Revenue from Contracts with Customers

Revenue Recognition

Sales of oil, gas and NGL are recognized at the point in time when control of the product is transferred to the customer and collectability is reasonably assured. The Company's contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among other factors, physical location, quality of the oil or gas, and prevailing supply and demand conditions. As a result, the price of the oil, gas and NGL fluctuates to remain competitive with other available oil, gas and NGL supplies in the market. The Company believes that the pricing provisions of our oil, gas and NGL contracts are customary in the industry.

Oil sales

The Company's oil sales contracts are generally structured such that it sells its oil production to a purchaser at a contractually specified delivery point at or near the wellhead. The crude oil production is priced on the delivery date based upon prevailing index prices less certain deductions related to oil quality, physical location and transportation costs incurred by the purchaser subsequent to delivery. The Company recognizes revenue when control transfers to the purchaser upon delivery at or near the wellhead at the net price received from the purchaser.

Gas and NGL Sales

Under the Company's gas processing contracts, it delivers wet gas to a midstream processing entity at the wellhead or the inlet of the midstream processing entity’s system. The midstream processing entity processes the gas and remits proceeds to the Company based upon either (i) the resulting sales price of NGL and residue gas received by the midstream processing entity from

third

party customers or (ii) the prevailing index prices for NGL and residue gas in the month of delivery to the midstream processing entity. Gathering, processing, transportation and other expenses incurred by the midstream processing entity are typically deducted from the proceeds that the Company receives.

In these scenarios, the Company evaluates whether it is the principal or the agent in the transaction. In the Company's gas purchase contracts, the Company has concluded that it is the agent, and thus, the midstream processing entity is its customer. Accordingly, the Company recognizes revenue upon delivery to the midstream processing entity based on the net amount of the proceeds received from the midstream processing entity.

Imbalances

The Company utilizes the sales method to account for gas production imbalances. Under this method, income is recorded based on the Company’s net revenue interest in production taken for delivery. The Company had

material gas imbalances at

June 30, 2018

and

2017.

Disaggregation of Revenue

The Company is focused on the development of oil and natural gas properties primarily located in the following

three

operating regions in the United States: (i) the Permian/Delaware Basin, (ii) Rocky Mountain and (iii) South Texas. Revenue attributable to each of those regions is disaggregated in the tables below.

	Three Months Ended June 30,
	2018						2017
	Oil		Gas		NGL		Oil		Gas		NGL
Operating Region
Permian/Delaware Basin	$	9,664	$	609	$	613	$	1,662	$	571	$	312
Rocky Mountain	$	15,479	$	674	$	1,180	$	8,244	$	429	$	421
South Texas	$	2,329	$	325	$	42	$	1,407	$	63	$	27

	Six Months Ended June 30,
	2018						2017
	Oil		Gas		NGL		Oil		Gas		NGL
Operating Region
Permian/Delaware Basin	$	24,039	$	1,528	$	1,411	$	4,149	$	1,327	$	701
Rocky Mountain	$	34,719	$	1,802	$	2,583	$	19,641	$	1,300	$	1,316
South Texas	$	4,708	$	655	$	64	$	3,024	$	418	$	47

Significant Judgments

Principal versus agent

The Company engages in various types of transactions in which midstream entities process the Company's gas and subsequently market resulting NGL and residue gas to

third

-party customers on behalf of the Company, such as the Company's percentage-of-proceeds and gas purchase contracts. These types of transactions require judgment to determine whether we are the principal or the agent in the contract and, as a result, whether revenues are recorded gross or net.

Transaction price allocated to remaining performance obligations

A significant number of the Company's product sales are short-term in nature with a contract term of

one

year or less. For those contracts, the Company has utilized the practical expedient in ASC Topic

606

exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of

one

year or less.

For product sales that have a contract term greater than

one

year, the Company has utilized the practical expedient in ASC Topic

606

(a) which states the Company is

not

required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these sales contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is

not

required.

Contract balances

Under the Company's product sales contracts, the Company is entitled to payment from purchasers once its performance obligations have been satisfied upon delivery of the product, at which point payment is unconditional. The Company records invoiced amounts as “Accounts receivable - Oil and gas production sales” in the accompanying condensed consolidated balance sheet.

To the extent actual volumes and prices of oil and natural gas are unavailable for a given reporting period because of timing or information

not

received from

third

parties, the expected sales volumes and prices for those properties are estimated and also recorded as “Accounts receivable - Oil and gas production sales” in the accompanying condensed consolidated balance sheets. In this scenario, payment is also unconditional, as the Company has satisfied its performance obligations through delivery of the relevant product. As a result, the Company has concluded that its product sales do

not

give rise to contract assets or liabilities under ASU

2014

09.

June 30, 2018

and

December 31, 2017,

our receivables from contracts with customers were

$13.3

million and

$17.8

million, respectively.

Prior-period performance obligations

The Company records revenue in the month production is delivered to the purchaser. However, settlement statements for certain gas and NGL sales

may

not

be received for

days after the date production is delivered, and as a result, the Company is required to estimate the amount of production that was delivered to the midstream purchaser and the price that will be received for the sale of the product. Additionally, to the extent actual volumes and prices of oil are unavailable for a given reporting period because of timing or information

not

received from

third

party purchasers, the expected sales volumes and prices for those barrels of oil are also estimated.

The Company records the differences between its estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. Any identified differences between its revenue estimates and actual revenue received historically have

not

been significant. For the

three

and

six

months ended

June 30, 2018,

revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was

not

material.