to Note Purchase Agreement, dated as of December 31, 2015 (Form 8-K for February 9, 2016). |
(b) Amendment No. 2 to Note Purchase Agreement, dated as of April 6, 2016. (Form 10-Q for the quarter ended March 31, 2016). | ||
4.4 | Note Purchase Agreement dated as of September 18, 2014 among Cabot Oil & Gas Corporation and the Purchasers named therein (Form 8-K for September 24, 2014). | |
(a) Amendment No. 1 to Note Purchase Agreement, dated as of December 31, 2015 (Form 8-K for February 9, 2016). | ||
(b) Amendment No. 2 to Note Purchase Agreement, dated as of April 6, 2016. (Form 10-Q for the quarter ended March 31, 2016). | ||
31.1 | 302 Certification — Chairman, President and Chief Executive Officer. | |
31.2 | 302 Certification — Executive Vice President and Chief Financial Officer. | |
32.1 | 906 Certification. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
CABOT OIL & GAS CORPORATION | ||
(Registrant) | ||
July 29, 2016 | By: | /s/ DAN O. DINGES |
Dan O. Dinges | ||
Chairman, President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
July 29, 2016 | By: | /s/ SCOTT C. SCHROEDER |
Scott C. Schroeder | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
July 29, 2016 | By: | /s/ TODD M. ROEMER |
Todd M. Roemer | ||
Controller | ||
(Principal Accounting Officer) |
/s/ DAN O. DINGES | |
Dan O. Dinges | |
Chairman, President and Chief Executive Officer |
/s/ SCOTT C. SCHROEDER | |
Scott C. Schroeder | |
Executive Vice President and Chief Financial Officer |
(1) | the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DAN O. DINGES | |
Dan O. Dinges | |
Chief Executive Officer | |
/s/ SCOTT C. SCHROEDER | |
Scott C. Schroeder | |
Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 25, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | CABOT OIL & GAS CORP | |
Entity Central Index Key | 0000858470 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 465,148,234 | |
Entity Current Reporting Status | Yes |
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, authorized (shares) | 960,000,000 | 960,000,000 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, issued (shares) | 475,040,914 | 423,768,593 |
Treasury stock (shares) | 9,892,680 | 9,892,680 |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
OPERATING REVENUES | ||||
Natural gas | $ 223,232 | $ 224,806 | $ 450,811 | $ 584,997 |
Crude oil and condensate | 46,156 | 81,233 | 76,833 | 143,791 |
Gain (loss) on derivative instruments | (27,184) | (6,819) | (8,190) | 27,304 |
Brokered natural gas | 2,596 | 3,813 | 5,776 | 8,640 |
Other | 2,016 | 3,264 | 3,527 | 6,330 |
TOTAL OPERATING REVENUES | 246,816 | 306,297 | 528,757 | 771,062 |
OPERATING EXPENSES | ||||
Direct operations | 26,477 | 36,112 | 52,513 | 72,129 |
Transportation and gathering | 107,560 | 98,295 | 217,213 | 219,531 |
Brokered natural gas | 2,021 | 2,885 | 4,587 | 6,624 |
Taxes other than income | 8,973 | 11,611 | 14,967 | 22,891 |
Exploration | 3,738 | 5,298 | 10,121 | 14,030 |
Depreciation, depletion and amortization | 147,533 | 152,513 | 309,420 | 328,009 |
General and administrative | 20,247 | 19,978 | 48,621 | 42,507 |
TOTAL OPERATING EXPENSES | 316,549 | 326,692 | 657,442 | 705,721 |
Earnings (loss) on equity method investments | (73) | 1,512 | 1,935 | 2,933 |
Gain (loss) on sale of assets | (878) | (79) | 477 | 59 |
INCOME (LOSS) FROM OPERATIONS | (70,684) | (18,962) | (126,273) | 68,333 |
Loss on debt extinguishment | 4,709 | 0 | 4,709 | 0 |
Interest expense | 21,963 | 24,168 | 46,338 | 47,734 |
Income (loss) before income taxes | (97,356) | (43,130) | (177,320) | 20,599 |
Income tax expense (benefit) | (34,446) | (15,622) | (63,216) | 7,852 |
NET INCOME (LOSS) | $ (62,910) | $ (27,508) | $ (114,104) | $ 12,747 |
Earnings (loss) per share | ||||
Basic (in dollars per share) | $ (0.14) | $ (0.07) | $ (0.25) | $ 0.03 |
Diluted (in dollars per share) | $ (0.14) | $ (0.07) | $ (0.25) | $ 0.03 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 465,068 | 413,713 | 448,455 | 413,530 |
Diluted (in shares) | 465,068 | 413,713 | 448,455 | 414,878 |
Dividends per common share (in dollars per share) | $ 0.02 | $ 0.02 | $ 0.04 | $ 0.04 |
Financial Statement Presentation |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation During interim periods, Cabot Oil & Gas Corporation (the Company) follows the same accounting policies disclosed in its Annual Report on Form 10-K for the year ended December 31, 2015 (Form 10-K) filed with the Securities and Exchange Commission (SEC). The interim financial statements should be read in conjunction with the notes to the consolidated financial statements and information presented in the Form 10-K. In management’s opinion, the accompanying interim condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair statement. The results for any interim period are not necessarily indicative of the expected results for the entire year. Certain reclassifications have been made to prior year statements to conform with the current year presentation. These reclassifications have no impact on previously reported stockholder's equity, net income (loss) or cash flows. Recently Adopted Accounting Pronouncements Debt Issuance Costs. In March 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The update provides authoritative guidance for debt issuance costs related to line-of-credit arrangements, noting the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The guidance is effective for interim and annual periods beginning after December 15, 2015. Effective January 1, 2016, the Company adopted ASU No. 2015-03 as a change in accounting principle. The Condensed Consolidated Balance Sheet as of December 31, 2015 has been retrospectively adjusted to reflect the adoption of this guidance, resulting in a decrease of $8.9 million in both other assets and long term debt related to the debt issuance costs on our senior notes. There was no impact to the Company’s Condensed Consolidated Statement of Operations or Statement of Cash Flows. Recently Issued Accounting Pronouncements Stock-based Compensation. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, as an amendment to Accounting Standards Codification (ASC) Topic 718. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, results of operations or cash flows. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases, as a new Topic, Accounting Standards Codification Topic 842. The new lease guidance supersedes Topic 840. The core principle of the guidance is that a company should recognize the assets and liabilities that arise from leases. The guidance is effective for interim and annual periods beginning after December 15, 2018. This ASU can be adopted using a modified retrospective approach. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, results of operations or cash flows. Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which deferred the effective date of ASU No. 2014-09 by one year, making the new standard effective for interim and annual periods beginning after December 15, 2017. This ASU can be adopted either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Additionally, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus agent considerations (reporting revenue gross versus net), which clarifies the implementation guidance on principal versus agent considerations on such matters. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying performance obligations and licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-scope improvements and practical expedients, which addresses narrow-scope improvements to the guidance on collectibility, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, results of operations or cash flows. |
Properties and Equipment, Net |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties and Equipment, Net | Properties and Equipment, Net Properties and equipment, net are comprised of the following:
At June 30, 2016, the Company did not have any projects that had exploratory well costs capitalized for a period of greater than one year after drilling. In February 2016, the Company completed the divestiture of certain proved and unproved oil and gas properties in east Texas for approximately $56.4 million and recognized a $0.5 million gain on sale of assets. The purchase price included a $6.3 million deposit that was received in the fourth quarter of 2015. |
Equity Method Investments |
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Equity Method Investments The Company holds a 25% equity interest in Constitution Pipeline Company, LLC (Constitution) and a 20% equity interest in Meade Pipeline Co LLC (Meade). Activity related to these equity method investments is as follows:
During 2016, the Company expects to contribute between approximately $30.0 million and $35.0 million to its equity method investments. For further information regarding the Company’s equity method investments, refer to Note 4 of the Notes to the Consolidated Financial Statements in the Form 10-K. Constitution On April 22, 2016, Constitution announced that the New York State Department of Environmental Conservation (NYSDEC) denied Constitution's application for a section 401 Water Quality Certification (Certification) for the New York State portion of its proposed 124-mile route. During second quarter of 2016, Constitution filed legal actions in the U.S Court of Appeals for the Second Circuit and the U.S District Court for the Northern District of New York challenging the legality and appropriateness of the NYSDEC’s decision. Both courts have granted Constitution's motions to expedite the schedules for the legal actions. Constitution stated that it remains committed to pursuing the project and that it intends to pursue all available options to challenge the NYSDEC’s decision. In light of the denial of the Certification and ongoing litigation, Constitution has revised its target in-service date to the second half of 2018, assuming that the challenge process is satisfactorily and promptly concluded. In light of the NYSDEC’s denial and resulting litigation, during the second quarter of 2016, the Company evaluated its investment in Constitution for other-than-temporary impairment (OTTI) and as of June 30, 2016, does not believe there is an indication of an OTTI. The Company’s evaluation considered various factors, including but not limited to prior Federal Energy Regulatory Commission (FERC) approval and the related economic viability of the project, legal actions filed by Constitution and the expected duration of the legal proceedings, which are at very early stages, and the other members’ commitment to the project. To the extent that the legal and regulatory proceedings have unfavorable outcomes, or if Constitution concludes that the project is no longer viable or elects to not go forward as legal and regulatory actions progress, the Company will reevaluate the facts and circumstances relative to its conclusions with respect to OTTI. In the event that facts and circumstances change, the Company may be required to recognize an impairment charge up to its investment value at such time, net of any cash and working capital held by Constitution. The Company will continue to monitor the carrying value of its investment as required. At this time, the Company remains committed to funding the project in an amount in proportion to its ownership interest for the development and construction of the new pipeline. The Company's total contributions for this project are expected to be approximately $240.0 million. As of June 30, 2016, the Company has made contributions of approximately $86.4 million since inception of the project. |
Debt and Credit Agreements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Credit Agreements | Debt and Credit Agreements The Company’s debt and credit agreements consisted of the following:
(1) Includes $20.0 million of current portion of long-term debt at June 30, 2016 and December 31, 2015, respectively. The borrowing base under the terms of the Company's revolving credit facility is redetermined annually in April. In addition, either the Company or the banks may request an interim redetermination twice a year or in connection with certain acquisitions or divestitures of oil and gas properties. Effective April 19, 2016, the Company’s borrowing base was reduced from $3.4 billion to $3.2 billion. The maximum credit amount under the revolving credit facility remained unchanged at $1.8 billion; however, the available commitments were reduced to $1.6 billion at the time of the redetermination. In May 2016, the Company repurchased $64.0 million principal amount of its 6.51% weighted-average senior notes for approximately $68.3 million. A $4.7 million extinguishment loss was recognized in the second quarter of 2016 associated with the premium paid and the write-off of a portion of the associated deferred financing costs due to early repayment. As a result of the repurchase of these senior notes, the available commitments under the revolving credit facility increased to $1.7 billion and remained at that level as of June 30, 2016. At June 30, 2016, the Company was in compliance with all restrictive financial covenants for both its revolving credit facility and senior notes. As of June 30, 2016, based on the Company's asset coverage and leverage ratios, there were no interest rate adjustments required for the Company's senior notes. At June 30, 2016, the Company had no borrowings outstanding under its revolving credit facility and had unused commitments of $1.7 billion. There were no borrowings under the revolving credit facility during the three months ended June 30, 2016. The Company’s weighted-average effective interest rate for the revolving credit facility for the three months ended June 30, 2015 was approximately 2.2% and for the six months ended June 30, 2016 and 2015 was approximately 2.3%. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities As of June 30, 2016, the Company had the following outstanding commodity derivatives:
In the table above, natural gas prices are stated per Mcf and crude oil prices are stated per barrel. Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet
Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet
Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company follows the authoritative guidance for measuring fair value of assets and liabilities in its financial statements. For further information regarding the fair value hierarchy, refer to Note 1 of the Notes to the Consolidated Financial Statements in the Form 10-K. Financial Assets and Liabilities The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:
The Company’s investments associated with its deferred compensation plan consist of mutual funds and deferred shares of the Company’s common stock that are publicly traded and for which market prices are readily available. The derivative instruments were measured based on quotes from the Company’s counterparties. Such quotes have been derived using an income approach that considers various inputs including current market and contractual prices for the underlying instruments, quoted forward prices for natural gas and crude oil, basis differentials, volatility factors and interest rates, such as a LIBOR curve for a similar length of time as the derivative contract term as applicable. Estimates are verified using relevant NYMEX futures contracts and/or are compared to multiple quotes obtained from counterparties for reasonableness. The determination of the fair values presented above also incorporates a credit adjustment for non-performance risk. The Company measured the non-performance risk of its counterparties by reviewing credit default swap spreads for the various financial institutions with which it has derivative transactions, while non-performance risk of the Company is evaluated using a market credit spread provided by the Company’s bank. The Company has not incurred any losses related to non-performance risk of its counterparties and does not anticipate any material impact on its financial results due to non-performance by third parties. The most significant unobservable inputs relative to the Company’s Level 3 derivative contracts are basis differentials and volatility factors. An increase (decrease) in these unobservable inputs would result in an increase (decrease) in fair value, respectively. The Company does not have access to the specific assumptions used in its counterparties’ valuation models. Consequently, additional disclosures regarding significant Level 3 unobservable inputs were not provided. The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:
There were no transfers between Level 1 and Level 2 fair value measurements for the six months ended June 30, 2016 and 2015. Non-Financial Assets and Liabilities The Company discloses or recognizes its non-financial assets and liabilities, such as impairments, at fair value on a nonrecurring basis. As none of the Company’s non-financial assets and liabilities were measured at fair value as of June 30, 2016 and December 31, 2015, additional disclosures were not required. The estimated fair value of the Company’s asset retirement obligation at inception is determined by utilizing the income approach by applying a credit-adjusted risk-free rate, which takes into account the Company’s credit risk, the time value of money, and the current economic state to the undiscounted expected abandonment cash flows. Given the unobservable nature of the inputs, the measurement of the asset retirement obligations was classified as Level 3 in the fair value hierarchy. Fair Value of Other Financial Instruments The estimated fair value of other financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amount reported in the Condensed Consolidated Balance Sheet for cash and cash equivalents approximates fair value due to the short-term maturities of these instruments. Cash and cash equivalents are classified as Level 1 in the fair value hierarchy and the remaining financial instruments are classified as Level 2. The Company uses available market data and valuation methodologies to estimate the fair value of debt. The fair value of debt is the estimated amount the Company would have to pay a third party to assume the debt, including a credit spread for the difference between the issue rate and the period end market rate. The credit spread is the Company’s default or repayment risk. The credit spread (premium or discount) is determined by comparing the Company’s senior notes and revolving credit facility to new issuances (secured and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The fair value of all senior notes and the revolving credit facility is based on interest rates currently available to the Company. The Company’s debt is valued using an income approach and classified as Level 3 in the fair value hierarchy. The carrying amount and fair value of debt is as follows:
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Asset Retirement Obligations |
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Asset Retirement Obligation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligations | Asset Retirement Obligations Activity related to the Company’s asset retirement obligations is as follows:
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Commitments and Contingencies |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contractual Obligations The Company has various contractual obligations in the normal course of its operations. There have been no material changes to the Company’s contractual obligations described under “Transportation and Gathering Agreements,” “Drilling Rig Commitments” and “Lease Commitments” as disclosed in Note 9 in the Notes to Consolidated Financial Statements included in the Form 10-K. Legal Matters The Company is a defendant in various legal proceedings arising in the normal course of business. All known liabilities are accrued when management determines they are probable based on its best estimate of the potential loss. While the outcome and impact of these legal proceedings on the Company cannot be predicted with certainty, management believes that the resolution of these proceedings will not have a material effect on the Company’s financial position, results of operations or cash flows. Contingency Reserves When deemed necessary, the Company establishes reserves for certain legal proceedings. The establishment of a reserve is based on an estimation process that includes the advice of legal counsel and subjective judgment of management. While management believes these reserves to be adequate, it is reasonably possible that the Company could incur additional losses with respect to those matters in which reserves have been established. The Company believes that any such amount above the amounts accrued would not be material to the Condensed Consolidated Financial Statements. Future changes in facts and circumstances not currently foreseeable could result in the actual liability exceeding the estimated ranges of loss and amounts accrued. |
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Equity [Abstract] | |
Capital Stock | Capital Stock On February 22, 2016, the Company entered into an underwriting agreement, pursuant to which the Company sold an aggregate of 44,000,000 shares of common stock at a price to the Company of $19.675 per share. On February 26, 2016, the Company received $865.7 million in net proceeds, after deducting underwriting discounts and commissions. On March 2, 2016, the Company sold an additional 6,600,000 shares of common stock as a result of the exercise of the underwriters’ option to purchase additional shares and received $129.9 million in net proceeds. These net proceeds were used for general corporate purposes, including repaying indebtedness under the Company’s revolving credit facility and senior notes and funding a portion of our capital program. |
Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation General From time to time the Company grants certain stock-based compensation awards, including restricted stock awards, restricted stock units and performance share awards. Stock-based compensation expense associated with these awards was $7.3 million and $8.6 million in the second quarter of 2016 and 2015, respectively, and $17.9 million and $14.5 million during the first six months of 2016 and 2015, respectively. Stock-based compensation expense is included in general and administrative expense in the Condensed Consolidated Statement of Operations. During the first six months of 2016, the Company recorded a shortfall of $2.1 million as a result of book compensation cost for employee stock-based compensation exceeding the federal and state tax deductions for certain awards that vested during the period, resulting in a reduction of the Company's windfall tax benefit that is recorded in additional paid in capital in the Condensed Consolidated Balance Sheet. During the first six months of 2015, the Company realized a $5.5 million tax benefit related to the federal and state tax deductions in excess of book compensation cost for employee stock-based compensation. The Company is able to recognize a tax benefit only to the extent it reduces the Company’s income taxes payable. Refer to Note 13 of the Notes to the Consolidated Financial Statements in the Form 10-K for further description of the various types of stock-based compensation awards and the applicable award terms. Restricted Stock Units During the first six months of 2016, 64,928 restricted stock units were granted to non-employee directors of the Company with a weighted-average grant date value of $20.41 per unit. The fair value of these units is measured based on the closing stock price on grant date and compensation expense is recorded immediately. These units immediately vest and are issued when the director ceases to be a director of the Company. Performance Share Awards The performance period for the awards granted in 2016 commenced on January 1, 2016 and ends on December 31, 2018. The Company used an annual forfeiture rate assumption ranging from 0% to 5% for purposes of recognizing stock-based compensation expense for its performance share awards. Performance Share Awards Based on Internal Performance Metrics The fair value of performance share award grants based on internal performance metrics is based on the closing stock price on the grant date. Each performance share award represents the right to receive up to 100% of the award in shares of common stock. Based on the Company’s probability assessment at June 30, 2016, it is considered probable that the criteria for all performance awards based on internal metrics awards will be met. Employee Performance Share Awards. During the first six months of 2016, 435,990 Employee Performance Share Awards were granted at a grant date value of $20.49 per share. The performance metrics are set by the Company’s compensation committee and are based on the Company’s average production, average finding costs and average reserve replacement over a three-year performance period. Hybrid Performance Share Awards. During the first six months of 2016, 271,938 Hybrid Performance Share Awards were granted at a grant date value of $20.49 per share. The 2016 awards vest 25% on each of the first and second anniversary dates and 50% on the third anniversary, provided that the Company has $100 million or more of operating cash flow for the year preceding the vesting date, as set by the Company’s compensation committee. If the Company does not meet the performance metric for the applicable period, then the portion of the performance shares that would have been issued on that anniversary date will be forfeited. Performance Share Awards Based on Market Conditions These awards have both an equity and liability component, with the right to receive up to the first 100% of the award in shares of common stock and the right to receive up to an additional 100% of the value of the award in excess of the equity component in cash. The equity portion of these awards is valued on the grant date and is not marked to market, while the liability portion of the awards is valued as of the end of each reporting period on a mark-to-market basis. The Company calculates the fair value of the equity and liability portions of the awards using a Monte Carlo simulation model. TSR Performance Share Awards. During the first six months of 2016, 407,907 TSR Performance Share Awards were granted and are earned, or not earned, based on the comparative performance of the Company’s common stock measured against a predetermined group of companies in the Company’s peer group over a three-year performance period. The following assumptions were used to determine the grant date fair value of the equity component (February 17, 2016) and the period-end fair value of the liability component of the TSR Performance Share Awards:
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Earnings per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share | Earnings per Common Share Basic earnings per share (EPS) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is similarly calculated except that the common shares outstanding for the period is increased using the treasury stock method to reflect the potential dilution that could occur if outstanding stock appreciation rights were exercised and stock awards were vested at the end of the applicable period. Anti-dilutive shares represent potentially dilutive securities that which are excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive. The following is a calculation of basic and diluted weighted-average shares outstanding:
The following is a calculation of weighted-average shares excluded from diluted EPS due to the anti-dilutive effect:
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Additional Balance Sheet Information |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Balance Sheet Information | Additional Balance Sheet Information Certain balance sheet amounts are comprised of the following:
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Financial Statement Presentation (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements Debt Issuance Costs. In March 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The update provides authoritative guidance for debt issuance costs related to line-of-credit arrangements, noting the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The guidance is effective for interim and annual periods beginning after December 15, 2015. Effective January 1, 2016, the Company adopted ASU No. 2015-03 as a change in accounting principle. The Condensed Consolidated Balance Sheet as of December 31, 2015 has been retrospectively adjusted to reflect the adoption of this guidance, resulting in a decrease of $8.9 million in both other assets and long term debt related to the debt issuance costs on our senior notes. There was no impact to the Company’s Condensed Consolidated Statement of Operations or Statement of Cash Flows. Recently Issued Accounting Pronouncements Stock-based Compensation. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, as an amendment to Accounting Standards Codification (ASC) Topic 718. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, results of operations or cash flows. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases, as a new Topic, Accounting Standards Codification Topic 842. The new lease guidance supersedes Topic 840. The core principle of the guidance is that a company should recognize the assets and liabilities that arise from leases. The guidance is effective for interim and annual periods beginning after December 15, 2018. This ASU can be adopted using a modified retrospective approach. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, results of operations or cash flows. Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which deferred the effective date of ASU No. 2014-09 by one year, making the new standard effective for interim and annual periods beginning after December 15, 2017. This ASU can be adopted either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Additionally, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus agent considerations (reporting revenue gross versus net), which clarifies the implementation guidance on principal versus agent considerations on such matters. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying performance obligations and licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-scope improvements and practical expedients, which addresses narrow-scope improvements to the guidance on collectibility, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, results of operations or cash flows. |
Properties and Equipment, Net (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of properties and equipment, net | Properties and equipment, net are comprised of the following:
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Equity Method Investments (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to the Company's Equity Method Investments | Activity related to these equity method investments is as follows:
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Debt and Credit Agreements (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and credit agreement components | The Company’s debt and credit agreements consisted of the following:
(1) Includes $20.0 million of current portion of long-term debt at June 30, 2016 and December 31, 2015, respectively. |
Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding commodity derivatives | As of June 30, 2016, the Company had the following outstanding commodity derivatives:
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Effect of derivative instruments on the condensed consolidated balance sheet | Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet
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Schedule of offsetting of derivative liabilities in the condensed consolidated balance sheet | Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet
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Effect of derivatives on the condensed consolidated statement of operations | Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets and liabilities measured at fair value on a recurring basis | The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:
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Reconciliation of changes in the fair value of financial assets and liabilities classified as level 3 | The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:
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Carrying amounts and fair values of debt | The carrying amount and fair value of debt is as follows:
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Asset Retirement Obligations (Tables) |
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to Asset Retirement Obligations | Activity related to the Company’s asset retirement obligations is as follows:
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Stock-based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The following assumptions were used to determine the grant date fair value of the equity component (February 17, 2016) and the period-end fair value of the liability component of the TSR Performance Share Awards:
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Earnings per Common Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of basic and diluted weighted-average shares outstanding | The following is a calculation of basic and diluted weighted-average shares outstanding:
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Calculation of weighted-average shares excluded from diluted EPS due to the anti-dilutive effect | The following is a calculation of weighted-average shares excluded from diluted EPS due to the anti-dilutive effect:
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Additional Balance Sheet Information (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Balance Sheet Information | Certain balance sheet amounts are comprised of the following:
|
Financial Statement Presentation - Narrative (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Jun. 30, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Debt issuance costs | $ (8,861,000) | $ (8,151,000) |
Accounting Standards Update 2015-03 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Change in income statement | 0 | |
Change in cash flow | 0 | |
Accounting Standards Update 2015-03 | Long-term Debt | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Debt issuance costs | (8,900,000) | |
Accounting Standards Update 2015-03 | Other Assets | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Debt issuance costs | $ 8,900,000 |
Properties and Equipment, Net - Schedule of PPE (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Proved oil and gas properties | $ 7,543,345 | $ 8,821,146 |
Unproved oil and gas properties | 325,857 | 390,434 |
Gathering and pipeline systems | 191,848 | 243,672 |
Land, building and other equipment | 80,397 | 117,848 |
Properties and equipment, gross, total | 8,141,447 | 9,573,100 |
Accumulated depreciation, depletion and amortization | (3,378,767) | (4,596,221) |
Properties and equipment, net | $ 4,762,680 | $ 4,976,879 |
Properties and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|
Feb. 29, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | ||||||
Proceeds from sale of assets | $ 49,828 | $ 3,002 | ||||
Gain (loss) on sale of assets | $ (878) | $ (79) | $ 477 | $ 59 | ||
East Texas | Oil and Gas Properties, Proved and Unproved | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Proceeds from sale of assets | $ 56,400 | |||||
Gain (loss) on sale of assets | $ 500 | |||||
Escrow deposit | $ 6,300 |
Derivative Instruments and Hedging Activities - Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Effect of derivative instruments on the Consolidated Balance Sheet | ||
Derivative instruments (current) | $ 18,501 | $ 0 |
Other liabilities (non-current) | 994 | 0 |
Net amounts of liabilities presented in the statement of financial position | 19,495 | 0 |
Derivatives Not Designated as Hedges | Commodity contracts | ||
Effect of derivative instruments on the Consolidated Balance Sheet | ||
Derivative instruments (current) | 18,501 | 0 |
Other liabilities (non-current) | $ 994 | $ 0 |
Derivative Instruments and Hedging Activities - Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative liabilities | ||
Gross amounts of recognized liabilities | $ 19,495 | $ 0 |
Gross amounts offset in the statement of financial position | 0 | 0 |
Net amounts of liabilities presented in the statement of financial position | 19,495 | 0 |
Gross amounts of financial instruments not offset in the statement of financial position | 236 | 0 |
Net amount | $ 19,731 | $ 0 |
Derivative Instruments and Hedging Activities - Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Derivative instruments and hedging activities | ||||
Gain (loss) on derivative instruments | $ (27,184) | $ (6,819) | $ (8,190) | $ 27,304 |
Non-cash gain (loss) on derivative instruments | (8,190) | 27,304 | ||
Gain (loss) on derivative instruments | (27,184) | (6,819) | (8,190) | 27,304 |
Derivatives Not Designated as Hedges | Gain (loss) on derivative instruments | ||||
Derivative instruments and hedging activities | ||||
Gain (loss) on derivative instruments | 11,305 | 51,045 | 11,305 | 88,730 |
Non-cash gain (loss) on derivative instruments | $ (38,489) | $ (57,864) | $ (19,495) | $ (61,426) |
Fair Value Measurements - Reconciliation of Changes in Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy | ||
Balance at beginning of period | $ 0 | $ 85,958 |
Total gain (loss) included in earnings | (6,499) | 12,662 |
Settlement (gain) loss | (1,807) | (50,622) |
Transfers in and/or out of level 3 | 0 | 0 |
Balance at end of period | (8,306) | 47,998 |
Change in unrealized gains (losses) relating to assets and liabilities still held at the end of the period | $ (8,306) | $ (37,961) |
Fair Value Measurements - Narrative (Details) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016
USD ($)
impaired_asset_and_liability
|
Jun. 30, 2015
impaired_asset_and_liability
|
Dec. 31, 2015
USD ($)
|
|
Fair Value Disclosures [Abstract] | |||
Fair value assets, level 1 to level 2 | $ 0 | $ 0 | |
Fair value liabilities, level 1 to level 2 | 0 | 0 | |
Fair value assets, level 2 to level 1 | 0 | 0 | |
Fair value liabilities, level 2 to level 1 | $ 0 | $ 0 | |
Number of non-financial assets and liabilities impaired | impaired_asset_and_liability | 0 | 0 |
Fair Value Measurements - Fair Value of Other Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair value disclosures | ||
Debt, net | $ 1,539,849 | $ 2,016,139 |
Current maturities | (20,000) | (20,000) |
Long-term debt, excluding current maturities | 1,519,849 | 1,996,139 |
Carrying amount | ||
Fair value disclosures | ||
Debt, net | 1,539,849 | 2,016,139 |
Current maturities | (20,000) | (20,000) |
Long-term debt, excluding current maturities | 1,519,849 | 1,996,139 |
Estimated fair value | ||
Fair value disclosures | ||
Debt, net | 1,519,226 | 1,839,530 |
Current maturities | (20,060) | (20,378) |
Long-term debt, excluding current maturities | $ 1,499,166 | $ 1,819,152 |
Asset Retirement Obligations - Schedule of ARO (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Asset Retirement Obligation | |
Balance at beginning of period | $ 145,606 |
Liabilities incurred | 2,389 |
Liabilities settled | (135) |
Liabilities divested | (16,353) |
Accretion expense | 3,559 |
Balance at end of period | $ 135,066 |
Capital Stock - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Mar. 02, 2016 |
Feb. 26, 2016 |
Feb. 22, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Equity [Abstract] | |||||
Shares issued during period (in shares) | 6,600,000.0 | 44,000,000 | |||
Price of share sold (in USD per share) | $ 19.675 | ||||
Sale of common stock, net | $ 129,900 | $ 865,700 | $ 995,279 | $ 0 |
Stock-based Compensation - Assumptions for TSR Shares (Details) - TSR Performance Share Awards - $ / shares |
6 Months Ended | |
---|---|---|
Feb. 17, 2016 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | $ 18.57 | |
Stock price volatility | 34.40% | |
Risk free rate of return | 0.90% | |
Minimum expected volatility | 37.40% | |
Maximum expected volatility | 49.80% | |
Minimum risk free interest rate | 0.40% | |
Maximum risk free interest rate | 0.70% | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | $ 7.03 | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | $ 10.79 |
Earnings per Common Share - Schedule of EPS (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Weighted-average shares - basic (in shares) | 465,068 | 413,713 | 448,455 | 413,530 |
Dilution effect of stock appreciation rights and stock awards at end of period (in shares) | 0 | 0 | 0 | 1,348 |
Weighted-average shares - diluted (in shares) | 465,068 | 413,713 | 448,455 | 414,878 |
Earnings per Common Share - Calculation of Weighted-Average Shares Excluded from Diluted EPS (Details) - Stock appreciation rights and stock awards - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Weighted-average stock appreciation rights and stock awards excluded from diluted EPS due to the anti-dilutive effect due to net loss | 1,569 | 1,655 | 1,168 | 0 |
Weighted-average stock appreciation rights and stock awards excluded from diluted EPS due to the anti-dilutive effect calculated using the treasury stock method | 0 | 1 | 827 | 400 |
Weighted-average stock appreciation rights and stock awards excluded from diluted EPS due to the anti-dilutive effect | 1,569 | 1,656 | 1,995 | 400 |
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