10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-12719

GOODRICH PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	76-0466193 (I.R.S. Employer Identification No.)
801 Louisiana, Suite 700 Houston, Texas 77002 (Address of principal executive offices) (Zip Code) (Registrant’s telephone number, including area code): (713) 780-9494 Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	GDP	NYSE American

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  ☒    No  ☐

The Registrant had 12,655,785 shares of common stock outstanding on November 10, 2020.

1

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION	3
ITEM 1	FINANCIAL STATEMENTS	3
	Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 (unaudited)	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019 (unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	7
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
ITEM 4	CONTROLS AND PROCEDURES	31
PART II	OTHER INFORMATION	32
ITEM 1	LEGAL PROCEEDINGS	32
ITEM 1A	RISK FACTORS	32
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32
ITEM 6	EXHIBITS	33

2

PART I – FINANCIAL INFORMATION

Item 1—Financial Statements

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

	September 30, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,251		$	1,452
Accounts receivable, trade and other, net of allowance		2,107			1,131
Accrued oil and natural gas revenue		7,637			11,345
Fair value of oil and natural gas derivatives		579			8,537
Inventory		234			234
Prepaid expenses and other		1,221			549
Total current assets		13,029			23,248
PROPERTY AND EQUIPMENT:
Unevaluated properties		144			123
Oil and natural gas properties (full cost method)		348,227			302,859
Furniture, fixtures and equipment and other capital assets		4,560			4,450
		352,931			307,432
Less: Accumulated depletion, depreciation, amortization and impairment		(147,490	)		(94,124	)
Net property and equipment		205,441			213,308
Fair value of oil and natural gas derivatives		-			31
Deferred tax asset		-			393
Other		1,963			2,338
TOTAL ASSETS	$	220,433		$	239,318
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	28,853		$	26,348
Fair value of oil and natural gas derivatives		6,181			-
Accrued liabilities		12,258			16,615
Total current liabilities		47,292			42,963
Long term debt, net		109,529			104,435
Accrued abandonment cost		4,523			4,169
Fair value of oil and natural gas derivatives		7,151			2,786
Other non-current liabilities		-			800
Total liabilities		168,495			155,153
Commitments and contingencies (See Note 9)
STOCKHOLDERS’ EQUITY:
Preferred stock: 10,000,000 shares $1.00 par value authorized, and none issued and outstanding		-			-
Common stock: $0.01 par value, 75,000,000 shares authorized, and 12,655,785 and 12,532,550 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		127			125
Treasury stock (39,700 and zero shares, respectively)		(281	)		-
Additional paid in capital		85,622			81,305
Accumulated earnings (deficit)		(33,530	)		2,735
Total stockholders’ equity		51,938			84,165
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	220,433		$	239,318

See accompanying notes to consolidated financial statements.

3

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2020			2019			2020			2019
REVENUES:
Oil and natural gas revenues	$	21,463		$	27,161		$	64,917		$	88,193
Other		3			4			9			(4	)
		21,466			27,165			64,926			88,189
OPERATING EXPENSES:
Lease operating expense		2,831			2,589			9,384			8,902
Production and other taxes		591			623			2,361			1,878
Transportation and processing		4,336			5,107			14,586			15,562
Depreciation, depletion and amortization		10,341			13,205			35,484			36,550
General and administrative		3,891			5,196			13,327			15,442
Impairment of oil and natural gas properties		3,040			-			17,170			-
Other		(11	)		228			(13	)		179
		25,019			26,948			92,299			78,513
Operating income (loss)		(3,553	)		217			(27,373	)		9,676
OTHER INCOME (EXPENSE):
Interest expense		(1,733	)		(1,981	)		(5,410	)		(9,036	)
Interest income and other expense		5			-			147			24
Gain (loss) on commodity derivatives not designated as hedges		(11,079	)		3,752			(3,629	)		15,397
Loss on early extinguishment of debt		-			-			-			(1,846	)
		(12,807	)		1,771			(8,892	)		4,539
Income (loss) before income taxes		(16,360	)		1,988			(36,265	)		14,215
Income tax benefit		-			-			-			-
Net income (loss)	$	(16,360	)	$	1,988		$	(36,265	)	$	14,215
PER COMMON SHARE
Net income (loss) per common share - basic	$	(1.30	)	$	0.16		$	(2.89	)	$	1.16
Net income (loss) per common share - diluted	$	(1.30	)	$	0.14		$	(2.89	)	$	1.02
Weighted average shares of common stock outstanding - basic		12,618			12,257			12,564			12,208
Weighted average shares of common stock outstanding - diluted		12,618			14,040			12,564			14,497

See accompanying notes to consolidated financial statements.

4

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,			Nine Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(36,265	)	$	14,215
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization		35,484			36,550
Impairment of oil and natural gas properties		17,170			-
Right of use asset depreciation		939			939
Loss (gain) on commodity derivatives not designated as hedges		3,629			(15,397	)
Net cash received for settlement of derivative instruments		14,905			6,135
Share-based compensation (non-cash)		3,564			4,765
Amortization of finance cost, debt discount, paid in-kind interest and accretion		2,261			6,340
Loss on early extinguishment of debt		-			1,846
Other		-			269
Change in assets and liabilities:
Accounts receivable, trade and other, net of allowance		(583	)		207
Accrued oil and natural gas revenue		3,708			4,562
Prepaid expenses and other		65			192
Accounts payable		2,505			(2,544	)
Accrued liabilities		(2,790	)		(1,232	)
Net cash provided by operating activities		44,592			56,847
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(48,012	)		(74,199	)
Proceeds from sale of assets		-			1,334
Net cash used in investing activities		(48,012	)		(72,865	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of bank borrowings		(1,000	)		(49,500	)
Proceeds from bank borrowings		4,500			110,400
Repayment of Convertible Second Lien Notes		-			(56,728	)
Proceeds from New 2L Notes		-			12,000
Issuance cost, net		-			(2,516	)
Purchase of treasury stock		(281	)		(546	)
Net cash provided by financing activities		3,219			13,110
Decrease in cash and cash equivalents		(201	)		(2,908	)
Cash and cash equivalents, beginning of period		1,452			4,068
Cash and cash equivalents, end of period	$	1,251		$	1,160
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,182		$	2,952
Increase (decrease) in non-cash capital expenditures	$	(2,367	)	$	5,052

See accompanying notes to consolidated financial statements.

5

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Preferred Stock				Common Stock					Additional Paid-in			Treasury Stock						Accumulated			Total Stockholders’
	Shares		Value		Shares			Value		Capital			Shares			Value			Earnings (Deficit)			Equity
Balance at December 31, 2018		-	$	-		12,151		$	122	$	74,861			-		$	-		$	(10,553	)	$	64,430
Net income		-		-		-			-		-			-			-			448			448
Share-based compensation		-		-		-			-		1,745			-			-			-			1,745
Treasury stock activity		-		-		1			-		-			-			(5	)		-			(5	)
Balance at March 31, 2019		-	$	-		12,152		$	122	$	76,606			-		$	(5	)	$	(10,105	)	$	66,618
Net income		-		-		-			-		-			-			-			11,779			11,779
Share-based compensation		-		-		-			-		1,765			-			-			-			1,765
New 2L Notes conversion		-		-		-			-		1,429			-			-						1,429
Convertible Second Lien Notes warrant exercises		-		-		150			1		(20	)		-			-						(19	)
Treasury stock activity		-		-		-			-		-			(47	)		(538	)		-			(538	)
Balance at June 30, 2019		-	$	-		12,302		$	123	$	79,780			(47	)	$	(543	)	$	1,674		$	81,034
Net income		-		-		-			-		-			-			-			1,988			1,988
Share-based compensation		-		-		11			-		1,802			-			-			-			1,802
Treasury stock activity		-		-		-			-		-			-			(4	)		-			(4	)
Balance at September 30, 2019		-	$	-		12,313		$	123	$	81,582			(47	)	$	(547	)	$	3,662		$	84,820
Balance at December 31, 2019		-	$	-		12,533		$	125	$	81,305			-		$	-		$	2,735		$	84,165
Net income		-		-		-			-		-			-			-			3,036			3,036
Share-based compensation		-		-		-			-		1,309			-			-			-			1,309
Treasury stock activity		-		-		1			-		-			-			(2	)		-			(2	)
Balance at March 31, 2020		-	$	-		12,534		$	125	$	82,614			-		$	(2	)	$	5,771		$	88,508
Net loss		-		-		-			-		-			-			-			(22,941	)		(22,941	)
Share-based compensation		-		-		-			-		1,533			-			-			-			1,533
Discount from New 2L Notes Modification (See Note 4)		-		-		-			-		282			-			-			-			282
Treasury stock activity		-		-		130			2		-			(38	)		(270	)		-			(268	)
Balance at June 30, 2020		-	$	-		12,664		$	127	$	84,429			(38	)	$	(272	)	$	(17,170	)	$	67,114
Net loss		-		-		-			-		-			-			-			(16,360	)		(16,360	)
Share-based compensation		-		-		(12	)		-		1,193			-			-			-			1,193
Treasury stock activity		-		-		4			-		-			(1	)		(9	)		-			(9	)
Balance at September 30, 2020		-	$	-		12,656		$	127	$	85,622			(39	)	$	(281	)	$	(33,530	)	$	51,938

See accompanying notes to consolidated financial statements.

6

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—Description of Business and Significant Accounting Policies

Goodrich Petroleum Corporation (“Goodrich” and, together with its subsidiary, Goodrich Petroleum Company, L.L.C. (the “Subsidiary”), “we,” “our,” or the “Company”) is an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas on properties primarily in (i) Northwest Louisiana and East Texas, which includes the Haynesville Shale Trend, (ii) Southwest Mississippi and Southeast Louisiana, which includes the Tuscaloosa Marine Shale Trend (“TMS”), and (iii) South Texas, which includes the Eagle Ford Shale Trend.

Basis of Presentation

The consolidated financial statements of the Company included in this Quarterly Report on Form 10-Q have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly, certain information normally included in financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) has been condensed or omitted. This information should be read in conjunction with our consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2019. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year or for any interim period.

The impact of the COVID-19 pandemic and related economic, business and market disruptions is both on-going and continuing to evolve, and its future effects are uncertain. The Company has seen impacts related to COVID-19 on oil price fluctuations due to market uncertainty. The full impact of COVID-19 and related market impacts on the Company will depend on many factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company. As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

Principles of Consolidation—The consolidated financial statements include the financial statements of the Company and the Subsidiary. Intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. Certain data in prior periods’ financial statements have been adjusted to conform to the presentation of the current period. We have evaluated subsequent events through the date of this filing.

Use of Estimates— Our management has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with US GAAP.

Cash and Cash Equivalents—Cash and cash equivalents includes cash on hand, demand deposit accounts and temporary cash investments with maturities of ninety days or less at the date of purchase.

Accounts Payable—Accounts payable consisted of the following amounts as of September 30, 2020 and December 31, 2019:

(In thousands)	September 30, 2020		December 31, 2019
Trade payables	$	16,547	$	11,461
Revenue payables		11,470		14,483
Prepayments from partners		513		-
Miscellaneous payables		323		404
Total Accounts payable	$	28,853	$	26,348

7

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accrued Liabilities—Accrued liabilities consisted of the following amounts as of September 30, 2020 and December 31, 2019:

(In thousands)	September 30, 2020		December 31, 2019
Accrued capital expenditures	$	3,808	$	6,175
Accrued lease operating expense		1,096		989
Accrued production and other taxes		1,031		430
Accrued transportation and gathering		1,884		2,258
Accrued performance bonus		2,731		4,642
Accrued interest		175		208
Accrued office lease		1,164		1,414
Accrued general and administrative expense and other		369		499
Total Accrued liabilities	$	12,258	$	16,615

Inventory –Inventory consists of casing and tubulars that are expected to be used in our capital drilling program. Inventory is carried on the Consolidated Balance Sheets at the lower of cost or market.

Property and Equipment—Under US GAAP, two acceptable methods of accounting for oil and natural gas properties are allowed. These are the Successful Efforts Method and the Full Cost Method. Entities engaged in the production of oil and natural gas have the option of selecting either method for application in the accounting for their properties. The principal differences between the two methods are in the treatment of exploration costs, the computation of depreciation, depletion and amortization (“DD&A”) expense and the assessment of impairment of oil and natural gas properties. We have elected to adopt the Full Cost Method of accounting. We believe that the true cost of developing a “portfolio” of reserves should reflect both successful and unsuccessful attempts at exploration and production. Application of the Full Cost Method better reflects the true economics of exploring for and developing our oil and gas reserves.

Under the Full Cost Method, we capitalize all costs associated with acquisitions, exploration, development and estimated abandonment costs. We capitalize internal costs that can be directly identified with the acquisition of leasehold, as well as drilling and completion activities, but do not include any costs related to production, general corporate overhead or similar activities. Unevaluated property costs are excluded from the amortization base until we make a determination as to the existence of proved reserves on the respective property or impairment. We review our unevaluated properties at the end of each quarter to determine whether the costs should be reclassified to proved oil and natural gas properties and thereby subject to DD&A and the full cost ceiling test. For the three months ended September 30, 2020 and 2019, we transferred less than $0.1 million from unevaluated properties to proved oil and natural gas properties. For the nine months ended September 30, 2020 and 2019, we transferred less than $0.1 million and $0.2 million, respectively, from unevaluated properties to proved oil and natural gas properties. Our sales of oil and natural gas properties are accounted for as adjustments to net proved oil and natural gas properties with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves.

Under the Full Cost Method, we amortize our investment in oil and natural gas properties through DD&A expense using the units of production method. An amortization rate is calculated based on total proved reserves converted to equivalent thousand cubic feet of natural gas (“Mcfe”) as the denominator and the net book value of the evaluated oil and gas asset together with the estimated future development cost of the proved undeveloped reserves as the numerator. The rate calculated per Mcfe is applied against the periods' production also converted to Mcfe to arrive at the periods' DD&A expense.

Depreciation of furniture, fixtures and equipment, consisting of office furniture, computer hardware and software and leasehold improvements, is computed using the straight-line method over their estimated useful lives, which vary from three to five years.

Full Cost Ceiling Test—The Full Cost Method requires that at the conclusion of each financial reporting period, the present value of estimated future net cash flows from proved reserves (adjusted for hedges and excluding cash flows related to estimated abandonment costs), be compared to the net capitalized costs of proved oil and natural gas properties, net of related deferred taxes. This comparison is referred to as a “ceiling test.” If the net capitalized costs of proved oil and natural gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write-down the value of our oil and natural gas properties to the value of the discounted cash flows. Estimated future net cash flows from proved reserves are calculated based on the Securities and Exchange Commission (“SEC”) required trailing 12-month average pricing assumption.

The Full Cost Ceiling Test performed as of September 30, 2020 utilized the latest SEC 12-month average price of $1.97 per mcf of natural gas, which resulted in the present value of future net cash flows being lower than our capitalized cost by $3.0 million. We recorded that amount as an impairment in the three months ended September 30, 2020 for a total impairment for the nine months ended September 30, 2020 of $17.2 million. We did not have an impairment for the comparable periods in 2019.

8

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurement—Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, whether in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, our credit risk.

We use various methods, including the income approach and market approach, to determine the fair values of our financial instruments that are measured at fair value on a recurring basis, which depend on a number of factors, including the availability of observable market data over the contractual term of the underlying instrument. For some of our instruments, the fair value is calculated based on directly observable market data or data available for similar instruments in similar markets. For other instruments, the fair value may be calculated based on these inputs as well as other assumptions related to estimates of future settlements of these instruments. We separate our financial instruments into three levels (levels 1, 2 and 3) based on our assessment of the availability of observable market data and the significance of non-observable data used to determine the fair value of our instruments. Our assessment of an instrument can change over time based on the maturity or liquidity of the instrument, which could result in a change in the classification of the instruments between levels.

Each of these levels and our corresponding instruments classified by level are further described below:

• Level 1 Inputs— unadjusted quoted market prices in active markets for identical assets or liabilities. We have no Level 1 instruments;

• Level 2 Inputs— quotes that are derived principally from or corroborated by observable market data. Included in this level are our senior credit facilities and commodity derivatives whose fair values are based on third-party quotes or available interest rate information and commodity pricing data obtained from third party pricing sources and our creditworthiness or that of our counter-parties; and

• Level 3 Inputs— unobservable inputs for the asset or liability, such as discounted cash flow models or valuations, based on our various assumptions and future commodity prices. Included in this level would be our initial measurement of asset retirement obligations.

As of September 30, 2020 and December 31, 2019, the carrying amounts of our cash and cash equivalents, trade receivables and payables represented fair value because of the short-term nature of these instruments.

Asset Retirement Obligations—Asset retirement obligations are related to the abandonment and site restoration requirements that result from the exploration and development of our oil and natural gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense is included in “Depreciation, depletion and amortization” on our Consolidated Statements of Operations. See Note 3.

The estimated fair value of the Company’s asset retirement obligations 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 initial measurement of the asset retirement obligations was classified as Level 3 in the fair value hierarchy.

Revenue Recognition—Oil and natural gas revenues are generally recognized upon delivery of our produced oil and natural gas volumes to our customers. We record revenue in the month our production is delivered to the purchaser. However, settlement statements and payments for our oil and natural gas sales may not be received for up to 60 days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. We record a liability or an asset for natural gas balancing when we have sold more or less than our working interest share of natural gas production, respectively. As ofSeptember 30, 2020and December 31, 2019, the net liability for natural gas balancing was immaterial. Differences between actual production and net working interest volumes are routinely adjusted. See Note 2.

Derivative Instruments—We use derivative instruments such as futures, forwards, swaps, collars, and options for purposes of hedging our exposure to fluctuations in the price of crude oil and natural gas and hedging our exposure to changing interest rates. Accounting standards related to derivative instruments and hedging activities require that all derivative instruments subject to the requirements of those standards be measured at fair value and recognized as assets or liabilities in the balance sheet. We offset the fair value of our asset and liability positions with the same counter-party for each commodity type. Changes in fair value are required to be recognized in earnings unless specific hedge accounting criteria are met. All of our realized gains or losses on our derivative contracts are the result of cash settlements. We have not designated any of our derivative contracts as hedges; accordingly, changes in fair value are reflected in earnings. See Note 8.

9

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes—We account for income taxes, as required, under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

We recognize, as required, the financial statement benefit of an uncertain tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. See Note 7.

Net Income or Net Loss Per Common Share—Basic income (loss) per common share is computed by dividing net income (loss) applicable to common stock for each reporting period by the weighted-average shares of common stock outstanding during the period. Diluted income (loss) per common share is computed by dividing net income (loss) applicable to common stock for each reporting period by the weighted average shares of common stock outstanding during the period, plus the effects of potentially dilutive restricted stock calculated using the treasury stock method and the potential dilutive effect of the conversion of convertible securities, such as warrants and convertible notes, into shares of our common stock. See Note 6.

Commitments and Contingencies—Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Recoveries from third parties, when probable of realization, are separately recorded and are not offset against the related environmental liability. See Note 9.

Share-Based Compensation—We account for our share-based transactions using the fair value as of the grant date and recognize compensation expense over the requisite service period.

Guarantee—As of September 30, 2020, Goodrich Petroleum Company, LLC, the wholly owned subsidiary of Goodrich Petroleum Corporation, was the Subsidiary Guarantor of our New 2L Notes (as defined below). The parent company has no independent assets or operations, the guarantee is full and unconditional, and the parent has no subsidiaries other than Goodrich Petroleum Company, LLC.

Debt Issuance Cost—The Company records debt issuance costs associated with its New 2L Notes (and previously with its Convertible Second Lien Notes, both as defined below) as a contra balance to long term debt, net in our Consolidated Balance Sheets, which is amortized straight-line over the life of the respective notes. Debt issuance costs associated with our revolving credit facility debt are recorded in other assets in our Consolidated Balance Sheets, which is amortized straight-line over the life of such debt.

New Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. For public entities, the amendments in this ASU are effective for fiscal periods beginning after December 15, 2020, including interim periods therein. We do not expect a material impact from the adoption of this ASU.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments is this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by this ASU do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are evaluating the expected impact these amendments and reference rate reform will have on our consolidated financial statements and various contracts.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this ASU affect entities that issue convertible instruments and/or contracts in an entity’s own equity. The amendments in this ASU primarily affect convertible instruments issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements of this ASU. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. Also affected is the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this ASU affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in this ASU are effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Board decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of these amendments on our accounting for and disclosure of our convertible notes.

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2—Revenue Recognition

In accordance with Accounting Standards Codification Topic 606, revenue is generally recognized upon delivery of our produced oil and natural gas volumes to our customers. Our customer sales contracts include oil and natural gas sales. Under Topic 606, each unit (Mcf or barrel) of commodity product represents a separate performance obligation which is sold at variable prices, determinable on a monthly basis. The pricing provisions of our contracts are primarily tied to a market index with certain adjustments based on factors such as delivery, product quality and prevailing supply and demand conditions in the geographic areas in which we operate. We allocate the transaction price to each performance obligation and recognize revenue upon delivery of the commodity product when the customer obtains control. Control of our produced natural gas volumes passes to our customers at specific metered points indicated in our natural gas contracts. Similarly, control of our produced oil volumes passes to our customers when the oil is measured either by a trucking oil ticket or by a meter when entering an oil pipeline. The Company has no control over the commodities after those points and the measurement at those points dictates the amount on which the customer's payment is based. Our oil and natural gas revenue streams include volumes burdened by royalty and non-operated working interests. Our revenues are recorded and presented on our financial statements net of the royalty and non-operated working interests. Our revenue stream does not include any payments for services or ancillary items other than sale of oil and natural gas.

We record revenue in the month our production is delivered to the purchaser. However, settlement statements and payments for our oil and natural gas sales may not be received for up to 60 days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. We record any differences, which historically have not been significant, between the actual amounts ultimately received and the original estimates in the period they become finalized. As of September 30, 2020 and December 31, 2019, receivables from contracts with customers were $7.6 million and $11.3 million, respectively.

The following table presents our oil and natural gas revenues disaggregated by revenue source and by operated and non-operated properties for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
(In thousands)	Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues		Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues
Operated	$	1,257	$	17,665	$	-	$	18,922	$	4,007	$	52,156	$	-	$	56,163
Non-operated		39		2,499		3		2,541		540		8,207		7		8,754
Total oil and natural gas revenues	$	1,296	$	20,164	$	3	$	21,463	$	4,547	$	60,363	$	7	$	64,917

	Three Months Ended September 30, 2019								Nine Months Ended September 30, 2019
(In thousands)	Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues		Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues
Operated	$	2,365	$	21,679	$	-	$	24,044	$	7,881	$	66,743	$	-	$	74,624
Non-operated		112		3,002		3		3,117		326		13,232		11		13,569
Total oil and natural gas revenues	$	2,477	$	24,681	$	3	$	27,161	$	8,207	$	79,975	$	11	$	88,193

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3—Asset Retirement Obligations

The reconciliation of the beginning and ending asset retirement obligation for the nine months ended September 30, 2020 is as follows (in thousands):

	Nine Months Ended September 30, 2020
Beginning balance at December 31, 2019	$	4,169
Liabilities incurred		138
Dispositions		(12	)
Accretion expense		228
Ending balance at September 30, 2020	$	4,523
Current liability		-
Long term liability	$	4,523

NOTE 4—Debt

Debt consisted of the following balances as of September 30, 2020 and December 31, 2019 (in thousands):

	September 30, 2020				December 31, 2019
	Principal		Carrying Amount		Principal		Carrying Amount
2019 Senior Credit Facility (1)	$	96,400	$	96,400	$	92,900	$	92,900
New 2L Notes (2)		14,327		13,129		12,969		11,535
Total debt	$	110,727	$	109,529	$	105,869	$	104,435

(1) The carrying amount for the 2019 Senior Credit Facility represents fair value as it was fully secured.

(2) The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal includes $2.3 million and $1.0 million of paid in-kind interest as of September 30, 2020 and December 31, 2019, respectively. The carrying value includes $1.0 million and $1.1 million of unamortized debt discount and $0.2 million and $0.3 million of unamortized issuance cost as of September 30, 2020 and December 31, 2019, respectively.

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the total interest expense (contractual interest expense, amortization of debt discount, accretion and financing costs) and the effective interest rate on the liability component of debt for the three and nine months ended September 30, 2020 and 2019 (amounts in thousands, except effective interest rates):

	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019					Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
	Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate
2017 Senior Credit Facility	$	-		—	%	$	-		-		$	-		—	%	$	872		7.2	%
2019 Senior Credit Facility		1,129		4.6	%		1,377		6.2	%		3,534		4.9	%		2,072		6.1	%
Convertible Second Lien Notes (1)		-		—	%		-		-			-		—	%		5,304		24.1	%
New 2L Notes (2)		604		18.6	%		604		21.9	%		1,876		20.1	%		788		21.6	%
Total interest expense	$	1,733				$	1,981				$	5,410				$	9,036

(1) The Convertible Second Lien Notes had a coupon interest rate of 13.50%; however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 24.1% for the nine months ended September 30, 2019. Interest expense for the nine months ended September 30, 2019 included $2.3 million of debt discount amortization and $3.0 million of paid in-kind interest.

(2) The New 2L Notes have a coupon interest rate of 13.50%; however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 18.6% and 20.1%, respectively, for the three and nine months ended September 30, 2020 and 21.9% and 21.6%, respectively, for the three and nine months ended September 30, 2019. Interest expense for the three months ended September 30, 2020 included $0.1 million of debt discount amortization and $0.5 million of accrued interest to be paid in-kind, and interest expense for the nine months ended September 30, 2020 included $0.4 million of debt discount amortization and $1.4 million of accrued interest to be paid in-kind. Interest expense for the three and nine months ended September 30, 2019 included $0.1 million and $0.2 million of debt discount amortization, respectively, and $0.4 million and $0.5 million of accrued interest to be paid in-kind, respectively.

2017 Senior Credit Facility

On October 17, 2017, the Company entered into the Amended and Restated Senior Secured Revolving Credit Agreement (as amended, the “2017 Credit Agreement”) with the Subsidiary, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders that are party thereto, which provided for revolving loans of up to the borrowing base then in effect (as amended, the “2017 Senior Credit Facility”). The 2017 Senior Credit Facility was set to mature on (a) October 17, 2021 or (b) December 30, 2019, if the Convertible Second Lien Notes had not been voluntarily redeemed, repurchased, refinanced or otherwise retired by December 30, 2019. The maximum credit amount under the 2017 Senior Credit Facility when it was paid off in full on May 14, 2019 was $250.0 million with a borrowing base of $75.0 million.

All amounts outstanding under the 2017 Senior Credit Facility bore interest at a rate per annum equal to, at the Company's option, either (i) the alternative base rate plus an applicable margin ranging from 1.75% to 2.75%, depending on the percentage of the borrowing base that was utilized, or (ii) adjusted LIBOR plus an applicable margin ranging from 2.75% to 3.75%, depending on the percentage of the borrowing base that was utilized. Undrawn amounts under the 2017 Senior Credit Facility were subject to a 0.50% commitment fee.

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The obligations under the 2017 Credit Agreement were secured by a first lien security interest in substantially all of the assets of the Company and the Subsidiary.

On May 14, 2019, the 2017 Senior Credit Facility was paid off in full and amended, restated and refinanced into the 2019 Senior Credit Facility. In connection with the refinancing, we recorded a $0.2 million loss on early extinguishment of debt related to the remaining unamortized debt issuance costs.

2019 Senior Credit Facility

On May 14, 2019, the Company entered into a Second Amended and Restated Senior Secured Revolving Credit Agreement (the “2019 Credit Agreement”) among the Company, the Subsidiary, as borrower (in such capacity, the “Borrower”), Truist Bank (formerly SunTrust Bank), as administrative agent (the “Administrative Agent”), and certain lenders that are party thereto, which provides for revolving loans of up to the borrowing base then in effect (the “2019 Senior Credit Facility”).

The 2019 Senior Credit Facility matures on (a) May 14, 2024 or (b) December 3, 2021, if the New 2L Notes (as defined below) have not been voluntarily redeemed, repurchased, refinanced or otherwise retired by December 3, 2021, which is the date that is 180 days prior to the May 31, 2022 “Maturity Date” of the New 2L Notes. The 2019 Senior Credit Facility provides for a maximum credit amount of $500 million subject to a borrowing base limitation, which was $120 million as of September 30, 2020. The borrowing base is scheduled to be redetermined in March and September of each calendar year, and is subject to additional adjustments from time to time, including for asset sales, elimination or reduction of hedge positions and incurrence of other debt. Additionally, each of the Borrower and the Administrative Agent may request one unscheduled redetermination of the borrowing base between scheduled redeterminations. The amount of the borrowing base is determined by the lenders in their sole discretion and consistent with their oil and gas lending criteria at the time of the relevant redetermination. The Borrower may also request the issuance of letters of credit under the 2019 Credit Agreement in an aggregate amount up to $10 million, which reduce the amount of available borrowings under the borrowing base in the amount of such issued and outstanding letters of credit.

All amounts outstanding under the 2019 Senior Credit Facility bear interest at a rate per annum equal to, at the Company’s option, either (i) the alternative base rate plus an applicable margin ranging from 1.50% to 2.50%, depending on the percentage of the borrowing base that is utilized, or (ii) adjusted LIBOR plus an applicable margin from 2.50% to 3.50%, depending on the percentage of the borrowing base that is utilized. Undrawn amounts under the 2019 Senior Credit Facility are subject to a commitment fee ranging from 0.375% to 0.50%, depending on the percentage of the borrowing base that is utilized. To the extent that a payment default exists and is continuing, all amounts outstanding under the 2019 Senior Credit Facility will bear interest at 2.0% per annum above the rate and margin otherwise applicable thereto. As of September 30, 2020, the weighted average interest rate on the borrowings from the 2019 Senior Credit Facility was 3.93%. The obligations under the 2019 Credit Agreement are guaranteed by the Company and secured by a first lien security interest in substantially all of the assets of the Company and the Borrower.

The 2019 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default. If an event of default occurs and is continuing, the lenders may declare all amounts outstanding under the 2019 Senior Credit Facility to be immediately due and payable.

The 2019 Credit Agreement also contains certain financial covenants, including the maintenance of (i) a ratio of Net Funded Debt to EBITDAX not to exceed 3.50 to 1.00 as of the last day of any fiscal quarter, (ii) a current ratio (based on the ratio of current assets to current liabilities as defined in the 2019 Credit Agreement) not to be less than 1.00 to 1.00 and (iii) until no New 2L Notes remain outstanding, a ratio of Total Proved PV-10 attributable to the Company’s and Borrower’s Proved Reserves to Total Secured Debt (net of any Unrestricted Cash not to exceed $10 million) not to be less than 1.50 to 1.00 and minimum liquidity requirements. On May 14, 2019, the Company utilized borrowings under the 2019 Senior Credit Facility to refinance its obligations under the 2017 Senior Credit Facility and to fund the Redemption (as defined below) of the Convertible Second Lien Notes.

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2020, the Company had $96.4 million of borrowings outstanding under the 2019 Senior Credit Facility. The Company also had $1.9 million of unamortized debt issuance costs recorded as of September 30, 2020 related to the 2019 Senior Credit Facility.

As of September 30, 2020, the Company was in compliance with all covenants within the 2019 Senior Credit Facility with the exception of the current ratio. On October 30, 2020, the Company entered into a Third Amendment to Credit Agreement (the “Third Amendment”) with the Subsidiary, Truist Bank, as administrative agent, and the lenders party thereto, pursuant to which, among other things, the lenders agreed to waive the default caused by our failure to comply with the current ratio financial covenant under the 2019 Senior Credit Facility as of the last day of the fiscal quarter ended September 30, 2020. The Third Amendment also decreased the maximum ratio of Net Funded Debt to EBITDAX from 4.00 to 1.00 to 3.50 to 1.00 and added an anti-cash hoarding covenant, which requires mandatory prepayments of the loans then outstanding with the amount of certain cash on the balance sheet in excess of $10 million, as set forth in greater detail in the Third Amendment. Additionally, the Third Amendment included updated language surrounding a benchmark replacement rate in anticipation of the phase out of LIBOR.

Convertible Second Lien Notes

In October 2016, the Company issued $40.0 million aggregate principal amount of the Company’s 13.50% Convertible Second Lien Senior Secured Notes due 2019 (the “Convertible Second Lien Notes”) along with 10-year costless warrants to acquire 2.5 million shares of common stock. Holders of the Convertible Second Lien Notes had a second priority lien on all assets of the Company, and holders of such warrants had a right to appoint two members to our Board of Directors (the “Board”) as long as such warrants were outstanding.

The Convertible Second Lien Notes were scheduled to mature on August 30, 2019 or six months after the maturity of our current revolving credit facility but in no event later than March 30, 2020. The Convertible Second Lien Notes bore interest at the rate of 13.50% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. The Company also had the option under certain circumstances to pay all or any portion of interest in-kind on the then outstanding principal amount of the Convertible Second Lien Notes by increasing the principal amount of the outstanding Convertible Second Lien Notes or by issuing additional second lien notes.

Upon issuance of the Convertible Second Lien Notes in October 2016, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion as well as warrants on the debt instrument, we recorded a debt discount of $11.0 million, thereby reducing the $40.0 million carrying value upon issuance to $29.0 million and recorded an equity component of $11.0 million. The debt discount was amortized using the effective interest rate method based upon an original term through August 30, 2019. The Convertible Second Lien Notes were redeemed in full on May 29, 2019 for $56.7 million using borrowings under the 2019 Senior Credit Facility. In connection with the redemption of the Convertible Second Lien Notes, we recorded a $1.6 million loss on early extinguishment of debt related to the remaining unamortized debt discount and debt issuance costs.

New Convertible Second Lien Notes 

On May 14, 2019, the Company and the Subsidiary entered into a purchase agreement with certain funds and accounts managed by Franklin Advisers, Inc., as investment manager (each such fund or account, together with its successors and assigns, a “New 2L Notes Purchaser”) pursuant to which the Company issued to the New 2L Notes Purchasers (the “New 2L Notes Offering”) $12.0 million aggregate principal amount of the Company’s 13.50% Convertible Second Lien Senior Secured Notes due 2021 (the “New 2L Notes”). The closing of the New 2L Notes Offering occurred on May 31, 2019. Proceeds from the sale of the New 2L Notes were primarily used to pay down outstanding borrowings under the 2019 Revolving Credit Facility. Holders of the New 2L Notes have a second priority lien on all assets of the Company.

The New 2L Notes, as set forth in the indenture governing such notes (as amended, the “New 2L Notes Indenture”), were initially scheduled to mature on May 31, 2021. In May 2020, the maturity date of the New 2L Notes was extended to May 31, 2022. The New 2L Notes bear interest at the rate of 13.50% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. The Company may elect to pay all or any portion of interest in-kind on the then outstanding principal amount of the New 2L Notes by increasing the principal amount of the outstanding New 2L Notes.

The New 2L Notes Indenture contains certain covenants pertaining to us and our Subsidiary, including delivery of financial reports; environmental matters; conduct of business; use of proceeds; operation and maintenance of properties; collateral and guarantee requirements; indebtedness; liens; dividends and distributions; limits on sales of assets and stock; business activities; transactions with affiliates; and changes of control. The New 2L Notes Indenture also contains a financial covenant which requires the maintenance of a ratio of Total Proved PV-10 attributable to the Company's and Subsidiary's Proved Reserves (as defined in the New 2L Notes Indenture) to Total Secured Debt (net of any Unrestricted Cash not to exceed $10.0 million) not to be less than 1.50 to 1.00.

The New 2L Notes are convertible into the Company’s common stock at the conversion rate, which is the sum of the outstanding principal amount of New 2L Notes to be converted, including any accrued and unpaid interest, divided by the conversion price, which shall initially be $21.33, subject to certain adjustments as described in the New 2L Notes Indenture. Upon conversion, the Company must deliver, at its option, either (1) a number of shares of its common stock determined as set forth in the New 2L Notes Indenture, (2) cash or (3) a combination of shares of its common stock and cash; however, the Company’s ability to redeem the New 2L Notes with cash is subject to the terms of the 2019 Senior Credit Agreement.

The New 2L Notes were issued and sold to the New 2L Notes Purchasers pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereunder. The Company has completed the registration with the U.S. Securities and Exchange Commission of the resale of the New 2L Notes and the shares of common stock issuable upon conversion of The New 2L Notes.

Upon issuance of the New 2L Notes on May 31, 2019, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, we recorded a debt discount of $1.4 million, thereby reducing the $12.0 million carrying value upon issuance to $10.6 million and recorded an equity component of $1.4 million. The equity component was valued using a binomial model. Prior to the maturity extension in May 2020, the debt discount was amortized using the effective interest rate method based upon an original term through May 31, 2021. Upon the maturity extension in May 2020, an additional $0.3 million of debt discount was recorded, and the debt discount began to be amortized using the effective interest rate method based upon the maturity date of May 31, 2022.

As of September 30, 2020, $1.0 million of debt discount and $0.2 million of debt issuance costs remained to be amortized on the New 2L Notes.

As of September 30, 2020, the Company was in compliance with all covenants within the New 2L Notes Indenture.

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5—Equity

During the three and nine months ended September 30, 2020, the Company had vestings of its share-based compensation units upon the retirement of certain employees representing a total fair value of less than $0.1 million and $1.0 million, respectively, and resulting in the issuance of approximately 6,000 and 136,000 common stock shares, respectively. The Company withheld shares for payment of $0.3 million in taxes due upon vesting resulting in approximately 39,700 shares held in treasury as of September 30, 2020.

During the three and nine months ended September 30, 2019, zero and 150,000, respectively, of the 10-year costless warrants associated with the Convertible Second Lien Notes were exercised. The Company received cash for the one cent par value for the issuance of the 150,000 common shares. As of September 30, 2019, no such warrants remain un-exercised. During the three and nine months ended September 30, 2019, the Company had vestings of its share-based compensation units representing a total fair value of $0.1 million and resulting in the issuance of approximately 12,000 common stock shares. During the three and nine months ended September 30, 2019, the Company paid less than $0.1 million and $0.5 million, respectively, in cash for the purchase of 352 and 47,133 Treasury shares, respectively, withheld from employees upon the vesting of restricted stock awards for the payment of taxes.

NOTE 6—Net Income (Loss) Per Common Share

Net income applicable to common stock was used as the numerator in computing basic and diluted net income (loss) per common share for the three and nine months ended September 30, 2020 and 2019. The Company used the treasury stock method in determining the effects of potentially dilutive restricted stock. The following table sets forth information related to the computations of basic and diluted net income (loss) per common share:

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
	(Amounts in thousands, except per share data)
Basic net income (loss) per common share:
Net income (loss) applicable to common stock	$	(16,360	)	$	1,988	$	(36,265	)	$	14,215
Weighted average shares of common stock outstanding		12,618			12,257		12,564			12,208
Basic net income (loss) per common share	$	(1.30	)	$	0.16	$	(2.89	)	$	1.16
Diluted net income (loss) per common share:
Net income (loss) applicable to common stock	$	(16,360	)	$	1,988	$	(36,265	)	$	14,215
Interest, discount and amortization on New 2L Notes		-			-		-			565
Adjusted net income (loss) per common share	$	(16,360	)	$	1,988	$	(36,265	)	$	14,780
Weighted average shares of common stock outstanding		12,618			12,257		12,564			12,208
Common shares issuable upon conversion of the New 2L Notes		-			-		-			588
Common shares issuable upon conversion of warrants of unsecured claim holders		-			1,285		-			1,285
Common shares issuable on assumed conversion of restricted stock **		-			498		-			416
Diluted weighted average shares of common stock outstanding		12,618			14,040		12,564			14,497
Diluted net income (loss) per common share (1) (2) (3)	$	(1.30	)	$	0.14	$	(2.89	)	$	1.02
(1) Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.		672			588		672			-
(2) Common shares issuable upon conversion of the unsecured claims warrants not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.		1,329			-		1,329			-
(3) Common shares issuable upon conversion of the restricted stock not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020. **		420			-		231			-

** Common shares issuable on assumed conversion of share-based compensation assumes a payout of the Company's performance share awards at 100% of the initial units granted (or a ratio of one unit to one common share). The range of common stock shares which may be earned ranges from zero to 250% of the initial performance units granted.

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7—Income Taxes

We recorded no income tax expense or benefit for the three and nine months ended September 30, 2020 or 2019. We maintained a valuation allowance at September 30, 2020, which resulted in no net deferred tax asset or liability appearing on our statement of financial position. We recorded this valuation allowance after an evaluation of all available evidence (including commodity prices and our recent history of tax net operating losses (“NOLs”) in 2019 and prior years) led to a conclusion that based upon the more-likely-than-not standard of the accounting literature our deferred tax assets were unrecoverable. The valuation allowance was $74.2 million as of December 31, 2019, which resulted in a net non-current deferred tax asset of $0.4 million appearing on our statement of financial position at that time. The net $0.4 million deferred tax asset related to alternative minimum tax (“AMT”) credits and accrued interest which were refundable to the Company was reclassed to a current receivable as of June 30, 2020, and such funds were subsequently received in the third quarter of 2020. The valuation allowance has no impact on our NOL position for tax purposes, and if we generate taxable income in future periods, we may be able to use our NOLs to offset taxable income at that time subject to any applicable tax limitations on the NOLs. Considering the Company’s taxable income forecasts, our assessment of the realization of our deferred tax assets has not changed, and we continue to maintain a full valuation allowance for our net deferred tax assets as of September 30, 2020.

As of September 30, 2020, we have no unrecognized tax benefits. There were no significant changes to our tax position since December 31, 2019.

NOTE 8—Commodity Derivative Activities

We use commodity and financial derivative contracts to manage fluctuations in commodity prices. We are currently not designating our derivative contracts for hedge accounting. All derivative gains and losses are from our oil and natural gas derivative contracts and have been recognized in “Other income (expense)” on our Consolidated Statements of Operations.

The following table summarizes gains and losses we recognized on our oil and natural gas derivatives for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
Oil and Natural Gas Derivatives (in thousands)
Gain on commodity derivatives not designated as hedges, settled	$	1,597		$	5,922		$	14,905		$	6,135
Gain (loss) on commodity derivatives not designated as hedges, not settled		(12,676	)		(2,170	)		(18,534	)		9,262
Total gain (loss) on commodity derivatives not designated as hedges	$	(11,079	)	$	3,752		$	(3,629	)	$	15,397

Commodity Derivative Activity

We enter into swap contracts, costless collars or other derivative agreements from time to time to manage commodity price risk for a portion of our production. Our policy is that all derivatives are approved by the Hedging Committee of our Board, and reviewed periodically by the Board.

Despite the measures taken by us to attempt to control price risk, we remain subject to price fluctuations for natural gas and crude oil sold in the spot market. Prices received for natural gas sold on the spot market are volatile due primarily to seasonality of demand and other factors beyond our control. Decreases in domestic crude oil and natural gas spot prices will have a material adverse effect on our financial position, results of operations and quantities of reserves recoverable on an economic basis. We routinely exercise our contractual right to net realized gains against realized losses when settling with our financial counter-parties. Neither our counter-parties nor we require any collateral upon entering into derivative contracts. We would have been at risk of losing $0.6 million had RBC Capital Markets been unable to fulfill their obligations as of September 30, 2020.

17

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2020, the open positions on our outstanding commodity derivative contracts, all of which were with Truist Bank, RBC Capital Markets, ARM Energy and Citizens Commercial Banking were as follows:

Contract Type	Average Daily Volume	Total Volume	Weighted Average Fixed Price	Fair Value at September 30, 2020 (In thousands)
Oil swaps (Bbls)
2020	200	18,400	$57.51	$310
2021 (through March 31, 2021)	200	18,000	$56.58	269
Total oil				$	579
Natural Gas swaps (MMBtu)
2020	45,000	4,109,000	$2.59	$58
2021	63,167	23,089,000	$2.56	(7,089		)
2022 (through March 31, 2022)	70,000	6,300,000	$2.53	(2,735		)
Natural Gas collars (MMBtu)
2020	25,000	2,300,000	$2.40 - $2.62	$(195		)
2021	29,250	10,680,000	$2.40 - $3.50	(966		)
2022 (through March 31, 2022)	30,000	2,700,000	$2.50 - $3.50	(97		)
Natural Gas basis swaps (MMBtu)
2020	50,000	4,600,000	$0.209	$252
2021	50,000	18,250,000	$0.209	(384		)
2022	50,000	18,250,000	$0.209	(517		)
2023	50,000	18,250,000	$0.209	(642		)
2024	50,000	18,300,000	$0.209	(1,017		)
Total natural gas				$	(13,332	)
Total oil and natural gas				$	(12,753	)

During the third quarter of 2020 we entered into the following contracts with Truist Bank, RBC Capital Markets and Citizens Commercial Banking:

Contract Type	Daily Volume	Weighted Average Fixed Price	Contract Start Date	Contract Termination
Natural gas swap (MMBtu)	20,000	$2.73	April 1, 2021	March 31, 2022
Natural gas collar (MMBtu)	30,000	$2.50 - $3.50	April 1, 2021	March 31, 2022

The following table summarizes the fair values of our derivative financial instruments that are recorded at fair value classified in each Level as of September 30, 2020 (in thousands). We measure the fair value of our commodity derivative contracts by applying the income approach. See Note 1—“Description of Business and Significant Accounting Policies” for our discussion regarding fair value, including inputs used and valuation techniques for determining fair values.

Description	Level 1		Level 2			Level 3		Total
Fair value of oil and natural gas derivatives - Current Assets	$	-	$	579		$	-	$	579
Fair value of oil and natural gas derivatives - Non-current Assets		-		-			-		-
Fair value of oil and natural gas derivatives - Current Liabilities		-		(6,181	)		-		(6,181	)
Fair value of oil and natural gas derivatives - Non-current Liabilities		-		(7,151	)		-		(7,151	)
Total	$	-	$	(12,753	)	$	-	$	(12,753	)

We enter into oil and natural gas derivative contracts under which we have netting arrangements with each counter-party. The following table discloses and reconciles the gross amounts to the amounts as presented on the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019:

	September 30, 2020									December 31, 2019
Fair Value of Oil and Natural Gas Derivatives	Gross			Amount			As			Gross			Amount			As
(in thousands)	Amount			Offset			Presented			Amount			Offset			Presented
Fair value of oil and natural gas derivatives - Current Assets	$	3,403		$	(2,824	)	$	579		$	9,401		$	(864	)	$	8,537
Fair value of oil and natural gas derivatives - Non-current Assets		1,356			(1,356	)		-			847			(816	)		31
Fair value of oil and natural gas derivatives - Current Liabilities		(9,005	)		2,824			(6,181	)		(864	)		864			-
Fair value of oil and natural gas derivatives - Non-current Liabilities		(8,507	)		1,356			(7,151	)		(3,602	)		816			(2,786	)
Total	$	(12,753	)	$	-		$	(12,753	)	$	5,782		$	-		$	5,782

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9—Commitments and Contingencies

We are party to various lawsuits from time to time arising in the normal course of business, including, but not limited to, royalty, contract, personal injury, and environmental claims. We have established reserves as appropriate for all such proceedings and intend to vigorously defend these actions. Management believes, based on currently available information, that adverse results or judgments from such actions, if any, would not have been material to our consolidated financial position, results of operations or liquidity for the three and nine months ended September 30, 2020 and 2019.

NOTE 10—Leases

We determine if an arrangement is or contains a lease at inception. Leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets. We lease our corporate office building in Houston, Texas. We recognize lease expense for this lease on a straight-line basis over the lease term. This operating lease is included in furniture, fixtures and equipment and other capital assets, accrued liabilities and other non-current liabilities on our Consolidated Balance Sheets. The operating lease asset and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As this lease did not provide an implicit rate, we used a collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset includes any lease payments made but excludes annual operating charges. Operating lease expense is recognized on a straight-line basis over the lease term and reported in general and administrative operating expense on our Consolidated Statements of Operations. We have also entered into leases for certain vehicles and other equipment which are immaterial to our financial statements and have therefore not been recorded on our Consolidated Balance Sheets.

The lease cost components for the three and nine months ended September 30, 2020 and 2019 are classified as follows:

(in thousands)	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019		Consolidated Statements of Operations Classification
Building lease cost	$	385		$	368	$	1,155	$	1,124	General and administrative expense
Variable lease cost (1)		(3	)		50		20		145	General and administrative expense
	$	382		$	418	$	1,175	$	1,269

(1) Includes building operating expenses.

The following are additional details related to our lease portfolio as of September 30, 2020 and December 31, 2019:

(in thousands)	September 30, 2020			December 31, 2019			Consolidated Balance Sheets Classification
Lease asset, gross	$	2,922		$	2,922		Furniture, fixtures and equipment and other capital assets
Accumulated depreciation		(2,191	)		(1,252	)	Accumulated depletion, depreciation and amortization
Lease asset, net	$	731		$	1,670
Current lease liability	$	1,164		$	1,414		Accrued liabilities
Non-current lease liability		-			800		Other non-current liabilities
Total lease liabilities	$	1,164		$	2,214

19

GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents operating lease liability maturities as of September 30, 2020:

(in thousands)	September 30, 2020
2020	$	385
2021		813
2022		-
2023		-
2024		-
Thereafter		-
Total lease payments	$	1,198
Less imputed interest		34
Present value of lease liabilities	$	1,164

As of September 30, 2020, our office building operating lease has a weighted-average remaining lease term of 0.6 years and a weighted-average discount rate of 8.0 percent. Cash paid for amounts included in the measurement of operating lease liabilities was $0.4 million for both the three months ended September 30, 2020 and 2019 and $1.2 million for the nine months ended September 30, 2020 and 2019.

NOTE 11—COVID-19 Pandemic

The impact of the COVID-19 pandemic and related economic, business and market disruptions is both on-going and continuing to evolve, and its future effects are uncertain. The Company has seen impacts related to COVID-19 on oil price fluctuations due to market uncertainty.

Starting in May 2020, as COVID-19 appeared to decrease or stabilize in certain areas, certain local, regional and national authorities began to loosen restrictions in various locations. While this relaxation of restrictions has led to an increased demand for oil and natural gas through improved general economic conditions, there has also been resurgences of COVID-19 cases that could result in the reinstatement of restrictions, which could lower demand for oil and natural gas.

Because we predominately produce natural gas and natural gas has not been impacted by the same market forces as crude oil, we have experienced less of an impact from COVID-19 than many of our peers. However, the scope and length of the economic downturn in the face of COVID-19 and the ultimate effect on the price of natural gas and oil cannot be determined, and we could be adversely affected in future periods. Management is actively monitoring the impact on the Company’s results of operations, financial position, and liquidity in fiscal year 2020.

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Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

We have made in this report, and may from time to time otherwise make in other public filings, press releases and discussions with our management, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), concerning our operations, economic performance and financial condition. These forward-looking statements include information concerning future production and reserves, schedules, plans, timing of development, contributions from oil and natural gas properties, marketing and midstream activities, and also include those statements accompanied by or that otherwise include the words “may,” “could,” “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “predicts,” “target,” “goal,” “plans,” “objective,” “potential,” “should,” or similar expressions or variations on such expressions that convey the uncertainty of future events or outcomes. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and assumptions about future events. These statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. These forward-looking statements speak only as of the date of this report, or if earlier, as of the date they were made; we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

These forward-looking statements involve risk and uncertainties. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:

• the market prices of oil and natural gas;

• volatility in the commodity-futures market;

• financial market conditions and availability of capital;

• future cash flows, credit availability and borrowings;

• sources of funding for exploration and development;

• our financial condition;

• our ability to repay our debt;

• the securities, capital or credit markets;

• planned capital expenditures;

• future drilling activity;

• uncertainties about the estimated quantities of our oil and natural gas reserves;

• production;

• hedging arrangements;

• litigation matters;

• pursuit of potential future acquisition opportunities;

• general economic conditions, either nationally or in the jurisdictions in which we are doing business;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing;

• public health crises, such as the COVID-19 pandemic, which has adversely impacted the demand for and price of crude oil and the global economy;

• legislative or regulatory changes, including retroactive royalty or production tax regimes, hydraulic-fracturing regulation, drilling and permitting regulations, derivatives reform, changes in state and federal corporate taxes, environmental regulation, environmental risks and liability under federal, state and foreign and local environmental laws and regulations;

• the creditworthiness of our financial counter-parties and operation partners; and

• other factors discussed below and elsewhere in this Quarterly Report on Form 10-Q and in our other public filings, press releases and discussions with our management.

For additional information regarding known material factors that could cause our actual results to differ from projected results please read the rest of this report and Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.

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Overview

Goodrich Petroleum Corporation (“Goodrich” and, together with its subsidiary, Goodrich Petroleum Company, L.L.C. (the "Subsidiary”), “we,” “our,” or the “Company”) is an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas on properties primarily in (i) Northwest Louisiana and East Texas, which includes the Haynesville Shale Trend, (ii) Southwest Mississippi and Southeast Louisiana, which includes the Tuscaloosa Marine Shale Trend (“TMS”), and (iii) South Texas, which includes the Eagle Ford Shale Trend.

We seek to increase shareholder value by growing our oil and natural gas reserves, production, revenues and cash flow from operating activities (“operating cash flow”). In our opinion, on a long term basis, growth in oil and natural gas reserves, cash flow and production on a cost-effective basis are the most important indicators of performance success for an independent oil and natural gas company.

We strive to increase our oil and natural gas reserves, production and cash flow through exploration and development activities. We develop an annual capital expenditure budget, which is reviewed and approved by our Board of Directors (the “Board”) on a quarterly basis and revised throughout the year as circumstances warrant. We take into consideration our projected operating cash flow, commodity prices for oil and natural gas and externally available sources of financing, such as bank debt, asset divestitures, issuance of debt and equity securities, and strategic joint ventures, when establishing our capital expenditure budget.

We place primary emphasis on our operating cash flow in managing our business. Management considers operating cash flow a more important indicator of our financial success than other traditional performance measures such as net income because operating cash flow considers only the cash expenses incurred during the period and excludes the non-cash impact of unrealized hedging gains (losses), non-cash general and administrative expenses and impairments.

Our revenues and operating cash flow depend on the successful development of our inventory of capital projects with available capital, the volume and timing of our production, as well as commodity prices for oil and natural gas. Such pricing factors are largely beyond our control; however, we employ commodity hedging techniques in an attempt to minimize the volatility of short term commodity price fluctuations on our earnings and operating cash flow.

The Coronavirus Disease 2019 (“COVID-19”) pandemic and related economic repercussions have created significant volatility, uncertainty and turmoil in the oil and gas industry. Throughout the first nine months of 2020, the effect of COVID-19 has lowered the demand for oil and natural gas which has resulted in an oversupply of crude oil with significant downward pressure on oil and natural gas prices. West Texas Intermediate crude oil closed at $21 per barrel on March 31, 2020 and generally remained at that level or lower through May 2020. In the third quarter of 2020, we experienced a gradual increase in oil and natural gas prices although not enough to alleviate the oversupply caused by lack of demand caused by COVID-19. The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of the worldwide population and the related impact on crude oil prices and the U.S. and global economy and capital markets remains uncertain. Because we predominately produce natural gas and natural gas has not been impacted by the same market forces as crude oil, we have experienced less of an impact from COVID-19 than many of our peers. However, the scope and length of this downturn and the ultimate effect on the price of natural gas cannot be determined and we could be adversely affected in future periods.

To mitigate the effects of the downturn in commodity prices due to the effects of COVID-19, we have reduced our capital expenditures planned for 2020 thereby conserving capital. We have initiated a company-wide cost reduction program eliminating outside services that are not core to our business. Additionally, we have substantial volumes of our production favorably hedged through the first quarter of 2022 and can further reduce our capital expenditures if necessary.

As a result of the steps we have taken to enhance our liquidity, we anticipate our cash on hand, cash from operations and our available borrowing capacity under our 2019 Senior Credit Facility will be sufficient to meet our investing, financing, and working capital requirements into 2021.

We remain committed to the following priorities while navigating through the COVID-19 pandemic:

• Ensure the health and safety of our employees and the contractors which provide services to us;

• Continue to monitor the impact the COVID-19 pandemic has on demand for our products in addition to related commodity price impacts in order to adjust our business accordingly; and

• Ensure we emerge from the COVID-19 pandemic and current oil and natural gas price environment in as strong of a position as possible as we continue to move forward with our long-term strategies.

While the potential still exists for the COVID-19 pandemic to adversely affect our operations or employees’ health, as of the date of this filing, we have not experienced a significant disruption to our operations and we have implemented a contingency plan, with most employees working remotely where possible in compliance with governmental orders and CDC recommendations.

Primary Operating Areas

Haynesville Shale Trend

Our relatively low risk development acreage in this trend is primarily centered in Caddo, DeSoto and Red River parishes, Louisiana and Angelina and Nacogdoches counties, Texas. We have acquired or farmed-in leases totaling approximately 42,000 gross (24,000 net) acres as of September 30, 2020 in the Haynesville Shale Trend. We completed and produced 8 gross (3.0 net) new wells in the third quarter of 2020 and had 4 gross (0.6 net) wells in the drilling or completions phase as of September 30, 2020. Our net production volumes from our Haynesville Shale Trend wells represented approximately 96% of our total equivalent production on a Mcfe basis and substantially all of our natural gas production for the third quarter of 2020. We are focusing on increasing our natural gas production volumes through increased drilling in the Haynesville Shale Trend, where we plan to focus all of our 2020 drilling efforts.

Tuscaloosa Marine Shale Trend

We have acquired approximately 48,000 gross (33,000 net) lease acres in the TMS as of September 30, 2020 which is held by production. We have 2 gross (1.7 net) TMS wells drilled and awaiting completion. Our net production volumes from our TMS wells represented approximately 2% of our total equivalent production on a Mcfe basis and 98% of our total oil production for the third quarter of 2020. Despite no capital expenditures, we are seeking to maintain production through strategic expense workover operations in the TMS.

22

Eagle Ford Shale Trend

We have retained approximately 4,300 net acres of undeveloped leasehold in the Eagle Ford Shale Trend in Frio County, Texas as of September 30, 2020, which is prospective for future development or sale.

Results of Operations

The items that had the most material financial effect on our net loss of $16.4 million and $36.3 million for the three and nine months ended September 30, 2020, compared to prior respective periods, were the decrease in revenues as a result of a substantial drop in oil and natural gas prices for both the three and nine months ended September 30, 2020, a mark-to-market loss on unsettled derivative contracts driven by increased natural gas forward strip prices and an impairment expense. Please see “Revenues from Operations”, “Gain (Loss) on Commodity Derivatives Not Designated as Hedges” and “Impairment Expense” below for further discussion.

The item that had the most material financial effect on our net income of $2.0 million for the three months ended September 30, 2019 was a $3.8 million gain on derivatives not designated as hedges. The majority of the gain was attributable to settlement of our natural gas derivative positions at prices lower than our fixed contract prices. The items that had the most material financial effect on our net income of $14.2 million for the nine months ended September 30, 2019, in addition to derivative settlement and mark-to-market gains, were oil and gas revenues, transportation and processing expense and depletion, depreciation and amortization expense. All these items increased compared to the nine months ended September 30, 2018, which is primarily attributable to production volume increases.

The following table reflects our summary operating information for the periods presented (in thousands, except for price and volume data). Because of normal production declines, increased or decreased drilling activity and the effects of acquisitions or divestitures, the historical information presented below should not be interpreted as indicative of future results.

Revenues from Operations

	Three Months Ended September 30,									Nine Months Ended September 30,
(In thousands, except for price and average daily production data)	2020		2019		Variance					2020		2019		Variance
Revenues:
Natural gas	$	20,167	$	24,684	$	(4,517	)	(18	)%	$	60,370	$	79,986	$	(19,616	)	(25	)%
Oil and condensate		1,296		2,477		(1,181	)	(48	)%		4,547		8,207		(3,660	)	(45	)%
Natural gas, oil and condensate		21,463		27,161		(5,698	)	(21	)%		64,917		88,193		(23,276	)	(26	)%
Net Production:
Natural gas (Mmcf)		11,346		12,257		(911	)	(7	)%		35,937		33,622		2,315		7	%
Oil and condensate (MBbls)		33		42		(9	)	(21	)%		107		134		(27	)	(20	)%
Total (Mmcfe)		11,543		12,506		(963	)	(8	)%		36,576		34,425		2,151		6	%
Average daily production (Mcfe/d)		125,462		135,936		(10,474	)	(8	)%		133,487		126,097		7,390		6	%
Average realized sales price per unit:
Natural gas (per Mcf)	$	1.78	$	2.01	$	(0.23	)	(11	)%	$	1.68	$	2.38	$	(0.70	)	(29	)%
Natural gas (per Mcf) including the effect of realized gains/losses on derivatives	$	1.89	$	2.51	$	(0.62	)	(25	)%	$	2.06	$	2.58	$	(0.52	)	(20	)%
Oil and condensate (per Bbl)	$	39.63	$	59.67	$	(20.04	)	(34	)%	$	42.76	$	61.40	$	(18.64	)	(30	)%
Oil and condensate (per Bbl) including the effect of realized gains/losses on derivatives	$	49.90	$	56.09	$	(6.19	)	(11	)%	$	55.06	$	57.52	$	(2.46	)	(4	)%
Average realized price (per Mcfe)	$	1.86	$	2.17	$	(0.31	)	(14	)%	$	1.77	$	2.56	$	(0.79	)	(31	)%

Natural gas, oil and condensate revenues decreased by $5.7 million and $23.3 million, respectively, for the three and nine months ended September 30, 2020 compared to the same periods in 2019. For the three months ended September 30, 2020 as compared to the prior year period, the decrease was primarily driven by lower realized oil and natural gas prices as well as decreased production volumes as a result of normal well production decline and the timing of new wells brought online in the later part of the quarter. For the nine months ended September 30, 2020 as compared to the prior year, the decrease was primarily driven by lower realized oil and natural gas prices, partially offset by increased natural gas production volumes as a result of our capital expenditure program.

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Operating Expenses

As described below, total operating expenses decreased $1.9 million and increased $13.8 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019. The decrease in total operating expenses for the three months ended September 30, 2020 was primarily due to decreased transportation, general and administrative and depreciation, depletion and amortization expense. The increase in total operating expenses for the nine months ended September 30, 2020 was primarily due to impairment expense as well as increased LOE and production and other taxes, offset by lower transportation costs and general and administrative expense. 

	Three Months Ended September 30,									Nine Months Ended September 30,
Operating Expenses (in thousands)	2020		2019		Variance					2020		2019		Variance
Lease operating expenses	$	2,831	$	2,589	$	242		9	%	$	9,384	$	8,902	$	482		5	%
Production and other taxes		591		623		(32	)	(5	)%		2,361		1,878		483		26	%
Transportation and processing		4,336		5,107		(771	)	(15	)%		14,586		15,562		(976	)	(6	)%
Operating Expenses per Mcfe
Lease operating expenses	$	0.25	$	0.21	$	0.04		19	%	$	0.26	$	0.26	$	-		0	%
Production and other taxes	$	0.05	$	0.05	$	-		0	%	$	0.06	$	0.05	$	0.01		20	%
Transportation and processing	$	0.38	$	0.41	$	(0.03	)	(7	)%	$	0.41	$	0.45	$	(0.04	)	(9	)%

Lease Operating Expense

Lease operating expense (“LOE”) increased $0.2 million and $0.5 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019. The increase in LOE is primarily attributed to workover expense. Per unit operating cost was $0.25 and $0.26 per Mcfe for the three and nine months ended September 30, 2020 of which $0.03 per Mcfe was attributed to the $0.3 million in workover expense incurred in the three months and $0.04 per Mcfe was attributed to the $1.3 million incurred in the nine months ended September 30, 2020. We are maintaining production levels in 2020 through our selective workover projects.

Production and Other Taxes

Production and other taxes includes severance and ad valorem taxes. Severance taxes for the three and nine months ended September 30, 2020 were $0.4 million and $1.5 million, respectively, and ad valorem taxes were $0.2 million and $0.9 million for the three and nine months ended September 30, 2020, respectively.

Severance taxes remained the same for the three months ended September 30, 2020 and increased $0.4 million for the nine months ended September 30, 2020, as compared with the same periods in 2019 The current quarter severance tax expense reflects the reduction of the severance tax rate that was effective on July 1, 2020 while the current year to date expense reflects the expiration of tax exemptions on certain wells. On July 1, 2020, the severance tax rate on natural gas production was reduced to $0.0934 per Mcf from the $0.125 per Mcf rate that was effective on July 1, 2019. The State of Louisiana has enacted an exemption from severance tax on oil and natural gas for horizontal wells with production commencing after July 31, 1994. The exemption is applicable until the earlier of (i) 24 months from the date of first sale of production or (ii) payout of the well. All of our recently drilled Haynesville Shale Trend wells in Northwest Louisiana are benefiting from this exemption. 

Ad valorem tax remained relatively flat for the three months ended September 30, 2020 and increased $0.1 million for thenine months ended September 30, 2020, as compared with the same periods in 2019. The slight increase in the current year to date period is due to our increased well count.

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Transportation and Processing

Transportation and processing expense for the three and nine months ended September 30, 2020 decreased $0.8 million and $1.0 million, respectively, compared to the same periods in 2019, despite an increase in production volumes for the year. We have increased production from our operated Haynesville Shale Trend wells for which we have contracted more favorable rates than those of our non-operated properties. Our natural gas volumes from operated wells generally carry less transportation cost than those from wells we do not operate. For the same reason, our per unit transportation cost per Mcfe cost decreased in both the three and nine months ended September 30, 2020,compared to the same periods in 2019. 

	Three Months Ended September 30,										Nine Months Ended September 30,
Operating Expenses (in thousands):	2020			2019		Variance					2020			2019		Variance
Depreciation, depletion and amortization	$	10,341		$	13,205	$	(2,864	)	(22	)%	$	35,484		$	36,550	$	(1,066	)	(3	)%
General and administrative		3,891			5,196		(1,305	)	(25	)%		13,327			15,442		(2,115	)	(14	)%
Impairment of oil and natural gas properties		3,040			-		3,040		100	%		17,170			-		17,170		100	%
Other		(11	)		228		(239	)	(105	)%		(13	)		179		(192	)	(107	)%
Operating Expenses per Mcfe
Depreciation, depletion and amortization	$	0.90		$	1.06	$	(0.16	)	(15	)%	$	0.97		$	1.06	$	(0.09	)	(8	)%
General and administrative	$	0.34		$	0.42	$	(0.08	)	(19	)%	$	0.36		$	0.45	$	(0.09	)	(20	)%
Impairment of oil and natural gas properties	$	0.26		$	-	$	0.26		100	%	$	0.47		$	-	$	0.47		100	%
Other	$	-		$	0.02	$	(0.02	)	(100	)%	$	-		$	0.01	$	(0.01	)	(100	)%

Depreciation, Depletion and Amortization (“DD&A”) Expense

DD&A expense is calculated under the Full Cost Method using the units of production method. DD&A expense for the three months ended September 30, 2020 decreased $2.9 million, and DD&A expense for the nine months ended September 30, 2020 decreased $1.1 million compared to the same periods in 2019.These decreases were due to using a lower DD&A rate in 2020 offset by the effect of increased production volumes for the year. We calculate our DD&A rates at least semi-annually in connection with the preparation of our reserve report on December 31st and June 30th which is used for that ending period. The June 30, 2020 and subsequently the September 30, 2020 calculation recognized the decreases in drilling and completion cost that the industry is currently experiencing which has lowered the DD&A rate.

Impairment Expense

The Full Cost Method requires that we perform a quarterly Ceiling Test. The Ceiling Test performed as of September 30, 2020 indicated that the net book value of our proved oil and natural gas properties exceeded the estimated discounted future net cash flows resulting in a $3.0 million impairment of oil and natural gas properties for the three months ended September 30, 2020, and $17.2 million for the nine months ended September 30, 2020, due to the low commodity price environment experienced during 2020 which brought the trailing 12-month average price to $1.97 per mcf of natural gas. Commodity prices have the greatest effect on the determination of an impairment, among other factors. Recently, natural gas future prices are trending upward; however, any commodity price deterioration from current levels may indicate an impairment of our oil and natural gas properties in the future. Please refer to Note 1—“Description of Business and Significant Accounting Policies—Full Cost Ceiling Test” in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

General and Administrative (“G&A”) Expense

The Company recorded $3.9 million and $13.3 million in G&A expense for the three and nine months ended September 30, 2020, respectively, which included non-cash expenses of $1.0 million and $3.5 million, respectively, for share-based compensation. G&A expense decreased for the three and nine months ended September 30, 2020 by $1.3 million and $2.1 million, respectively, compared to the same periods in 2019, primarily due to reduced stock compensation expense of $0.6 million and $1.2 million, respectively. Additional reductions occurred in accrued employee performance bonus expense and employee related expenses resulting from employee retirements during 2020.

The Company recorded $5.2 million and $15.4 million, respectively, in G&A expense for the three and nine months ended September 30, 2019. G&A expense for the three and nine months ended September 30, 2019 included non-cash expenses of $1.6 million and $4.7 million, respectively, for share-based compensation.

Other Income (Expense)

	Three Months Ended September 30,											Nine Months Ended September 30,
Other income (expense) (in thousands):	2020			2019			Variance					2020			2019			Variance
Interest expense	$	(1,733	)	$	(1,981	)	$	(248	)	(13	)%	$	(5,410	)	$	(9,036	)	$	(3,626	)	(40	)%
Interest income and other		5			-			5		100	%		147			24			123		513	%
Gain (loss) on commodity derivatives not designated as hedges		(11,079	)		3,752			(14,831	)	395	%		(3,629	)		15,397			(19,026	)	124	%
Loss on early extinguishment of debt		-			-			-		0	%		-			(1,846	)		1,846		(100	)%
Average funded borrowings adjusted for debt discount	$	107,268		$	95,761		$	11,507		12	%	$	104,925		$	92,641		$	12,284		13	%
Average funded borrowings	$	110,505		$	99,598		$	10,907		11	%	$	108,323		$	96,323		$	12,000		12	%

Interest Expense

The Company's interest expense for the three and nine months ended September 30, 2020 reflected interest payable in cash of $1.0 million and $3.1 million, respectively, incurred on the 2019 Senior Credit Facility and non-cash interest of $0.7 million and $2.3 million, respectively, incurred primarily on the Company's 13.50% Convertible Second Lien Senior Secured Notes due 2022 (the “New 2L Notes”), which included $0.5 million of paid in-kind interest and $0.2 million of amortization of debt discount and issuance costs for the three months ended September 30, 2020 and $1.4 million of paid in-kind interest and $0.9 million of amortization of debt discount and debt issuance costs for the nine months ended September 30, 2020.

Interest expense for the three and nine months ended September 30, 2019 reflected interest payable in cash of $1.2 million and $2.7 million, respectively, incurred on the 2017 Senior Credit Facility and 2019 Senior Credit Facility and non-cash interest of $0.7 million and $6.3 million, respectively, incurred primarily on the Company's Convertible Second Lien Notes and New 2L Notes, which included $0.4 million and $3.6 million, respectively, of paid in-kind interest and $0.3 million and $2.8 million, respectively, of debt discount and debt issuance cost amortization.

Interest expense decreased $0.2 million and $3.6 million, respectively, for the three and nine months ended September 30, 2020, compared to the same periods in 2019, having paid off in 2019 the higher interest bearing Convertible Second Lien Notes with borrowings from the 2019 Senior Credit Facility which carry a lower interest rate. 

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Gain (Loss) on Commodity Derivatives Not Designated as Hedges

The loss on commodity derivatives not designated as hedges of $11.1 million for the three months ended September 30, 2020 was comprised of a $12.7 million mark-to-market loss, representing the change in fair value of our open natural gas and oil derivatives, offset by a $1.6 million net gain on cash settlement of natural gas and oil derivative contracts. The loss on commodity derivatives not designated as hedges of $3.6 million for the nine months ended September 30, 2020 was comprised of a $18.5 million mark-to-market loss, representing the change of the fair value of our open natural gas and oil derivative contracts offset by $14.9 million net gain on cash settlement of natural gas and oil derivative contracts Volatility in the commodity futures market is quite high and since we do not apply hedge accounting on our derivatives contracts there can be large swings in our reported gains or losses between periods. Going forward, any increase in natural gas futures prices would result in recording of losses in future periods.

The gain on commodity derivatives not designated as hedges for the three months ended September 30, 2019 was comprised of $5.9 million gain on cash settlements during the period offset by a mark-to-market loss of $2.2 million, representing the change of the fair value of our natural gas derivative contracts. The gain on commodity derivatives not designated as hedges for the nine months ended September 30, 2019 was comprised of a mark-to-market gain of $9.3 million, representing the change of the fair value of our natural gas derivative contracts, and a $6.1 million gain on net cash settlements during the period.

Income Tax Benefit

We recorded no income tax expense or benefit for the three and nine months ended September 30, 2020 or 2019. We maintained a valuation allowance at September 30, 2020, which resulted in no net deferred tax asset or liability appearing on our statement of financial position. We recorded this valuation allowance after an evaluation of all available evidence (including commodity prices and our recent history of tax net operating losses (“NOLs”) in 2019 and prior years) led to a conclusion that based upon the more-likely-than-not standard of the accounting literature our deferred tax assets were unrecoverable. The valuation allowance was $74.2 million as of December 31, 2019, which resulted in a net non-current deferred tax asset of $0.4 million appearing on our statement of financial position at that time. The net $0.4 million deferred tax asset related to alternative minimum tax (“AMT”) credits and accrued interest which were refundable to the Company was reclassed to a current receivable as of June 30, 2020, and such funds were subsequently received in the third quarter of 2020. The valuation allowance has no impact on our NOL position for tax purposes, and if we generate taxable income in future periods, we may be able to use our NOLs to offset taxable income at that time subject to any applicable tax limitations on the NOLs. Considering the Company’s taxable income forecasts, our assessment of the realization of our deferred tax assets has not changed, and we continue to maintain a full valuation allowance for our net deferred tax assets as of September 30, 2020.

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-United States Generally Accepted Accounting Principle (“US GAAP”) financial measure that is used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest expense, income and similar tax, DD&A, share-based compensation expense and impairment of oil and natural gas properties (if any). In calculating Adjusted EBITDA, gains/losses on reorganization and mark-to-market gains/losses on commodity derivatives not designated as hedges are also excluded. Other excluded items include adjustments resulting from the accounting for operating leases under Accounting Standards Codification (“ASC”) 842 in accordance with our 2019 Senior Credit Facility, interest income and any extraordinary non-cash gains or losses. Adjusted EBITDA is not a measure of net income (loss) as determined by US GAAP. Adjusted EBITDA should not be considered an alternative to net income (loss), as defined by US GAAP.

The following table presents a reconciliation of the non-US GAAP measure of Adjusted EBITDA to the US GAAP measure of net income (loss), its most directly comparable measure presented in accordance with US GAAP:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2020			2019		2020			2019
Net income (loss) (US GAAP)	$	(16,360	)	$	1,988	$	(36,265	)	$	14,215
Interest expense		1,733			1,981		5,410			9,036
Depreciation, depletion and amortization		10,341			13,205		35,484			36,550
Impairment of oil and natural gas properties		3,040			-		17,170			-
Share-based compensation expense (non-cash)		1,035			1,617		3,564			4,765
Loss (gain) on commodity derivatives not designated as hedges, not settled		12,676			2,170		18,534			(9,262	)
Loss on early extinguishment of debt		-			-		-			1,846
Other items (1)		266			297		684			855
Adjusted EBITDA	$	12,731		$	21,258	$	44,581		$	58,005

(1) Other items included $0.3 million, $0.3 million, $0.8 million and $0.9 million, respectively, from the impact of accounting for operating leases under ASC 842 as well as interest income for the three and nine months ended September 30, 2020 and 2019, respectively.

Management believes that this non-US GAAP financial measure provides useful information to investors because it is monitored and used by our management and widely used by professional research analysts in the valuation and investment recommendations of companies within the oil and natural gas exploration and production industry.

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Liquidity and Capital Resources

Overview

Our primary sources of cash during the first nine months of 2020 were cash on hand and cash from operating activities. We used cash primarily to fund capital expenditures. We currently plan to fund our operations and capital expenditures for the remainder of 2020 through a combination of cash on hand, cash from operating activities and borrowings under our revolving credit facility, although we may from time to time consider the funding alternatives described below.

On May 14, 2019, the Company entered into a Second Amended and Restated Senior Secured Revolving Credit Agreement (the “2019 Credit Agreement”) among the Company, the Subsidiary, as borrower (in such capacity, the “Borrower”), Truist Bank (formerly SunTrust Bank), as administrative agent (the “Administrative Agent”), and certain lenders that are party thereto, which provides for revolving loans of up to the borrowing base then in effect (the “2019 Senior Credit Facility”). The 2019 Senior Credit Facility amended, restated and refinanced the obligations under our 2017 Credit Agreement.

The 2019 Senior Credit Facility matures (a) May 14, 2024 or (b) December 3, 2021, if the New 2L Notes (as defined below) have not been voluntarily redeemed, repurchased, refinanced or otherwise retired by December 3, 2021, which is the date that is 180 days prior to the May 31, 2022 “Maturity Date” of the New 2L Notes. The 2019 Senior Credit Facility provides for a maximum credit amount of $500 million subject to a borrowing base limitation, which was originally $115 million. The borrowing base was increased to $125 million in August 2019 and was decreased to $120 million in May 2020, which was reaffirmed in the fall 2020 redetermination. The borrowing base is scheduled to be redetermined in March and September of each calendar year, and is subject to additional adjustments from time to time, including for asset sales, elimination or reduction of hedge positions and incurrence of other debt. Additionally, each of the Borrower and the Administrative Agent may request one unscheduled redetermination of the borrowing base between scheduled redeterminations. The amount of the borrowing base is determined by the lenders at their sole discretion and consistent with their oil and gas lending criteria at the time of the relevant redetermination. The Borrower may also request the issuance of letters of credit under the 2019 Credit Agreement in an aggregate amount up to $10 million, which reduce the amount of available borrowings under the borrowing base in the amount of such issued and outstanding letters of credit.

On May 14, 2019, the Company and the Subsidiary entered into a purchase agreement with certain funds and accounts managed by Franklin Advisers, Inc., as investment manager (each such fund or account, together with its successors and assigns, a “New 2L Notes Purchaser”) pursuant to which the Company issued to the New 2L Notes Purchasers (the “New 2L Notes Offering”) $12.0 million aggregate principal amount of the Company’s 13.50% Convertible Second Lien Senior Secured Notes due 2021 (the “New 2L Notes”). The closing of the New 2L Notes Offering occurred on May 31, 2019. Proceeds from the sale of the New 2L Notes were primarily used to pay down outstanding borrowings under the 2019 Senior Credit Facility. Holders of the New 2L Notes have a second priority lien on all assets of the Company.

The New 2L Notes, as set forth in the indenture governing the New 2L Notes were scheduled to mature on May 31, 2021. In May 2020, the maturity date of the New 2L Notes was extended to May 31, 2022. The New 2L Notes bear interest at the rate of 13.50% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. The Company may elect to pay all or any portion of interest in-kind on the then outstanding principal amount of the New 2L Notes by increasing the principal amount of the outstanding New 2L Notes.

We exited the third quarter of 2020 with $1.3 million cash on hand and $96.4 million of outstanding borrowings with $23.6 million of availability under the 2019 Senior Credit Facility borrowing base of $120.0 million in effect as of September 30, 2020. Due to the timing of payment of our capital expenditures, we reflected a working capital deficit of $34.3 million as of September 30, 2020. Subsequently, our working capital deficit was not covered by availability under the 2019 Senior Credit Facility, and we were therefore not in compliance with our current ratio under the 2019 Senior Credit Facility. On October 30, 2020, we entered into a Third Amendment to Credit Agreement with the Subsidiary, Truist Bank, as administrative agent, and the lenders party thereto, pursuant to which, among other things, the lenders agreed to waive the default caused by our failure to comply with the current ratio financial covenant under the 2019 Senior Credit Facility as of the last day of the fiscal quarter ended September 30, 2020. To the extent we continue to operate with a working capital deficit, we expect such deficit to be offset by liquidity available under our 2019 Senior Credit Facility. Compliance with our covenants under the 2019 Senior Credit Facility and New 2L Notes is primarily dependent upon our capital spending program. We have taken advantage of the improving natural gas prices by completing wells in the third quarter which were drilled in prior quarters. Our financial forecast indicates we will be in compliance with all our bank covenants through 2021. 

Outlook

Our capital expenditures for the remainder of 2020 and 2021 are dependent upon commodity prices. We have the flexibility to move forward with or delay capital projects based on the upward or downward movement of commodity prices. We plan to continue to focus all of our capital on drilling and development of our Haynesville Shale Trend natural gas properties in North Louisiana.

We believe the results of the capital investments we made in 2019 and thus far in 2020 will generate sufficient cash flows and coupled with the availability under our 2019 Senior Credit Facility will allow us to execute our operational plans through 2021. That value that is created will allow us to raise capital to continue our capital development in the future.

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We continuously monitor our leverage position and coordinate our capital program with our expected cash flows and repayment of our projected debt. We will continue to evaluate funding alternatives as needed.

Alternatives available to us include:

• availability under the 2019 Senior Credit Facility;

• issuance of debt securities;

• joint ventures in our TMS and/or Haynesville Shale Trend acreage;

• sale of non-core assets; and

• issuance of equity securities if favorable conditions exist.

We have supported our cash flows with derivative contracts that covered approximately 53% of our natural gas sales volumes for the first nine months of 2020 and 59% of our oil volumes for the first nine months of 2020. We have approximately 50% of our forecasted natural gas production hedged through the first quarter of 2022 at a weighted average price of $2.53 per Mcf. We have approximately 52% of our forecasted oil production hedged through the first quarter of 2021 at a weighted average price of $57.05 per barrel. For additional information on our derivative instruments see Note 8—“Commodity Derivative Activities” in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.

To mitigate the effects of the downturn in commodity prices experienced during 2020 due to the effects of COVID-19, we reduced our capital expenditures for 2020 thereby conserving capital. We also initiated a company-wide cost reduction program eliminating outside services that are not core to our business. Additionally, we have substantial volumes of our production favorably hedged through the first quarter of 2022 and can further adjust our capital expenditures based upon commodity prices, if necessary.

As a result of the steps we have taken to enhance our liquidity, we anticipate our cash on hand, cash from operations and our available borrowing capacity under our 2019 Senior Credit Facility will be sufficient to meet our investing, financing, and working capital requirements into 2021.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Cash flow statement information:
Net cash:
Provided by operating activities	$	13,512		$	15,594		$	44,592		$	56,847
Used in investing activities		(14,816	)		(19,083	)		(48,012	)		(72,865	)
Provided by financing activities		991			2,980			3,219			13,110
Decrease in cash and cash equivalents	$	(313	)	$	(509	)	$	(201	)	$	(2,908	)

Operating activities: Production from our wells, the price of oil and natural gas and operating costs represent the main drivers behind our cash flow from operations for the three and nine months ended September 30, 2020 and 2019. Changes in working capital and net cash settlements related to our derivative contracts also impact cash flows. Net cash provided by operating activities for the three months ended September 30, 2020 was $13.5 million including operating cash flows before positive working capital changes of $11.8 million, including net cash receipts of $1.6 million in settlement of derivative contracts. Net cash provided by operating activities for the nine months ended September 30, 2020 was $44.6 million including operating cash flows before positive working capital changes of $41.7 million, including net cash receipts of $14.9 million in settlement of derivative contracts. The decrease in cash provided by operating activities for the three and nine months ended September 30, 2020 compared to the same periods in 2019 was primarily attributable to decreases in oil and natural gas revenues driven by decreased realized prices.

Investing activities: Net cash used in investing activities was $14.8 million and $48.0 million for the three and nine months ended September 30, 2020, respectively, which reflected cash expended on capital projects. We recorded $16.9 million in capital expenditures during the three months ended September 30, 2020. The difference in capital expenditures and cash expended on capital projects for the three months ended September 30, 2020 was attributed to a net capital accrual increase of $2.7 million and $0.1 million of asset retirement and non-cash internal costs, offset by $0.7 million in cash calls paid on our non-operated wells. During the three months ended September 30, 2020, we conducted drilling and completion operations and brought onto production 8 gross (3.0 net) wells. We recorded $45.5 million in capital expenditures during the nine months ended September 30, 2020. The difference in capital expenditures and cash expended on capital projects for the nine months ended September 30, 2020 was attributed to a net capital accrual decrease of $2.4 million and $0.7 million in paid cash calls on non-operated wells, offset by capitalization of $0.6 million of asset retirement and non-cash internal costs. Though we have reduced our drilling and completion activities, we are still paying for capital costs incurred and recorded in prior periods. During the nine months ended September 30, 2020, we conducted drilling and completion operations on 20 gross (6.1 net) wells bringing 16 gross (5.5 net) wells on production with 6.0 gross (2.4 net) wells remaining in the drilling and completion process at September 30, 2020.

Financing activities: Net cash provided by financing activities for the three and nine months ended September 30, 2020 reflected $1.0 million and $3.5 million of net borrowings under our 2019 Senior Credit Facility, respectively, offset by $0.3 million for the purchase of shares withheld from employee stock award vestings for the payment of taxes in the nine month period ended September 30, 2020.

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Debt consisted of the following balances as of the dates indicated (in thousands):

	September 30, 2020				December 31, 2019
	Principal		Carrying Amount		Principal		Carrying Amount
2019 Senior Credit Facility (1)	$	96,400	$	96,400	$	92,900	$	92,900
New 2L Notes (2)		14,327		13,129		12,969		11,535
Total debt	$	110,727	$	109,529	$	105,869	$	104,435

(1) The carrying amount for the 2019 Senior Credit Facility represents fair value as it was fully secured.

(2) The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal includes $2.3 million and $1.0 million of paid in-kind interest as of September 30, 2020 and December 31, 2019, respectively. The carrying value includes $1.0 million and $1.1 million of unamortized debt discount and $0.2 million and $0.3 million of unamortized issuance cost as of September 30, 2020 and December 31, 2019, respectively.

For additional information on our financing activities, see Note 4—“Debt” in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements for any purpose.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on consolidated financial statements, which were prepared in accordance with US GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We believe that certain accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements. Our Annual Report on Form 10-K for the year ended December 31, 2019 includes a discussion of our critical accounting policies and there have been no material changes to such policies during the three and nine months ended September 30, 2020.

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Item 3—Quantitative and Qualitative Disclosures about Market Risk

Our primary market risks are attributable to fluctuations in commodity prices and interest rates. These fluctuations can affect revenues and cash flow from operating, investing and financing activities. Our risk-management policies provide for the use of derivative instruments to manage these risks. The types of derivative instruments we utilize include futures, swaps, options and fixed-price physical-delivery contracts. The volume of commodity derivative instruments we utilize may vary from year to year and is governed by risk-management policies with levels of authority delegated by our Board. Both exchange and over-the-counter traded commodity derivative instruments may be subject to margin deposit requirements, and we may be required from time to time to deposit cash or provide letters of credit with exchange brokers or its counter-parties in order to satisfy these margin requirements.

For information regarding our accounting policies and additional information related to our derivative and financial instruments, see Note 1—“Description of Business and Significant Accounting Policies”, Note 4—“Debt” and Note 8—“Commodity Derivative Activities” in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.

Commodity Price Risk

Our most significant market risk relates to fluctuations in crude oil and natural gas prices. Management expects the prices of these commodities to remain volatile and unpredictable. As these prices decline or rise significantly, revenues and cash flow will also decline or rise significantly. In addition, a non-cash write-down of our oil and natural gas properties may be required if future commodity prices experience a sustained and significant decline. We have entered into natural gas and oil derivative instruments in order to reduce the price risk associated with production for the rest of 2020 of approximately 70,000 MMBtu per day and 200 barrels per day, respectively, in the first quarter of 2021, approximately 70,000 MMBtu per day and 200 barrels per day, for the remainder of 2021 approximately 100,000 MMBtu per day, and in the first quarter of 2022, approximately 100,000 MMBtu per day. We did not enter into derivative instruments for trading purposes. Utilizing actual derivative contractual volumes, a hypothetical increase of 10% in the underlying commodity prices would have increased the derivative natural gas net liability position by $9.1 million and decreased the derivative oil asset position by $0.1 million as of September 30, 2020. Likewise, a hypothetical decrease of 10% in the underlying commodity prices would have changed our derivative natural gas net liability position to a net asset position with a change of $11.6 million and increased the derivative oil asset position by $0.1 million as of September 30, 2020. Furthermore, a gain or loss would have been substantially offset by an increase or decrease, respectively, in the actual sales value of production covered by the derivative instruments.

Adoption of Comprehensive Financial Reform

The adoption of comprehensive financial reform legislation by the United States Congress could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business. See Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Item 4—Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure that material information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission and that any material information relating to us is recorded, processed, summarized and reported to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, our management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives. In reaching a reasonable level of assurance, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report and have identified a material weakness in our internal control over financial reporting. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2020.

Notwithstanding the identified material weakness, the Company's management, including our Chief Executive Officer and Chief Financial Officer have determined, based on the procedures we have performed, that the unaudited consolidated financial statements included in this report fairly present in all material respects our financial condition and results of operations as of and for the three and nine months ended September 30, 2020 and 2019 in accordance with US GAAP.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

During the third quarter of fiscal year 2020, management, in connection with our independent auditors, identified a material weakness in our controls over the determination of the estimated PV-10 of our reserves. Specifically, we did not design and maintain effective controls to sufficiently review the completeness and accuracy of the future development costs component of the estimated PV-10 of our reserves and, thus, failed to identify the omission of capital expenditure costs from the future costs required to develop certain of our reserves. This material weakness resulted in an undiscovered $7.3 million error in the amount of impairment expense recorded in relation to our oil and gas properties for the three and six months ended June 30, 2020, which required the Company to restate its consolidated financial statements as of and for the three and six months ended June 30, 2020, and also resulted in a corrected $1.0 million error in the amount of impairment expense recorded in relation to our oil and gas properties in the consolidated financial statements for the three and nine months ended September 30, 2020.

Plan for Remediation of Material Weakness

Our management is actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness identified. Specifically, our management is currently evaluating our policies and procedures related to its process of verifying the completeness and accuracy of data inputs into our reserves calculation. As part of our commitment to strengthening our internal control over financial reporting, we are implementing the following remedial actions under the oversight of the Audit Committee of our Board of Directors to address deficiencies in the preparation of reserves estimates, including:

• implementation of a quarterly review by independent reserve engineers to verify the completeness and accuracy of data inputs into the reserves calculation;

• implementation of additional procedures to perform enhanced internal detailed reviews of reserves report components, including (but not necessarily limited to) future development costs; and

• revision and communication of the accounting controls, policies and procedures relating to identifying and assessing changes that could potentially impact the system of internal control governing the full cost ceiling test calculation.

We will continue to monitor the design and effectiveness of these procedures and controls and make any further changes management determines appropriate. We believe the control improvements described above will remediate the material weakness that management has identified. However, this material weakness will not be considered remediated until the applicable remedial controls operate effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting

Except for the remedial actions described above, there were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

31

PART II—OTHER INFORMATION

Item 1—Legal Proceedings

A discussion of our current legal proceedings is set forth in Part I, Item 1 under Note 9—“Commitments and Contingencies” to the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

As of September 30, 2020, we did not have any material outstanding and pending litigation.

Item 1A—Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition or future results.

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds

None.

32

Item 6—Exhibits

3.1	Third Amended and Restated Certificate of Incorporation of Goodrich Petroleum Corporation, dated August 16, 2019, (Incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 333-12719) filed on August 21, 2019).
3.2	Second Amended and Restated Bylaws of Goodrich Petroleum Corporation, dated October 12, 2016, (Incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-8 (File No. 333-214080) filed on October 12, 2016).
4.1	First Amendment to Indenture and Notes, dated as of May 6, 2020, by and between Goodrich Petroleum Corporation, Goodrich Petroleum Company, L.L.C., as the subsidiary guarantor, and Wilmington Trust, National Association, as trustee and collateral agent, relating to the 13.50% Convertible Second Lien Senior Secured Notes due 2022 (Incorporated by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q (File No. 001-12719) filed on May 7, 2020).
10.1	Second Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 6, 2020, among Goodrich Petroleum Corporation, as Parent Guarantor, Goodrich Petroleum Company, L.L.C., as Borrower, SunTrust Bank, as Administrative Agent, and the Lenders party thereto (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (File No. 001-12719) filed on May 7, 2020).
10.2	Third Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of October 30, 2020, among Goodrich Petroleum Corporation, as Parent Guarantor, Goodrich Petroleum Company, L.L.C., as Borrower, Truist Bank, as Administrative Agent, and the Lenders party thereto (Incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (File No. 001-12719) filed on November 5, 2020).
31.1*	Certification by Chief Executive Officer Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification by Chief Financial Officer Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.LAB*	XBRL Labels Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document

*	Filed herewith
**	Furnished herewith

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GOODRICH PETROLEUM CORPORATION (Registrant)
Date: November 13, 2020	By:	/S/ Walter G. Goodrich
		Walter G. Goodrich
		Chairman & Chief Executive Officer
Date: November 13, 2020	By:	/S/ Robert T. Barker
		Robert T. Barker
		Senior Vice President and Chief Financial Officer

34

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Walter G. Goodrich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Goodrich Petroleum Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2020

/s/ Walter G. Goodrich

Walter G. Goodrich

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Robert T. Barker certify that:

1. I have reviewed this quarterly report on Form 10-Q of Goodrich Petroleum Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2020

/s/ Robert T. Barker

Robert T. Barker

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. § 1350

In connection with the Quarterly Report of Goodrich Petroleum Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Walter G. Goodrich, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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/ Walter G. Goodrich

Walter G. Goodrich

Chief Executive Officer

November 13, 2020

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company or the certifying officer for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. § 1350

In connection with the Quarterly Report of Goodrich Petroleum Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert T. Barker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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/ Robert T. Barker

Robert T. Barker

Senior Vice President and Chief Financial Officer

November 13, 2020

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company or the certifying officer for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 03, 2020
Document Information [Line Items]
Entity Registrant Name	GOODRICH PETROLEUM CORP
Entity Central Index Key	0000943861
Trading Symbol	gdp
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		12,655,785
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common stock, par value $0.01 per share

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
CURRENT ASSETS:
Cash and cash equivalents	$ 1,251	$ 1,452
Accounts receivable, trade and other, net of allowance	2,107	1,131
Accrued oil and natural gas revenue	7,637	11,345
Fair value of oil and natural gas derivatives	579	8,537
Inventory	234	234
Prepaid expenses and other	1,221	549
Total current assets	13,029	23,248
PROPERTY AND EQUIPMENT:
Unevaluated properties	144	123
Oil and natural gas properties (full cost method)	348,227	302,859
Furniture, fixtures and equipment and other capital assets	4,560	4,450
Property, Plant and Equipment, Gross, Ending Balance	352,931	307,432
Less: Accumulated depletion, depreciation and amortization	(146,537)	(94,124)
Net property and equipment	206,394	213,308
Fair value of oil and natural gas derivatives		31
Deferred tax asset		393
Other	1,963	2,338
TOTAL ASSETS	221,386	239,318
CURRENT LIABILITIES:
Accounts payable	28,853	26,348
Fair value of oil and natural gas derivatives	6,181
Accrued liabilities	12,258	16,615
Total current liabilities	47,292	42,963
Long term debt, net	109,529	104,435
Accrued abandonment cost	4,523	4,169
Fair value of oil and natural gas derivatives	7,151	2,786
Other non-current liabilities		800
Total liabilities	168,495	155,153
Commitments and contingencies (See Note 9)
STOCKHOLDERS’ EQUITY:
Preferred stock: 10,000,000 shares $1.00 par value authorized, and none issued and outstanding	0	0
Common stock: $0.01 par value, 75,000,000 shares authorized, and 12,655,785 and 12,532,550 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	127	125
Treasury stock (39,700 and zero shares, respectively)	(281)
Additional paid in capital	85,622	81,305
Accumulated earnings (deficit)	(32,577)	2,735
Total stockholders’ equity	52,891	84,165
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 221,386	$ 239,318

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Preferred Stock, Shares Issued (in shares)	0	0
Preferred Stock, Shares Outstanding (in shares)	0	0
Preferred Stock, Par Value (in dollars per share)	$ 1	$ 1
Preferred Stock, Shares Authorized (in shares)	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	12,655,785	12,532,550
Common stock, shares outstanding (in shares)	12,655,785	12,532,550
Treasury stock, shares (in shares)	39,700	0

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
REVENUES:
Revenues		$ 21,466	$ 27,165	$ 64,926	$ 88,189
OPERATING EXPENSES:
Lease operating expense		2,831	2,589	9,384	8,902
Production and other taxes		591	623	2,361	1,878
Transportation and processing		4,336	5,107	14,586	15,562
Depreciation, depletion and amortization		10,341	13,205	35,484	36,550
General and administrative		3,891	5,196	13,327	15,442
Impairment of oil and natural gas properties		9,370		16,217
Other		(11)	228	(13)	179
Operating Expenses, Total		31,349	26,948	91,346	78,513
Operating income (loss)		(9,883)	217	(26,420)	9,676
OTHER INCOME (EXPENSE):
Interest expense		(1,733)	(1,981)	(5,410)	(9,036)
Interest income and other expense		5		147	24
Gain (loss) on commodity derivatives not designated as hedges		(11,079)	3,752	(3,629)	15,397
Loss on early extinguishment of debt					(1,846)
Nonoperating Income (Expense), Total		(12,807)	1,771	(8,892)	4,539
Income (loss) before income taxes		(22,690)	1,988	(35,312)	14,215
Income tax benefit		0	0	0	0
Net income (loss)		$ (22,690)	$ 1,988	$ (35,312)	$ 14,215
PER COMMON SHARE
Net income (loss) per common share - basic (in dollars per share)		$ (1.80)	$ 0.16	$ (2.81)	$ 1.16
Net income (loss) per common share - diluted (in dollars per share)	[1],[2],[3]	$ (1.80)	$ 0.14	$ (2.81)	$ 1.02
Weighted average shares of common stock outstanding - basic (in shares)		12,618	12,257	12,564	12,208
Weighted average shares of common stock outstanding - diluted (in shares)		12,618	14,040	12,564	14,497
Oil and Gas [Member]
REVENUES:
Revenues		$ 21,463	$ 27,161	$ 64,917	$ 88,193
Service, Other [Member]
REVENUES:
Revenues		$ 3	$ 4	$ 9	$ (4)

[1] Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.

[2] Common shares issuable upon conversion of the restricted stock not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.

[3] Common shares issuable upon conversion of the unsecured claims warrants not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (35,312)	$ 14,215
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	35,484	36,550
Impairment of oil and natural gas properties	16,217
Right of use asset depreciation	939	939
Loss (gain) on commodity derivatives not designated as hedges	3,629	(15,397)
Net cash received for settlement of derivative instruments	14,905	6,135
Share-based compensation (non-cash)	3,564	4,765
Amortization of finance cost, debt discount, paid in-kind interest and accretion	2,261	6,340
Loss on early extinguishment of debt		1,846
Other		269
Change in assets and liabilities:
Accounts receivable, trade and other, net of allowance	(583)	207
Accrued oil and natural gas revenue	3,708	4,562
Prepaid expenses and other	65	192
Accounts payable	2,505	(2,544)
Accrued liabilities	(2,790)	(1,232)
Net cash provided by operating activities	44,592	56,847
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(48,012)	(74,199)
Proceeds from sale of assets		1,334
Net cash used in investing activities	(48,012)	(72,865)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of bank borrowings	(1,000)	(49,500)
Proceeds from bank borrowings	4,500	110,400
Repayment of Convertible Second Lien Notes		(56,728)
Proceeds from New 2L Notes		12,000
Issuance cost, net		(2,516)
Purchase of treasury stock	(281)	(546)
Net cash provided by financing activities	3,219	13,110
Decrease in cash and cash equivalents	(201)	(2,908)
Cash and cash equivalents, beginning of period	1,452	4,068
Cash and cash equivalents, end of period	1,251	1,160
Supplemental disclosures of cash flow information:
Cash paid for interest	3,182	2,952
Increase (decrease) in non-cash capital expenditures	$ (2,367)	$ 5,052

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	New 2L Notes [Member] Preferred Stock [Member]	New 2L Notes [Member] Common Stock Outstanding [Member]	New 2L Notes [Member] Additional Paid-in Capital [Member]	New 2L Notes [Member] Treasury Stock [Member]	New 2L Notes [Member] Retained Earnings [Member]	New 2L Notes [Member]	Convertible Second Lien Notes [Member] Preferred Stock [Member]	Convertible Second Lien Notes [Member] Common Stock Outstanding [Member]	Convertible Second Lien Notes [Member] Additional Paid-in Capital [Member]	Convertible Second Lien Notes [Member] Treasury Stock [Member]	Convertible Second Lien Notes [Member] Retained Earnings [Member]	Convertible Second Lien Notes [Member]	Preferred Stock [Member]	Common Stock Outstanding [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2018														12,151
Balance at Dec. 31, 2018														$ 122	$ 74,861		$ (10,553)	$ 64,430
Net income (loss)																	448	448
Share-based compensation															1,745			1,745
Treasury stock activity (in shares)														1
Treasury stock activity																$ (5)		(5)
Treasury stock activity																$ (5)		(5)
Balance (in shares) at Mar. 31, 2019														12,152
Balance at Mar. 31, 2019														$ 122	76,606	$ (5)	(10,105)	66,618
Balance (in shares) at Dec. 31, 2018														12,151
Balance at Dec. 31, 2018														$ 122	74,861		(10,553)	64,430
Net income (loss)																		14,215
Balance (in shares) at Sep. 30, 2019														12,313		(47)
Balance at Sep. 30, 2019														$ 123	81,582	$ (547)	3,662	84,820
Balance (in shares) at Mar. 31, 2019														12,152
Balance at Mar. 31, 2019														$ 122	76,606	$ (5)	(10,105)	66,618
Net income (loss)																	11,779	11,779
Share-based compensation															1,765			1,765
Treasury stock activity (in shares)																(47)
Treasury stock activity																$ (538)		(538)
Conversion of convertible securities			$ 1,429			$ 1,429		$ 1	$ (20)			$ (19)
Convertible Second Lien Notes warrant exercises (in shares)								150
Treasury stock activity																$ (538)		(538)
Balance (in shares) at Jun. 30, 2019														12,302		(47)
Balance at Jun. 30, 2019														$ 123	79,780	$ (543)	1,674	81,034
Net income (loss)																	1,988	1,988
Share-based compensation															1,802			1,802
Treasury stock activity (in shares)
Treasury stock activity																$ (4)		(4)
Share-based compensation (in shares)														11
Treasury stock activity																$ (4)		(4)
Balance (in shares) at Sep. 30, 2019														12,313		(47)
Balance at Sep. 30, 2019														$ 123	81,582	$ (547)	3,662	84,820
Balance (in shares) at Dec. 31, 2019														12,533
Balance at Dec. 31, 2019														$ 125	81,305		2,735	84,165
Net income (loss)																	3,036	3,036
Share-based compensation															1,309			1,309
Treasury stock activity (in shares)														1
Treasury stock activity																$ (2)		(2)
Treasury stock activity																$ (2)		(2)
Balance (in shares) at Mar. 31, 2020														12,534
Balance at Mar. 31, 2020														$ 125	82,614	$ (2)	5,771	88,508
Balance (in shares) at Dec. 31, 2019														12,533
Balance at Dec. 31, 2019														$ 125	81,305		2,735	84,165
Net income (loss)																		(35,312)
Balance (in shares) at Sep. 30, 2020														12,656		(39)
Balance at Sep. 30, 2020														$ 127	85,622	$ (281)	(32,577)	52,891
Balance (in shares) at Mar. 31, 2020														12,534
Balance at Mar. 31, 2020														$ 125	82,614	$ (2)	5,771	88,508
Net income (loss)																	(15,658)	(15,658)
Share-based compensation															1,533			1,533
Treasury stock activity (in shares)														130		(38)
Treasury stock activity														$ 2		$ (270)		(268)
Discount from New 2L Notes Modification (See Note 4)															282			282
Treasury stock activity														$ 2		$ (270)		(268)
Balance (in shares) at Jun. 30, 2020														12,664		(38)
Balance at Jun. 30, 2020														$ 127	84,429	$ (272)	(9,887)	74,397
Net income (loss)																	(22,690)	(22,690)
Share-based compensation															1,193			1,193
Treasury stock activity (in shares)														4		(1)
Treasury stock activity																$ (9)		(9)
Treasury stock activity																$ (9)		(9)
Share-based compensation, forfeited (in shares)														(12)
Balance (in shares) at Sep. 30, 2020														12,656		(39)
Balance at Sep. 30, 2020														$ 127	$ 85,622	$ (281)	$ (32,577)	$ 52,891

XML

Note 1 - Description of Business and Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

1—Description

of Business and Significant Accounting Policies

Goodrich Petroleum Corporation (“Goodrich” and, together with its subsidiary, Goodrich Petroleum Company, L.L.C. (the “Subsidiary”), “we,” “our,” or the “Company”) is an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas on properties primarily in (i) Northwest Louisiana and East Texas, which includes the Haynesville Shale Trend, (ii) Southwest Mississippi and Southeast Louisiana, which includes the Tuscaloosa Marine Shale Trend (“TMS”), and (iii) South Texas, which includes the Eagle Ford Shale Trend.

Basis of Presentation

The consolidated financial statements of the Company included in this Quarterly Report on Form

10

-Q have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly, certain information normally included in financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) has been condensed or omitted. This information should be read in conjunction with our consolidated financial statements and notes contained in our Annual Report on Form

10

-K for the year ended

December 31, 2019

. Operating results for the

three

 and 

nine

 months ended

September 30, 2020

 are

not

necessarily indicative of the results that

may

be expected for the full year or for any interim period.

The impact of the COVID-

19

 pandemic and related economic, business and market disruptions is both on-going and continuing to evolve, and its future effects are uncertain. The Company has seen impacts related to COVID-

19

on oil price fluctuations due to market uncertainty. The full impact of COVID-

19

and related market impacts on the Company will depend on many factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company. As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, adjustments

may

be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

Principles of Consolidation

—The consolidated financial statements include the financial statements of the Company and the Subsidiary. Intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. Certain data in prior periods' financial statements have been adjusted to conform to the presentation of the current period. We have evaluated subsequent events through the date of this filing.

Use of Estimates

— Our management has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with US GAAP.

Cash and Cash Equivalents

—Cash and cash equivalents includes cash on hand, demand deposit accounts and temporary cash investments with maturities of

ninety

days or less at the date of purchase.

Accounts Payable

—Accounts payable consisted of the following amounts as of

September 30, 2020

 and

December 31, 2019

:

(In thousands)	September 30, 2020		December 31, 2019
Trade payables	$	16,547	$	11,461
Revenue payables		11,470		14,483
Prepayments from partners		513		-
Miscellaneous payables		323		404
Total Accounts payable	$	28,853	$	26,348

Accrued Liabilities

—Accrued liabilities consisted of the following amounts as of

September 30, 2020

and

December 31, 2019

:

(In thousands)	September 30, 2020		December 31, 2019
Accrued capital expenditures	$	3,808	$	6,175
Accrued lease operating expense		1,096		989
Accrued production and other taxes		1,031		430
Accrued transportation and gathering		1,884		2,258
Accrued performance bonus		2,731		4,642
Accrued interest		175		208
Accrued office lease		1,164		1,414
Accrued general and administrative expense and other		369		499
Total Accrued liabilities	$	12,258	$	16,615

Inventory

–Inventory consists of casing and tubulars that are expected to be used in our capital drilling program. Inventory is carried on the Consolidated Balance Sheets at the lower of cost or market.

Property and Equipment

—Under US GAAP,

two

acceptable methods of accounting for oil and natural gas properties are allowed. These are the Successful Efforts Method and the Full Cost Method. Entities engaged in the production of oil and natural gas have the option of selecting either method for application in the accounting for their properties. The principal differences between the

two

methods are in the treatment of exploration costs, the computation of depreciation, depletion and amortization (“DD&A”) expense and the assessment of impairment of oil and natural gas properties. We have elected to adopt the Full Cost Method of accounting. We believe that the true cost of developing a “portfolio” of reserves should reflect both successful and unsuccessful attempts at exploration and production. Application of the Full Cost Method better reflects the true economics of exploring for and developing our oil and gas reserves.

Under the Full Cost Method, we capitalize all costs associated with acquisitions, exploration, development and estimated abandonment costs. We capitalize internal costs that can be directly identified with the acquisition of leasehold, as well as drilling and completion activities, but do

not

include any costs related to production, general corporate overhead or similar activities. Unevaluated property costs are excluded from the amortization base until we make a determination as to the existence of proved reserves on the respective property or impairment. We review our unevaluated properties at the end of each quarter to determine whether the costs should be reclassified to proved oil and natural gas properties and thereby subject to DD&A and the full cost ceiling test. For the 

three

 months ended 

September 30, 2020

and

2019

, we transferred less than

$0.1

million from unevaluated properties to proved oil and natural gas properties. For the

nine

 months ended

September 30, 2020

and

2019

, we transferred less than

$0.1

million and 

$0.2

million, respectively, from unevaluated properties to proved oil and natural gas properties. Our sales of oil and natural gas properties are accounted for as adjustments to net proved oil and natural gas properties with

no

gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves.

Under the Full Cost Method, we amortize our investment in oil and natural gas properties through DD&A expense using the units of production method. An amortization rate is calculated based on total proved reserves converted to equivalent thousand cubic feet of natural gas (“Mcfe”) as the denominator and the net book value of the evaluated oil and gas asset together with the estimated future development cost of the proved undeveloped reserves as the numerator. The rate calculated per Mcfe is applied against the periods' production also converted to Mcfe to arrive at the periods' DD&A expense.

Depreciation of furniture, fixtures and equipment, consisting of office furniture, computer hardware and software and leasehold improvements, is computed using the straight-line method over their estimated useful lives, which vary from

three

to

five

years.

Full Cost Ceiling Test

—The Full Cost Method requires that at the conclusion of each financial reporting period, the p

resent value of estimated future net cash flows from proved reserves (adjusted for hedges and excluding cash flows related to estimated abandonment costs), be compared to the net capitalized costs of proved oil and natural gas properties, net of related deferred taxes. This comparison is referred to as a “ceiling test.” If the net capitalized costs of proved oil and natural gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write-down the value of our oil and natural gas properties to the value of the discounted cash flows. Estimated future net cash flows from proved reserves are calculat

ed based on the Securities and Exchange Commission (“SEC”) required trailing

12

-month average pricing assumption.

The Full Cost Ceiling Test performed as of 

September 30, 2020

 utilized the latest SEC

12

-month average price of

$1.97

per mcf of natural gas, which resulted in the present value of future net cash flows being lower than our capitalized cost by 

$9.4

million. We recorded that amount as an impairment in the

three

months ended

September 30, 2020

for a total impairment for the

nine

months ended

September 30, 2020

of

$16.2

million. We did

not

have an impairment for the comparable periods in

2019.

Fair Value Measurement

—Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, whether in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, our credit risk.

We use various methods, including the income approach and market approach, to determine the fair values of our financial instruments that are measured at fair value on a recurring basis, which depend on a number of factors, including the availability of observable market data over the contractual term of the underlying instrument. For some of our instruments, the fair value is calculated based on directly observable market data or data available for similar instruments in similar markets. For other instruments, the fair value

may

be calculated based on these inputs as well as other assumptions related to estimates of future settlements of these instruments. We separate our financial instruments into

three

levels (levels

1,

2

and

3

) based on our assessment of the availability of observable market data and the significance of non-observable data used to determine the fair value of our instruments. Our assessment of an instrument can change over time based on the maturity or liquidity of the instrument, which could result in a change in the classification of the instruments between levels.

Each of these levels and our corresponding instruments classified by level are further described below:

• Level 1 Inputs— unadjusted quoted market prices in active markets for identical assets or liabilities. We have no Level 1 instruments;

• Level 2 Inputs— quotes that are derived principally from or corroborated by observable market data. Included in this level are our senior credit facilities and commodity derivatives whose fair values are based on third -party quotes or available interest rate information and commodity pricing data obtained from third party pricing sources and our creditworthiness or that of our counter-parties; and

• Level 3 Inputs— unobservable inputs for the asset or liability, such as discounted cash flow models or valuations, based on our various assumptions and future commodity prices. Included in this level would be our initial measurement of asset retirement obligations.

As of

September 30, 2020

and

December 31, 2019

, the carrying amounts of our cash and cash equivalents, trade receivables and payables represented fair value because of the short-term nature of these instruments.

Asset Retirement Obligations

—Asset retirement obligations are related to the abandonment and site restoration requirements that result from the exploration and development of our oil and natural gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense is included in “Depreciation, depletion and amortization” on our Consolidated Statements of Operations. See

Note

3

.

The estimated fair value of the Company's asset retirement obligations 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 initial measurement of the asset retirement obligations was classified as Level

3

in the fair value hierarchy.

Revenue Recognition

—Oil and natural gas revenues are generally recognized upon delivery of our produced oil and natural gas volumes to our customers. We record revenue in the month our production is delivered to the purchaser. However, settlement statements and payments for our oil and natural gas sales

may

not

be received for up to

60

days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the purchaser

and the price that will be received for the sale of the product. We record a liability or an asset for natural gas balancing when we have sold more or less than our working interest share of natural gas production, respectively. As of

September 30, 2020

and

December 31, 2019

, the net liability for natural gas balancing was immaterial. Differ

ences between actual production and net working interest volumes are routinely adjusted. See

Note

2

.

Derivative Instruments

—We use derivative instruments such as futures, forwards, swaps, collars, and options for purposes of hedging our exposure to fluctuations in the price of crude oil and natural gas and hedging our exposure to changing interest rates. Accounting standards related to derivative instruments and hedging activities require that all derivative instruments subject to the requirements of those standards be measured at fair value and recognized as assets or liabilities in the balance sheet. We offset the fair value of our asset and liability positions with the same counter-party for each commodity type. Changes in fair value are required to be recognized in earnings unless specific hedge accounting criteria are met. All of our realized gains or losses on our derivative contracts are the result of cash settlements. We have

not

designated any of our derivative contracts as hedges; accordingly, changes in fair value are reflected in earnings. See

Note

8

.

Income Taxes

—We account for income taxes, as required, under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized.

We recognize, as required, the financial statement benefit of an uncertain tax position only after determining that the relevant tax authority would more likely than

not

sustain the position following an audit. For tax positions meeting the more likely-than-

not

threshold, the amount recognized in the financial statements is the largest benefit that has a greater than

50

percent likelihood of being realized upon ultimate settlement with the relevant tax authority. See

Note

7

.

Net Income or Net Loss Per Common Share—

Basic income (loss) per common share is computed by dividing net income (loss) applicable to common stock for each reporting period by the weighted-average shares of common stock outstanding during the period. Diluted income (loss) per common share is computed by dividing net income (loss) applicable to common stock for each reporting period by the weighted average shares of common stock outstanding during the period, plus the effects of potentially dilutive restricted stock calculated using the treasury stock method and the potential dilutive effect of the conversion of convertible securities, such as warrants and convertible notes, into shares of our common stock. See

Note

6

.

Commitments and Contingencies

—Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Recoveries from

third

parties, when probable of realization, are separately recorded and are

not

offset against the related environmental liability. See

Note

9

.

Share-Based Compensation

—We account for our share-based transactions using the fair value as of the grant date and recognize compensation expense over the requisite service period.

Guarantee

—As of

September 30, 2020

, Goodrich Petroleum Company, LLC, the wholly owned subsidiary of Goodrich Petroleum Corporation, was the Subsidiary Guarantor of our New

2L

Notes (as defined below). The parent company has

no

independent assets or operations, the guarantee is full and unconditional, and the parent has

no

subsidiaries other than Goodrich Petroleum Company, LLC.

Debt Issuance Cost

—The Company records debt issuance costs associated with its New

2L

Notes (and previously with its Convertible Second Lien Notes, both as defined below) as a contra balance to long term debt, net in our Consolidated Balance Sheets, which is amortized straight-line over the life of the respective notes. Debt issuance costs associated with our revolving credit facility debt are recorded in other assets in our Consolidated Balance Sheets, which is amortized straight-line over the life of such debt.

New Accounting Pronouncements

In

December 2019,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2019

-

12,

Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes. The amendments in this ASU adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. For public entities, the amendments in this ASU are effective for fiscal periods beginning after

December 15, 2020,

including interim periods therein. We do

not

expect a material impact from the adoption of this ASU.

In

March 2020,

the FASB issued ASU

2020

-

04,

Reference Rate Reform (Topic

848

): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments is this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by this ASU do

not

apply to contract modifications made and hedging relationships entered into or evaluated after

December 31, 2022,

except for hedging relationships existing as of

December 31, 2022,

that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are evaluating the expected impact these amendments and reference rate reform will have on our consolidated financial statements and various contracts.

In

August 2020,

the FASB issued ASU

2020

-

06,

 Debt—Debt with Conversion and Other Options (Subtopic

470

-

20

) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic

815

-

40

): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The amendments in this ASU affect entities that issue convertible instruments and/or contracts in an entity's own equity. The amendments in this ASU primarily affect convertible instruments issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements of this ASU. For contracts in an entity's own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. Also affected is the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this ASU affect the diluted EPS calculation for instruments that

may

be settled in cash or shares and for convertible instruments. The amendments in this ASU are effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after

December 15, 2021,

including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after

December 15, 2023,

including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Board decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of these amendments on our accounting for and disclosure of our convertible notes.

XML

Note 2 - Revenue Recognition

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

2—Revenue

Recognition

In accordance with Accounting Standards Codification Topic

606,

 revenue is generally recognized upon delivery of our produced oil and natural gas volumes to our customers. Our customer sales contracts include oil and natural gas sales. Under Topic

606,

each unit (Mcf or barrel) of comm

odity product represents a separate performance obligation which is sold at variable prices, determinable on a monthly basis. The pricing provisions of our contracts are primarily tied to a market index with certain adjustments based on factors such as delivery, product quality and prevailing supply and demand conditions in the geographic areas in which we operate. We allocate the transaction price to each performance obligation and recognize revenue upon delivery of the commodity product when the customer obtains control. Control of our produced natural gas volumes passes to our customers at specific metered points indicated in our natural gas contracts. Similarly, control of our produced oil volumes passes to our customers when the oil is measured either by a trucking oil ticket or by a meter when entering an oil pipeline. The Company has

no

control over the commodities after those points and the measurement at those points dictates the amount on which the customer's payment is based. Our oil and natural gas revenue streams include volumes burdened by royalty and non-operated working interests. Our revenues are recorded and presented on our financial statements net of the royalty and non-operated working interests. Our revenue stream does

not

include any payments for services or ancillary items other than sale of oil and natural gas.

We record revenue in the month our production is delivered to the purchaser. However, settlement statements and payments for our oil and natural gas sales

may

not

be received for up to

60

days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the purchaser and the price that will be

received for the sale of the product. We re

cord any differences, which historically have

not

been significant, between the actual amounts ultimately received and the original estimates in the period they become finalized. As of

September 30, 2020

 and

December 31, 2019

, receivables from contracts with customers were

$7.6

 million and

$11.3

 million, respectively.

The following table presents our oil and natural gas revenues disaggregated by revenue source and by operated and non-operated properties for the

three

 and 

nine

months ended

September 30, 2020

 and

2019

:

	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
(In thousands)	Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues		Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues
Operated	$	1,257	$	17,665	$	-	$	18,922	$	4,007	$	52,156	$	-	$	56,163
Non-operated		39		2,499		3		2,541		540		8,207		7		8,754
Total oil and natural gas revenues	$	1,296	$	20,164	$	3	$	21,463	$	4,547	$	60,363	$	7	$	64,917

	Three Months Ended September 30, 2019								Nine Months Ended September 30, 2019
(In thousands)	Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues		Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues
Operated	$	2,365	$	21,679	$	-	$	24,044	$	7,881	$	66,743	$	-	$	74,624
Non-operated		112		3,002		3		3,117		326		13,232		11		13,569
Total oil and natural gas revenues	$	2,477	$	24,681	$	3	$	27,161	$	8,207	$	79,975	$	11	$	88,193

XML

Note 3 - Asset Retirement Obligations

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Asset Retirement Obligation Disclosure [Text Block]

NOTE

3—Asset

Retirement Obligations

The reconciliation of the beginning and ending asset retirement obligation for the 

nine

months ended 

September 30, 2020

is as follows (in thousands):

	Nine Months Ended September 30, 2020
Beginning balance at December 31, 2019	$	4,169
Liabilities incurred		138
Dispositions		(12	)
Accretion expense		228
Ending balance at September 30, 2020	$	4,523
Current liability		-
Long term liability	$	4,523

XML

Note 4 - Debt

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

4—Debt

Debt consisted of the following balances as of

September 30, 2020

 and

December 31, 2019

(in thousands):

	September 30, 2020				December 31, 2019
	Principal		Carrying Amount		Principal		Carrying Amount
2019 Senior Credit Facility (1)	$	96,400	$	96,400	$	92,900	$	92,900
New 2L Notes (2)		14,327		13,129		12,969		11,535
Total debt	$	110,727	$	109,529	$	105,869	$	104,435

(

1

) The carrying amount for the

2019

Senior Credit Facility represents fair value as it was fully secured.

(

2

) The debt discount is being amortized using the effective interest rate method based upon a maturity date of

May 31, 2022.

The principal includes

$2.3

 million and

$1.0

million of paid in-kind interest as of 

September 30, 2020

and

December 31, 2019

, respectively. The carrying value includes

$1.0

million and

$1.1

million of unamortized debt discount and

$0.2

million and

$0.3

million of unamortized issuance cost as of 

September 30, 2020

and

December 31, 2019

, respectively.

The following table summarizes the total interest expense (contractual interest expense, amortization of debt discount, accretion and financing costs) and the effective interest rate on the liability component of debt for the 

three

and 

nine

 months ended

September 30, 2020

and

2019

 (amounts in thousands, except effective interest rates):

	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019					Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
	Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate
2017 Senior Credit Facility	$	-		—	%	$	-		-		$	-		—	%	$	872		7.2	%
2019 Senior Credit Facility		1,129		4.6	%		1,377		6.2	%		3,534		4.9	%		2,072		6.1	%
Convertible Second Lien Notes (1)		-		—	%		-		-			-		—	%		5,304		24.1	%
New 2L Notes (2)		604		18.6	%		604		21.9	%		1,876		20.1	%		788		21.6	%
Total interest expense	$	1,733				$	1,981				$	5,410				$	9,036

(

1

) The Convertible Second Lien Notes had a coupon interest rate of

13.50%;

however, the discount recorded due to the convertibility of the notes increased the effective interes

t rat

e to

24.1%

 for the

nine

months ended

September 30, 2019.

Interest expense for the

 

nine

months ended

September 30, 2019 

included

$2.3

million of debt discount amortization and

$3.0

million of paid in-kind interest.

(

2

) The New

2L

Notes have a coupon interest rate of

13.50%;

however, the discount recorded due to the convertibility of the notes increased the eff

ective interest rate to

18.6%

and

20.1%,

respectively, for the

three

and 

nine

 months ended

September 30, 2020

 and

21.9%

and

21.6%,

respectively, for the

three

and

nine

months ended

September 30, 2019. 

Interest expense for the

three

 months ended

September 30, 2020

included

$0.1

million of debt discount amortization and

$0.5

million of accrued interest to be paid in-kind, and interest expense for the

nine

 months ended

September 30, 2020

included

$0.4

million of debt discount amortization and

$1.4

million of accrued interest to be paid in-kind. Interest expense for the

three

 and

nine

months ended

September 30, 2019 

included

$0.1

million and

$0.2

million of debt discount amortization, respectively, and

$0.4

million and

$0.5

million of accrued interest to be paid in-kind, respectively.

2017

Senior Credit Facility

On

October 17, 2017,

the Company entered into the Amended and Restated Senior Secured Revolving Credit Agreement (as amended, the

“2017

Credit Agreement”) with the Subsidiary, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders that are party thereto, which provided for revolving loans of up to the borrowing base then in effect (as amended, the

“2017

Senior Credit Facility”). The

2017

Senior Credit Facility was set to mature on (a)

October 17, 2021

or (b)

December 30, 2019,

if the Convertible Second Lien Notes had

not

been voluntarily redeemed, repurchased, refinanced or otherwise retired by

December 30, 2019.

The maximum credit amount under the

2017

Senior Credit Facility when it was paid off in full on

May 14, 2019

was

$250.0

million with a borrowing base of

$75.0

million.

All amounts outstanding under the

2017

Senior Credit Facility bore interest at a rate per annum equal to, at the Company's option, either (i) the alternative base rate plus an applicable margin ranging from

1.75%

to

2.75%,

depending on the percentage of the borrowing base that was utilized, or (ii) adjusted LIBOR plus an applicable margin ranging from

2.75%

to

3.75%,

depending on the percentage of the borrowing base that was utilized. Undrawn amounts under the

2017

Senior Credit Facility were subject to a

0.50%

commitment fee.

The obligations under the

2017

Credit Agreement were secured by a

first

lien security interest in substantially all of the assets of the Company and the Subsidiary.

On

May 14, 2019,

the

2017

Senior Credit Facility was paid off in full and amended, restated and refinanced into the

2019

Senior Credit Facility. In connection with the refinancing, we recorded a

$0.2

million loss on early extinguishment of debt related to the remaining unamortized debt issuance costs.

2019

Senior Credit Facility

On

May 14, 2019,

the Company entered into a Second Amended and Restated Senior Secured Revolving Credit Agreement (the

“2019

Credit Agreement”) among the Company, the Subsidiary, as borrower (in such capacity, the “Borrower”), Truist Bank (formerly SunTrust Bank), as administrative agent (the “Administrative Agent”), and certain lenders that are party thereto, which provides for revolving loans of up to the borrowing base then in effect (the

“2019

Senior Credit Facility”).

The

2019

Senior Credit Facility matures on (a) 

May 14, 2024

or (b)

December 3, 2021,

if the New

2L

Notes (as defined below) have

not

been voluntarily redeemed, repurchased, refinanced or otherwise retired by

December 3, 2021,

which is the date that is

180

days prior to the

May 31, 2022

“Maturity Date” of the New

2L

Notes. The

2019

Senior Credit Facility provides for a maximum credit amount of

$500

million subject to a borrowing base limitation, which was 

$120

million as of 

September 30, 2020

. The borrowing base is scheduled to be redetermined in

March

and

September

of each calendar year, and is subject to additional adjustments from time to time, including for asset sales, elimination or reduction of hedge positions and incurrence of other debt. Additionally, each of the Borrower and the Administrative Agent

may

request

one

unscheduled redetermination of the borrowing base between scheduled redeterminations. The amount of the borrowing base is determined by the lenders in their sole discretion and consistent with their oil and gas lending criteria at the time of the relevant redetermination. The Borrower

may

also request the issuance of letters of credit under the

2019

Credit Agreement in an aggregate amount up to

$10

 million, which reduce the amount of available borrowings under the borrowing base in the amount of such issued and outstanding letters of credit.

All amounts outstanding under the

2019

Senior Credit Facility bear interest at a rate per annum equal to, at the Company's option, either (i) the alternative base rate plus an applicable margin ranging from

1.50%

to

2.50%,

depending on the percentage of the borrowing base that is utilized, or (ii) adjusted LIBOR plus an applicable margin from

2.50%

to

3.50%,

depending on the percentage of the borrowing base that is utilized. Undrawn amounts under the

2019

Senior Credit Facility are subject to a commitment fee ranging from

0.375%

to

0.50%,

depending on the percentage of the borrowing base that is utilized. To the extent that a payment default exists and is continuing, all amounts outstanding under the

2019

Senior Credit Facility will bear interest at

2.0%

per annum above the rate and margin otherwise applicable thereto. As of

September 30, 2020

, the weighted average interest rate on the borrowings from the

2019

Senior Credit Facility was

3.93%.

T

he obligations under the

2019

Credit Agreement are guaranteed by the Company and secured by a

first

lien security interest in substantially all of the assets of the Company and the Borrower.

The

2019

Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default. If an event of default occurs and is continuing, the lenders

may

declare all amounts outstanding under the

2019

Senior Credit Facility to be immediately due and payable.

The

2019

Credit Agreement also contains certain financial covenants, including the maintenance of (i) a ratio of Net Funded Debt to EBITDAX

not

to exceed

3.50

to

1.00

as of the last day of any fiscal quarter, (ii) a current ratio (based on the ratio of current assets to current liabilities as defined in the

2019

Credit Agreement)

not

to be less than

1.00

to

1.00

and (iii) until

no

New

2L

Notes remain outstanding, a ratio of Total Proved PV-

10

attributable to the Company's and Borrower's Proved Reserves to Total Secured Debt (net of any Unrestricted Cash

not

to exceed

$10

million)

not

to be less than

1.50

to

1.00

and minimum liquidity requirements. On

May 14, 2019,

the Company utilized borrowings under the

2019

Senior Credit Facility to refinance its obligations under the

2017

Senior Credit Facility and to fund the Redemption (as defined below) of the Convertible Second Lien Notes.

As of

September 30, 2020

, the Company had

$96.4

million of borrowings outstanding under the

2019

Senior Credit Facility. The Company also had

$1.9

 million of unamortized debt issuance costs recorded as of

September 30, 2020

 related to the

2019

Senior Credit Facility.

As of

September 30, 2020

, the Company was in compliance with all covenants within the

2019

Senior Credit Facility with the exception of the current ratio.

On

October 30, 2020,

the Company entered into a Third Amendment to Credit Agreement (the “Third Amendment”) with the Subsidiary, Truist Bank, as administrative agent, and the lenders party thereto, pursuant to which, among other things, the lenders agreed to waive the default caused by our failure to comply with the current ratio financial covenant under the

2019

Senior Credit Facility as of the last day of the fiscal quarter ended

September 30, 2020. 

The Third Amendment also decreased the maximum ratio of Net Funded Debt to EBITDAX from

4.00

to

1.00

to

3.50

to

1.00.

In addition, the Third Amendment added an anti-cash hoarding covenant, which requires mandatory prepayments of the loans then outstanding with the amount of certain cash on the balance sheet in excess of

$10

million, as set forth in greater detail in the Third Amendment.

Convertible Second Lien Notes

In

October 

2016,

the Company issued

$40.0

million aggregate principal amount of the Company's

13.50%

Convertible Second Lien Senior Secured Notes due

2019

(the “Convertible Second Lien Notes”) along with

10

-year costless warrants to acquire

2.5

million shares of common stock. Holders of the Convertible Second Lien Notes had a

second

priority lien on all assets of the Company, and holders of such warrants had a right to appoint

two

members to our Board of Directors (the “Board”) as long as such warrants were outstanding.

The Convertible Second Lien Notes were scheduled to mature on

August 30, 2019

or

six

months after the maturity of our current revolving credit facility but in

no

event later than

March 30, 2020.

The Convertible Second Lien Notes bore interest at the rate of

13.50%

 per annum, payable quarterly in arrears on

January 

15,

 

April 

15,

 

July 

15

and

October 

15

of each year. The Company also had the option under certain circumstances to pay all or any portion of interest in-kind on the then outstanding principal amount of the Convertible Second Lien Notes by increasing the principal amount of the outstanding Convertible Second Lien Notes or by issuing additional

second

lien notes.

Upon issuance of the Convertible Second Lien Notes in

October 2016,

in accordance with accounting standards related to convertible debt instruments that

may

be settled in cash upon conversion as well as warrants on the debt instrument, we recorded a debt discount of

$11.0

million, thereby reducing the

$40.0

million carrying value upon issuance to

$29.0

million and recorded an equity component of

$11.0

million. The debt discount was amortized using the effective interest rate method based upon an original term through

August 

30,

2019.

The Convertible Second Lien Notes were redeemed in full on

May 29, 2019

for

$56.7

million using borrowings under the

2019

Senior Credit Facility. In connection with the redemption of the Convertible Second Lien Notes, we recorded a

$1.6

million loss on early extinguishment of debt related to the remaining unamortized debt discount and debt issuance costs.

New Convertible Second Lien Notes

 

On

May 14, 2019,

the Company and the Subsidiary entered into a purchase agreement with certain funds and accounts managed by Franklin Advisers, Inc., as investment manager (each such fund or account, together with its successors and assigns, a “New

2L

Notes Purchaser”) pursuant to which the Company issued to the New

2L

Notes Purchasers (the “New

2L

Notes Offering”)

$12.0

million aggregate principal amount of the Company's

13.50%

Convertible Second Lien Senior Secured Notes due

2021

(the “New

2L

Notes”). The closing of the New

2L

Notes Offering occurred on

May 31, 2019.

Proceeds from the sale of the New

2L

Notes were primarily used to pay down outstanding borrowings under the

2019

Revolving Credit Facility. Holders of the New

2L

Notes have a

second

priority lien on all assets of the Company.

The New

2L

Notes, as set forth in the indenture governing such notes (as amended, the “New

2L

Notes Indenture”), were initially scheduled to mature on

May 31, 2021.

In

May 2020,

the maturity date of the New

2L

Notes was extended to

May 31, 2022.

The New

2L

Notes bear interest at the rate of

13.50%

per annum, payable quarterly in arrears on

January 15,

April 15,

July 15

and

October 15

of each year. The Company

may

elect to pay all or any portion of interest in-kind on the then outstanding principal amount of the New

2L

Notes by increasing the principal amount of the outstanding New

2L

Notes.

The New

2L

Notes Indenture contains certain covenants pertaining to us and our Subsidiary, including delivery of financial reports; environmental matters; conduct of business; use of proceeds; operation and maintenance of properties; collateral and guarantee requirements; indebtedness; liens; dividends and distributions; limits on sales of assets and stock; business activities; transactions with affiliates; and changes of control. The New

2L

Notes Indenture also contains a financial covenant which requires the maintenance of a ratio of Total Proved PV-

10

attributable to the Company's and Subsidiary's Proved Reserves (as defined in the New

2L

Notes Indenture) to Total Secured Debt (net of any Unrestricted Cash

not

to exceed

$10.0

million) 

not

to be less than

1.50

to

1.00.

The New

2L

Notes are convertible into the Company's common stock at the conversion rate, which is the sum of the outstanding principal amount of New

2L

Notes to be converted, including any accrued and unpaid interest, divided by the conversion price, which shall initially be

$21.33,

subject to certain adjustments as described in the New

2L

Notes Indenture. Upon conversion, the Company must deliver, at its option, either (

1

) a number of shares of its common stock determined as set forth in the New

2L

Notes Indenture, (

2

) cash or (

3

) a combination of shares of its common stock and cash; however, the Company's ability to redeem the New

2L

Notes with cash is subject to the terms of the

2019

Senior Credit Agreement.

The New

2L

Notes were issued and sold to the New

2L

Notes Purchasers pursuant to an exemption from the registration requirements of the Securities Act of

1933,

as amended, pursuant to Section

4

(a)(

2

) thereunder. The Company has completed the registration with the U.S. Securities and Exchange Commission of the resale of the New

2L

Notes and the shares of common stock issuable upon conversion of The New

2L

Notes.

Upon issuance of the New

2L

Notes on

May 31, 2019,

in accordance with accounting standards related to convertible debt instruments that

may

be settled in cash upon conversion, we recorded a debt discount of

$1.4

million, thereby reducing the

$12.0

million carrying value upon issuance to

$10.6

million and recorded an equity component of

$1.4

million. The equity component was valued using a binomial model. Prior to the maturity extension in

May 2020,

the debt discount was amortized using the effective interest rate method based upon an original term through

May 31, 2021.

Upon the maturity extension in

May 2020,

an additional

$0.3

million of debt discount was recorded, and the debt discount began to be amortized using the effective interest rate method based upon the maturity date of

May 31, 2022.

As of 

September 30, 2020

,

$1.0

million of debt discount and

$0.2

million of debt issuance costs remai

ned to be amortized on the New

2L

Notes.

As of 

September 30, 2020

, the Company was in compliance with all covenants within the New

2L

Notes Indenture.

XML

Note 5 - Equity

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

5—Equity

During the

three

and 

nine

 months ended

September 30, 2020

, the Company had vestings of its share-based compensation units upon the retirement of certain employees representing a total fair value of less than 

$0.1

 million and

$1.0

 million, respectively, and resulting in the issuance of approximately

6,000

and

136,000

common stock shares, respectively. The Company withheld shares for payment of

$0.3

million in taxes due upon vesting resulting in approximately

39,700

shares held in treasury as of

September 30, 2020

.

During the 

three

and

nine

months ended

September 30, 2019,

zero

and

150,000,

respectively, of the

10

-year costless warrants associated with the Convertible Second Lien Notes were exercised. The Company received cash for the

one

cent par value for the issuance of the

150,000

common shares. As of 

September 30, 2019,

no

such warrants remain un-exercised. During the 

three

and

nine

months ended

September 30, 2019,

the Company had vestings of its share-based compensation units representing a total fair value of

$0.1

million and resulting in the issuance of approximately

12,000

 common stock shares. During the 

three

and

nine

months ended

September 30, 2019,

the Company paid less than

$0.1

million and

$0.5

million, respectively, in cash for the purchase of

352

and

47,133

Treasury shares, respectively, withheld from employees upon the vesting of restricted stock awards for the payment of taxes.

XML

Note 6 - Net Income (Loss) Per Common Share

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

6—Net

Income (Loss) Per Common Share

Net income applicable to common stock was used as the numerator in computing basic and diluted net income (loss) per common share for the

three

and 

nine

months ended

September 30, 2020

and

2019

. The Company used the treasury stock method in determining the effects of potentially dilutive restricted stock. The following table sets forth information related to the computations of basic and diluted net income (loss) per common share:

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
	(Amounts in thousands, except per share data)
Basic net income (loss) per common share:
Net income (loss) applicable to common stock	$	(22,690	)	$	1,988	$	(35,312	)	$	14,215
Weighted average shares of common stock outstanding		12,618			12,257		12,564			12,208
Basic net income (loss) per common share	$	(1.80	)	$	0.16	$	(2.81	)	$	1.16
Diluted net income (loss) per common share:
Net income (loss) applicable to common stock	$	(22,690	)	$	1,988	$	(35,312	)	$	14,215
Interest, discount and amortization on New 2L Notes		-			-		-			565
Adjusted net income (loss) per common share	$	(22,690	)	$	1,988	$	(35,312	)	$	14,780
Weighted average shares of common stock outstanding		12,618			12,257		12,564			12,208
Common shares issuable upon conversion of the New 2L Notes		-			-		-			588
Common shares issuable upon conversion of warrants of unsecured claim holders		-			1,285		-			1,285
Common shares issuable on assumed conversion of restricted stock **		-			498		-			416
Diluted weighted average shares of common stock outstanding		12,618			14,040		12,564			14,497
Diluted net income (loss) per common share (1) (2) (3)	$	(1.80	)	$	0.14	$	(2.81	)	$	1.02
(1) Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.		672			588		672			-
(2) Common shares issuable upon conversion of the unsecured claims warrants not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.		1,329			-		1,329			-
(3) Common shares issuable upon conversion of the restricted stock not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020. **		420			-		231			-

** Common shares issuable on assumed conversion of share-based compensation assumes a payout of the Company's performance share awards at

100%

of the initial units granted (or a ratio of

one

unit to

one

common share). The range of common stock shares which

may

be earned ranges from

zero

to

250%

of the initial performance units granted.

XML

Note 7 - Income Taxes

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

7—Income

Taxes

We record

ed

no

income tax expense or benefit for the

three

and 

nine

 months ended

September 30, 2020

 or

2019

.

We maintained a valuation allowance at

September 30, 2020

, which resulted in

no

net deferred tax asset or liability appearing on our statement of financial position. We recorded this valuation allowance after an evaluation of all available evidence (including commodity prices and our recent history of tax net operating losses (“NOLs”) in

2019

 and prior years) led to a conclusion that based upon the more-likely-than-

not

standard of the accounting literature our deferred tax assets were unrecoverable. The valuation allowance was

$74.2

 million as of 

December 31, 2019

, which resulted in a net non-current deferred tax asset of

$0.4

 million appearing on our statement of financial position at that time. The net

$0.4

million deferred tax asset related to alternative minimum tax (“AMT”) credits and accrued interest which were refundable to the Company was reclassed to a current receivable as of

June 30, 2020,

and such funds were subsequently received in the

third

quarter of

2020.

The valuation allowance has

no

impact on our NOL position for tax purposes, and if we generate taxable income in future periods, we

may

be able to use our NOLs to offset taxable income at that time subject to any applicable tax limitations on the NOLs. 

Considering the Company's taxable income forecasts, our assessment of the realization of our deferred tax assets has

not

changed, and we continue to maintain a full valuation allowance for our net deferred tax assets as of

September 30, 2020

.

As of

September 30, 2020

, we have

no

unrecognized tax benefits. There were

no

significant changes to our tax position since

December 31, 2019

.

XML

Note 8 - Commodity Derivative Activities

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE

8—Commodity

Derivative Activities

We use commodity and financial derivative contracts to manage fluctuations in commodity prices. We are currently

not

designating our derivative contracts for hedge accounting. All derivative gains and losses are from our oil and natural gas derivative contracts and have been recognized in “Other income (expense)” on our Consolidated Statements of Operations.

The following table summarizes gains and losses we recognized on our oil and natural gas derivatives for the

three

and 

nine

months ended

September 30, 2020

and

2019

:

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
Oil and Natural Gas Derivatives (in thousands)
Gain on commodity derivatives not designated as hedges, settled	$	1,597		$	5,922		$	14,905		$	6,135
Gain (loss) on commodity derivatives not designated as hedges, not settled		(12,676	)		(2,170	)		(18,534	)		9,262
Total gain (loss) on commodity derivatives not designated as hedges	$	(11,079	)	$	3,752		$	(3,629	)	$	15,397

Commodity Derivative Activity

We enter into swap contracts, costless collars or other derivative agreements from time to time to manage commodity price risk for a portion of our production. Our policy is that all derivatives are approved by the Hedging Committee of our Board, and reviewed periodically by the Board.

Despite the measures taken by us to attempt to control price risk, we remain subject to price fluctuations for natural gas and crude oil sold in the spot market. Prices received for natural gas sold on the spot market are volatile due primarily to seasonality of demand and other factors beyond our control. Decreases in domestic crude oil and natural gas spot prices will have a material adverse effect on our financial position, results of operations and quantities of reserves recoverable on an economic basis. We routinely exercise our contractual right to net realized gains against realized losses when settling with our financial counter-parties. Neither our counter-parties nor we require any collateral upon entering into derivative contracts. We would have been at risk of losing

$0.6

million had RBC Capital Markets been unable to fulfill their obligations as of

September 30, 2020

.

As of

September 30, 2020

, the open positions on our outstanding commodity derivative contracts, all of which were wit

h Truist Bank, RBC Capital Markets, ARM Energy and Citizens Commercial Banking w

ere as follows:

Contract Type	Average Daily Volume	Total Volume	Weighted Average Fixed Price	Fair Value at September 30, 2020 (In thousands)
Oil swaps (Bbls)
2020	200	18,400	$57.51	$310
2021 (through March 31, 2021)	200	18,000	$56.58	269
Total oil				$	579
Natural Gas swaps (MMBtu)
2020	45,000	4,109,000	$2.59	$58
2021	63,167	23,089,000	$2.56	(7,089		)
2022 (through March 31, 2022)	70,000	6,300,000	$2.53	(2,735		)
Natural Gas collars (MMBtu)
2020	25,000	2,300,000	2.40 0 - 2.62 62	$(195		)
2021	29,250	10,680,000	2.40 0 - 3.50 50	(966		)
2022 (through March 31, 2022)	30,000	2,700,000	2.50 0 - 3.50 50	(97		)
Natural Gas basis swaps (MMBtu)
2020	50,000	4,600,000	$0.209	$252
2021	50,000	18,250,000	$0.209	(384		)
2022	50,000	18,250,000	$0.209	(517		)
2023	50,000	18,250,000	$0.209	(642		)
2024	50,000	18,300,000	$0.209	(1,017		)
Total natural gas				$	(13,332	)
Total oil and natural gas				$	(12,753	)

During the

third

quarter of

2020

 we entered into the following contrac

ts with Truist Bank, RBC Capital Markets and Citizens Commercial Banking:

Contract Type	Daily Volume	Weighted Average Fixed Price	Contract Start Date	Contract Termination
Natural gas swap (MMBtu)	20,000	$2.73	April 1, 2021	March 31, 2022
Natural gas collar (MMBtu)	30,000	2.50 0 - 3.50 50	April 1, 2021	March 31, 2022

The following table summarizes the fair values of our derivative financial instruments that are recorded at fair value classified in each Level as of

September 30, 2020

(in thousands). We measure the fair value of our commodity derivative contracts by applying the income approach. See

Note

1—“Description

of Business and Significant Accounting Policies”

for our discussion regarding fair value, including inputs used and valuation techniques for determining fair values.

Description	Level 1		Level 2			Level 3		Total
Fair value of oil and natural gas derivatives - Current Assets	$	-	$	579		$	-	$	579
Fair value of oil and natural gas derivatives - Non-current Assets		-		-			-		-
Fair value of oil and natural gas derivatives - Current Liabilities		-		(6,181	)		-		(6,181	)
Fair value of oil and natural gas derivatives - Non-current Liabilities		-		(7,151	)		-		(7,151	)
Total	$	-	$	(12,753	)	$	-	$	(12,753	)

We enter into oil and natural gas derivative contracts under which we have netting arrangements with each counter-party. The following table discloses and reconciles the gross amounts to the amounts as presented on the Consolidated Balance Sheets as of

September 30, 2020

and

December 31, 2019

:

	September 30, 2020									December 31, 2019
Fair Value of Oil and Natural Gas Derivatives	Gross			Amount			As			Gross			Amount			As
(in thousands)	Amount			Offset			Presented			Amount			Offset			Presented
Fair value of oil and natural gas derivatives - Current Assets	$	3,403		$	(2,824	)	$	579		$	9,401		$	(864	)	$	8,537
Fair value of oil and natural gas derivatives - Non-current Assets		1,356			(1,356	)		-			847			(816	)		31
Fair value of oil and natural gas derivatives - Current Liabilities		(9,005	)		2,824			(6,181	)		(864	)		864			-
Fair value of oil and natural gas derivatives - Non-current Liabilities		(8,507	)		1,356			(7,151	)		(3,602	)		816			(2,786	)
Total	$	(12,753	)	$	-		$	(12,753	)	$	5,782		$	-		$	5,782

XML

Note 9 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

9—Commitments

and Contingencies

We are party to various lawsuits from time to time arising in the normal course of business, including, but

not

limited to, royalty, contract, personal injury, and environmental claims. We have established reserves as appropriate for all such proceedings and intend to vigorously defend these actions. Management believes, based on currently available information, that adverse results or judgments from such actions, if any, would

not

have been material to our consolidated financial position, results of operations or liquidity for the

three

and 

nine

months ended

September 30, 2020

and

2019

.

XML

Note 10 - Leases

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE

10—Leases

We determine if an arrangement is or contains a lease at inception. Leases with an initial term of

12

months or less are

not

recorded on our Consolidated Balance Sheets. We lease our corporate office building in Houston, Texas. We recognize lease expense for this lease on a straight-line basis over the lease term. This operating lease is included in furniture, fixtures and equipment and other capital assets, accrued liabilities and other non-current liabilities on our Consolidated Balance Sheets. The operating lease asset and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As this lease did

not

provide an implicit rate, we used a collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset includes any lease payments made but excludes annual operating charges. Operating lease expense is recognized on a straight-line basis over the lease term and reported in general and administrative operating expense on our Consolidated Statements of Operations. We have also entered into leases for certain vehicles and other equipment which are immaterial to our financial statements and have therefore

not

been recorded on our Consolidated Balance Sheets.

The lease cost components for the

three

and

nine

months ended

September 30, 2020

 and

2019

 are classified as follows:

(in thousands)	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019		Consolidated Statements of Operations Classification
Building lease cost	$	385		$	368	$	1,155	$	1,124	General and administrative expense
Variable lease cost (1)		(3	)		50		20		145	General and administrative expense
	$	382		$	418	$	1,175	$	1,269

(

1

) Includes building operating expenses.

The following are additional details related to our lease portfolio as of

September 30, 2020

 and

December 31, 2019

:

(in thousands)	September 30, 2020			December 31, 2019			Consolidated Balance Sheets Classification
Lease asset, gross	$	2,922		$	2,922		Furniture, fixtures and equipment and other capital assets
Accumulated depreciation		(2,191	)		(1,252	)	Accumulated depletion, depreciation and amortization
Lease asset, net	$	731		$	1,670
Current lease liability	$	1,164		$	1,414		Accrued liabilities
Non-current lease liability		-			800		Other non-current liabilities
Total lease liabilities	$	1,164		$	2,214

The following table presents operating lease liability maturities as of

September 30, 2020

:

(in thousands)	September 30, 2020
2020	$	385
2021		813
2022		-
2023		-
2024		-
Thereafter		-
Total lease payments	$	1,198
Less imputed interest		34
Present value of lease liabilities	$	1,164

As of

September 30, 2020

, our office building operating lease has a weighted-average remaining lease term of

0.6

 years and a weighted-average discount rate of

8.0

percent. Cash paid for amounts included in the measurement of operating lease liabilities was

$0.4

million for both the

three

months ended

September 30, 2020

 and

2019

 and

$1.2

million for the

nine

months ended 

September 30, 2020

 and

2019

.

XML

Note 11 - COVID-19 Pandemic

9 Months Ended

Sep. 30, 2020

COVID 19 [Member]

Notes to Financial Statements

Unusual or Infrequent Items, or Both, Disclosure [Text Block]

NOTE

11—COVID

-

19

Pandemic

The impact of the COVID-

19

 pandemic and related economic, business and market disruptions is both on-going and continuing to evolve, and its future effects are uncertain. The Company has seen impacts related to COVID-

19

on oil price fluctuations due to market uncertainty.

Starting in

May 2020,

as COVID-

19

appeared to decrease or stabilize in certain areas, certain local, regional and national authorities began to loosen restrictions in various locations. While this relaxation of restrictions has led to an increased demand for oil and natural gas through improved general economic conditions, there has also been resurgences of COVID-

19

cases that could result in the reinstatement of restrictions, which could lower demand for oil and natural gas.

Because we predominately produce natural gas and natural gas has

not

been impacted by the same market forces as crude oil, we have experienced less of an impact from COVID-

19

than many of our peers. However, the scope and length of the economic downturn in the face of COVID-

19

and the ultimate effect on the price of natural gas and oil cannot be determined, and we could be adversely affected in future periods. Management is actively monitoring the impact on the Company's results of operations, financial position, and liquidity in fiscal year

2020.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The consolidated financial statements of the Company included in this Quarterly Report on Form

10

-Q have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly, certain information normally included in financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) has been condensed or omitted. This information should be read in conjunction with our consolidated financial statements and notes contained in our Annual Report on Form

10

-K for the year ended

December 31, 2019

. Operating results for the

three

 and 

nine

 months ended

September 30, 2020

 are

not

necessarily indicative of the results that

may

be expected for the full year or for any interim period.

The impact of the COVID-

19

 pandemic and related economic, business and market disruptions is both on-going and continuing to evolve, and its future effects are uncertain. The Company has seen impacts related to COVID-

19

on oil price fluctuations due to market uncertainty. The full impact of COVID-

19

and related market impacts on the Company will depend on many factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company. As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, adjustments

may

be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

—The consolidated financial statements include the financial statements of the Company and the Subsidiary. Intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. Certain data in prior periods' financial statements have been adjusted to conform to the presentation of the current period. We have evaluated subsequent events through the date of this filing.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

— Our management has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with US GAAP.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

—Cash and cash equivalents includes cash on hand, demand deposit accounts and temporary cash investments with maturities of

ninety

days or less at the date of purchase.

Accounts Payable, Policy [Policy Text Block]

Accounts Payable

—Accounts payable consisted of the following amounts as of

September 30, 2020

 and

December 31, 2019

:

(In thousands)	September 30, 2020		December 31, 2019
Trade payables	$	16,547	$	11,461
Revenue payables		11,470		14,483
Prepayments from partners		513		-
Miscellaneous payables		323		404
Total Accounts payable	$	28,853	$	26,348

Accrued Liabilities, Policy [Policy Text Block]

Accrued Liabilities

—Accrued liabilities consisted of the following amounts as of

September 30, 2020

and

December 31, 2019

:

(In thousands)	September 30, 2020		December 31, 2019
Accrued capital expenditures	$	3,808	$	6,175
Accrued lease operating expense		1,096		989
Accrued production and other taxes		1,031		430
Accrued transportation and gathering		1,884		2,258
Accrued performance bonus		2,731		4,642
Accrued interest		175		208
Accrued office lease		1,164		1,414
Accrued general and administrative expense and other		369		499
Total Accrued liabilities	$	12,258	$	16,615

Inventory, Policy [Policy Text Block]

Inventory

–Inventory consists of casing and tubulars that are expected to be used in our capital drilling program. Inventory is carried on the Consolidated Balance Sheets at the lower of cost or market.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

—Under US GAAP,

two

acceptable methods of accounting for oil and natural gas properties are allowed. These are the Successful Efforts Method and the Full Cost Method. Entities engaged in the production of oil and natural gas have the option of selecting either method for application in the accounting for their properties. The principal differences between the

two

methods are in the treatment of exploration costs, the computation of depreciation, depletion and amortization (“DD&A”) expense and the assessment of impairment of oil and natural gas properties. We have elected to adopt the Full Cost Method of accounting. We believe that the true cost of developing a “portfolio” of reserves should reflect both successful and unsuccessful attempts at exploration and production. Application of the Full Cost Method better reflects the true economics of exploring for and developing our oil and gas reserves.

Under the Full Cost Method, we capitalize all costs associated with acquisitions, exploration, development and estimated abandonment costs. We capitalize internal costs that can be directly identified with the acquisition of leasehold, as well as drilling and completion activities, but do

not

include any costs related to production, general corporate overhead or similar activities. Unevaluated property costs are excluded from the amortization base until we make a determination as to the existence of proved reserves on the respective property or impairment. We review our unevaluated properties at the end of each quarter to determine whether the costs should be reclassified to proved oil and natural gas properties and thereby subject to DD&A and the full cost ceiling test. For the 

three

 months ended 

September 30, 2020

and

2019

, we transferred less than

$0.1

million from unevaluated properties to proved oil and natural gas properties. For the

nine

 months ended

September 30, 2020

and

2019

, we transferred less than

$0.1

million and 

$0.2

million, respectively, from unevaluated properties to proved oil and natural gas properties. Our sales of oil and natural gas properties are accounted for as adjustments to net proved oil and natural gas properties with

no

gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves.

Under the Full Cost Method, we amortize our investment in oil and natural gas properties through DD&A expense using the units of production method. An amortization rate is calculated based on total proved reserves converted to equivalent thousand cubic feet of natural gas (“Mcfe”) as the denominator and the net book value of the evaluated oil and gas asset together with the estimated future development cost of the proved undeveloped reserves as the numerator. The rate calculated per Mcfe is applied against the periods' production also converted to Mcfe to arrive at the periods' DD&A expense.

Depreciation of furniture, fixtures and equipment, consisting of office furniture, computer hardware and software and leasehold improvements, is computed using the straight-line method over their estimated useful lives, which vary from

three

to

five

years.

Full Cost or Successful Efforts, Policy [Policy Text Block]

Full Cost Ceiling Test

—The Full Cost Method requires that at the conclusion of each financial reporting period, the p

resent value of estimated future net cash flows from proved reserves (adjusted for hedges and excluding cash flows related to estimated abandonment costs), be compared to the net capitalized costs of proved oil and natural gas properties, net of related deferred taxes. This comparison is referred to as a “ceiling test.” If the net capitalized costs of proved oil and natural gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write-down the value of our oil and natural gas properties to the value of the discounted cash flows. Estimated future net cash flows from proved reserves are calculat

ed based on the Securities and Exchange Commission (“SEC”) required trailing

12

-month average pricing assumption.

The Full Cost Ceiling Test performed as of 

September 30, 2020

 utilized the latest SEC

12

-month average price of

$1.97

per mcf of natural gas, which resulted in the present value of future net cash flows being lower than our capitalized cost by 

$9.4

million. We recorded that amount as an impairment in the

three

months ended

September 30, 2020

for a total impairment for the

nine

months ended

September 30, 2020

of

$16.2

million. We did

not

have an impairment for the comparable periods in

2019.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value Measurement

—Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, whether in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, our credit risk.

We use various methods, including the income approach and market approach, to determine the fair values of our financial instruments that are measured at fair value on a recurring basis, which depend on a number of factors, including the availability of observable market data over the contractual term of the underlying instrument. For some of our instruments, the fair value is calculated based on directly observable market data or data available for similar instruments in similar markets. For other instruments, the fair value

may

be calculated based on these inputs as well as other assumptions related to estimates of future settlements of these instruments. We separate our financial instruments into

three

levels (levels

1,

2

and

3

) based on our assessment of the availability of observable market data and the significance of non-observable data used to determine the fair value of our instruments. Our assessment of an instrument can change over time based on the maturity or liquidity of the instrument, which could result in a change in the classification of the instruments between levels.

Each of these levels and our corresponding instruments classified by level are further described below:

• Level 1 Inputs— unadjusted quoted market prices in active markets for identical assets or liabilities. We have no Level 1 instruments;

• Level 2 Inputs— quotes that are derived principally from or corroborated by observable market data. Included in this level are our senior credit facilities and commodity derivatives whose fair values are based on third -party quotes or available interest rate information and commodity pricing data obtained from third party pricing sources and our creditworthiness or that of our counter-parties; and

• Level 3 Inputs— unobservable inputs for the asset or liability, such as discounted cash flow models or valuations, based on our various assumptions and future commodity prices. Included in this level would be our initial measurement of asset retirement obligations.

As of

September 30, 2020

and

December 31, 2019

, the carrying amounts of our cash and cash equivalents, trade receivables and payables represented fair value because of the short-term nature of these instruments.

Asset Retirement Obligation [Policy Text Block]

Asset Retirement Obligations

—Asset retirement obligations are related to the abandonment and site restoration requirements that result from the exploration and development of our oil and natural gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense is included in “Depreciation, depletion and amortization” on our Consolidated Statements of Operations. See

Note

3

.

The estimated fair value of the Company's asset retirement obligations 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 initial measurement of the asset retirement obligations was classified as Level

3

in the fair value hierarchy.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

—Oil and natural gas revenues are generally recognized upon delivery of our produced oil and natural gas volumes to our customers. We record revenue in the month our production is delivered to the purchaser. However, settlement statements and payments for our oil and natural gas sales

may

not

be received for up to

60

days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the purchaser

and the price that will be received for the sale of the product. We record a liability or an asset for natural gas balancing when we have sold more or less than our working interest share of natural gas production, respectively. As of

September 30, 2020

and

December 31, 2019

, the net liability for natural gas balancing was immaterial. Differ

ences between actual production and net working interest volumes are routinely adjusted. See

Note

2

.

Derivatives, Policy [Policy Text Block]

Derivative Instruments

—We use derivative instruments such as futures, forwards, swaps, collars, and options for purposes of hedging our exposure to fluctuations in the price of crude oil and natural gas and hedging our exposure to changing interest rates. Accounting standards related to derivative instruments and hedging activities require that all derivative instruments subject to the requirements of those standards be measured at fair value and recognized as assets or liabilities in the balance sheet. We offset the fair value of our asset and liability positions with the same counter-party for each commodity type. Changes in fair value are required to be recognized in earnings unless specific hedge accounting criteria are met. All of our realized gains or losses on our derivative contracts are the result of cash settlements. We have

not

designated any of our derivative contracts as hedges; accordingly, changes in fair value are reflected in earnings. See

Note

8

.

Income Tax, Policy [Policy Text Block]

Income Taxes

—We account for income taxes, as required, under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized.

We recognize, as required, the financial statement benefit of an uncertain tax position only after determining that the relevant tax authority would more likely than

not

sustain the position following an audit. For tax positions meeting the more likely-than-

not

threshold, the amount recognized in the financial statements is the largest benefit that has a greater than

50

percent likelihood of being realized upon ultimate settlement with the relevant tax authority. See

Note

7

.

Earnings Per Share, Policy [Policy Text Block]

Net Income or Net Loss Per Common Share—

Basic income (loss) per common share is computed by dividing net income (loss) applicable to common stock for each reporting period by the weighted-average shares of common stock outstanding during the period. Diluted income (loss) per common share is computed by dividing net income (loss) applicable to common stock for each reporting period by the weighted average shares of common stock outstanding during the period, plus the effects of potentially dilutive restricted stock calculated using the treasury stock method and the potential dilutive effect of the conversion of convertible securities, such as warrants and convertible notes, into shares of our common stock. See

Note

6

.

Commitments and Contingencies, Policy [Policy Text Block]

Commitments and Contingencies

—Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Recoveries from

third

parties, when probable of realization, are separately recorded and are

not

offset against the related environmental liability. See

Note

9

.

Share-based Payment Arrangement [Policy Text Block]

Share-Based Compensation

—We account for our share-based transactions using the fair value as of the grant date and recognize compensation expense over the requisite service period.

Guarantee, Policy [Policy Text Block]

Guarantee

—As of

September 30, 2020

, Goodrich Petroleum Company, LLC, the wholly owned subsidiary of Goodrich Petroleum Corporation, was the Subsidiary Guarantor of our New

2L

Notes (as defined below). The parent company has

no

independent assets or operations, the guarantee is full and unconditional, and the parent has

no

subsidiaries other than Goodrich Petroleum Company, LLC.

Debt, Policy [Policy Text Block]

Debt Issuance Cost

—The Company records debt issuance costs associated with its New

2L

Notes (and previously with its Convertible Second Lien Notes, both as defined below) as a contra balance to long term debt, net in our Consolidated Balance Sheets, which is amortized straight-line over the life of the respective notes. Debt issuance costs associated with our revolving credit facility debt are recorded in other assets in our Consolidated Balance Sheets, which is amortized straight-line over the life of such debt.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

In

December 2019,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2019

-

12,

Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes. The amendments in this ASU adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. For public entities, the amendments in this ASU are effective for fiscal periods beginning after

December 15, 2020,

including interim periods therein. We do

not

expect a material impact from the adoption of this ASU.

In

March 2020,

the FASB issued ASU

2020

-

04,

Reference Rate Reform (Topic

848

): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments is this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by this ASU do

not

apply to contract modifications made and hedging relationships entered into or evaluated after

December 31, 2022,

except for hedging relationships existing as of

December 31, 2022,

that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are evaluating the expected impact these amendments and reference rate reform will have on our consolidated financial statements and various contracts.

In

August 2020,

the FASB issued ASU

2020

-

06,

 Debt—Debt with Conversion and Other Options (Subtopic

470

-

20

) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic

815

-

40

): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The amendments in this ASU affect entities that issue convertible instruments and/or contracts in an entity's own equity. The amendments in this ASU primarily affect convertible instruments issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements of this ASU. For contracts in an entity's own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. Also affected is the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this ASU affect the diluted EPS calculation for instruments that

may

be settled in cash or shares and for convertible instruments. The amendments in this ASU are effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after

December 15, 2021,

including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after

December 15, 2023,

including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Board decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of these amendments on our accounting for and disclosure of our convertible notes.

XML

Note 1 - Description of Business and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

(In thousands)	September 30, 2020		December 31, 2019
Trade payables	$	16,547	$	11,461
Revenue payables		11,470		14,483
Prepayments from partners		513		-
Miscellaneous payables		323		404
Total Accounts payable	$	28,853	$	26,348

(In thousands)	September 30, 2020		December 31, 2019
Accrued capital expenditures	$	3,808	$	6,175
Accrued lease operating expense		1,096		989
Accrued production and other taxes		1,031		430
Accrued transportation and gathering		1,884		2,258
Accrued performance bonus		2,731		4,642
Accrued interest		175		208
Accrued office lease		1,164		1,414
Accrued general and administrative expense and other		369		499
Total Accrued liabilities	$	12,258	$	16,615

XML

Note 2 - Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
(In thousands)	Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues		Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues
Operated	$	1,257	$	17,665	$	-	$	18,922	$	4,007	$	52,156	$	-	$	56,163
Non-operated		39		2,499		3		2,541		540		8,207		7		8,754
Total oil and natural gas revenues	$	1,296	$	20,164	$	3	$	21,463	$	4,547	$	60,363	$	7	$	64,917

	Three Months Ended September 30, 2019								Nine Months Ended September 30, 2019
(In thousands)	Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues		Oil Revenue		Gas Revenue		NGL Revenue		Total Oil and Natural Gas Revenues
Operated	$	2,365	$	21,679	$	-	$	24,044	$	7,881	$	66,743	$	-	$	74,624
Non-operated		112		3,002		3		3,117		326		13,232		11		13,569
Total oil and natural gas revenues	$	2,477	$	24,681	$	3	$	27,161	$	8,207	$	79,975	$	11	$	88,193

XML

Note 3 - Asset Retirement Obligations (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Asset Retirement Obligations [Table Text Block]

	Nine Months Ended September 30, 2020
Beginning balance at December 31, 2019	$	4,169
Liabilities incurred		138
Dispositions		(12	)
Accretion expense		228
Ending balance at September 30, 2020	$	4,523
Current liability		-
Long term liability	$	4,523

XML

Note 4 - Debt (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	September 30, 2020				December 31, 2019
	Principal		Carrying Amount		Principal		Carrying Amount
2019 Senior Credit Facility (1)	$	96,400	$	96,400	$	92,900	$	92,900
New 2L Notes (2)		14,327		13,129		12,969		11,535
Total debt	$	110,727	$	109,529	$	105,869	$	104,435

Schedule of Interest Expense and Effective Interest on Liability Component [Table Text Block]

	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019					Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
	Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate			Interest Expense		Effective Interest Rate
2017 Senior Credit Facility	$	-		—	%	$	-		-		$	-		—	%	$	872		7.2	%
2019 Senior Credit Facility		1,129		4.6	%		1,377		6.2	%		3,534		4.9	%		2,072		6.1	%
Convertible Second Lien Notes (1)		-		—	%		-		-			-		—	%		5,304		24.1	%
New 2L Notes (2)		604		18.6	%		604		21.9	%		1,876		20.1	%		788		21.6	%
Total interest expense	$	1,733				$	1,981				$	5,410				$	9,036

XML

Note 6 - Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
	(Amounts in thousands, except per share data)
Basic net income (loss) per common share:
Net income (loss) applicable to common stock	$	(22,690	)	$	1,988	$	(35,312	)	$	14,215
Weighted average shares of common stock outstanding		12,618			12,257		12,564			12,208
Basic net income (loss) per common share	$	(1.80	)	$	0.16	$	(2.81	)	$	1.16
Diluted net income (loss) per common share:
Net income (loss) applicable to common stock	$	(22,690	)	$	1,988	$	(35,312	)	$	14,215
Interest, discount and amortization on New 2L Notes		-			-		-			565
Adjusted net income (loss) per common share	$	(22,690	)	$	1,988	$	(35,312	)	$	14,780
Weighted average shares of common stock outstanding		12,618			12,257		12,564			12,208
Common shares issuable upon conversion of the New 2L Notes		-			-		-			588
Common shares issuable upon conversion of warrants of unsecured claim holders		-			1,285		-			1,285
Common shares issuable on assumed conversion of restricted stock **		-			498		-			416
Diluted weighted average shares of common stock outstanding		12,618			14,040		12,564			14,497
Diluted net income (loss) per common share (1) (2) (3)	$	(1.80	)	$	0.14	$	(2.81	)	$	1.02
(1) Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.		672			588		672			-
(2) Common shares issuable upon conversion of the unsecured claims warrants not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.		1,329			-		1,329			-
(3) Common shares issuable upon conversion of the restricted stock not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020. **		420			-		231			-

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Note 8 - Commodity Derivative Activities (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Realized and Unrealized Gains and Losses [Table Text Block]

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
Oil and Natural Gas Derivatives (in thousands)
Gain on commodity derivatives not designated as hedges, settled	$	1,597		$	5,922		$	14,905		$	6,135
Gain (loss) on commodity derivatives not designated as hedges, not settled		(12,676	)		(2,170	)		(18,534	)		9,262
Total gain (loss) on commodity derivatives not designated as hedges	$	(11,079	)	$	3,752		$	(3,629	)	$	15,397

Schedule of Price Risk Derivatives [Table Text Block]

Contract Type	Average Daily Volume	Total Volume	Weighted Average Fixed Price	Fair Value at September 30, 2020 (In thousands)
Oil swaps (Bbls)
2020	200	18,400	$57.51	$310
2021 (through March 31, 2021)	200	18,000	$56.58	269
Total oil				$	579
Natural Gas swaps (MMBtu)
2020	45,000	4,109,000	$2.59	$58
2021	63,167	23,089,000	$2.56	(7,089		)
2022 (through March 31, 2022)	70,000	6,300,000	$2.53	(2,735		)
Natural Gas collars (MMBtu)
2020	25,000	2,300,000	2.40 0 - 2.62 62	$(195		)
2021	29,250	10,680,000	2.40 0 - 3.50 50	(966		)
2022 (through March 31, 2022)	30,000	2,700,000	2.50 0 - 3.50 50	(97		)
Natural Gas basis swaps (MMBtu)
2020	50,000	4,600,000	$0.209	$252
2021	50,000	18,250,000	$0.209	(384		)
2022	50,000	18,250,000	$0.209	(517		)
2023	50,000	18,250,000	$0.209	(642		)
2024	50,000	18,300,000	$0.209	(1,017		)
Total natural gas				$	(13,332	)
Total oil and natural gas				$	(12,753	)

Contract Type	Daily Volume	Weighted Average Fixed Price	Contract Start Date	Contract Termination
Natural gas swap (MMBtu)	20,000	$2.73	April 1, 2021	March 31, 2022
Natural gas collar (MMBtu)	30,000	2.50 0 - 3.50 50	April 1, 2021	March 31, 2022

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

Description	Level 1		Level 2			Level 3		Total
Fair value of oil and natural gas derivatives - Current Assets	$	-	$	579		$	-	$	579
Fair value of oil and natural gas derivatives - Non-current Assets		-		-			-		-
Fair value of oil and natural gas derivatives - Current Liabilities		-		(6,181	)		-		(6,181	)
Fair value of oil and natural gas derivatives - Non-current Liabilities		-		(7,151	)		-		(7,151	)
Total	$	-	$	(12,753	)	$	-	$	(12,753	)

Offsetting Liabilities [Table Text Block]

	September 30, 2020									December 31, 2019
Fair Value of Oil and Natural Gas Derivatives	Gross			Amount			As			Gross			Amount			As
(in thousands)	Amount			Offset			Presented			Amount			Offset			Presented
Fair value of oil and natural gas derivatives - Current Assets	$	3,403		$	(2,824	)	$	579		$	9,401		$	(864	)	$	8,537
Fair value of oil and natural gas derivatives - Non-current Assets		1,356			(1,356	)		-			847			(816	)		31
Fair value of oil and natural gas derivatives - Current Liabilities		(9,005	)		2,824			(6,181	)		(864	)		864			-
Fair value of oil and natural gas derivatives - Non-current Liabilities		(8,507	)		1,356			(7,151	)		(3,602	)		816			(2,786	)
Total	$	(12,753	)	$	-		$	(12,753	)	$	5,782		$	-		$	5,782

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Note 10 - Leases (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Lease, Cost [Table Text Block]

(in thousands)	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019		Consolidated Statements of Operations Classification
Building lease cost	$	385		$	368	$	1,155	$	1,124	General and administrative expense
Variable lease cost (1)		(3	)		50		20		145	General and administrative expense
	$	382		$	418	$	1,175	$	1,269

Operating Lease, Assets and Liabilities [Table Text Block]

(in thousands)	September 30, 2020			December 31, 2019			Consolidated Balance Sheets Classification
Lease asset, gross	$	2,922		$	2,922		Furniture, fixtures and equipment and other capital assets
Accumulated depreciation		(2,191	)		(1,252	)	Accumulated depletion, depreciation and amortization
Lease asset, net	$	731		$	1,670
Current lease liability	$	1,164		$	1,414		Accrued liabilities
Non-current lease liability		-			800		Other non-current liabilities
Total lease liabilities	$	1,164		$	2,214

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

(in thousands)	September 30, 2020
2020	$	385
2021		813
2022		-
2023		-
2024		-
Thereafter		-
Total lease payments	$	1,198
Less imputed interest		34
Present value of lease liabilities	$	1,164

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Note 1 - Description of Business and Significant Accounting Policies (Details Textual) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Oil and Gas Property Full Cost Method Period Increase (Decrease)	$ 0.1	$ 0.1	$ 0.1	$ 0.2
Unamortized Costs Capitalized Less Related Deferred Income Taxes Exceed Ceiling Limitations, Expense	$ 9.4		$ 16.2
Minimum [Member]
Property, Plant and Equipment, Useful Life (Year)			3 years
Maximum [Member]
Property, Plant and Equipment, Useful Life (Year)			5 years

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Note 1 - Description of Business and Significant Accounting Policies - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Trade payables	$ 16,547	$ 11,461
Revenue payables	11,470	14,483
Prepayments from partners	513
Miscellaneous payables	323	404
Total Accounts payable	28,853	26,348
Accrued capital expenditures	3,808	6,175
Accrued lease operating expense	1,096	989
Accrued production and other taxes	1,031	430
Accrued transportation and gathering	1,884	2,258
Accrued performance bonus	2,731	4,642
Accrued interest	175	208
Accrued office lease	1,164	1,414
Accrued general and administrative expense and other	369	499
Total Accrued liabilities	$ 12,258	$ 16,615

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Note 2 - Revenue Recognition (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accrued Oil and Gas Revenue	$ 7,637	$ 11,345

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Note 2 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue from Contract with Customer	$ 21,466	$ 27,165	$ 64,926	$ 88,189
Operated [Member]
Revenue from Contract with Customer	18,922	24,044	56,163	74,624
Non-operated [Member]
Revenue from Contract with Customer	2,541	3,117	8,754	13,569
Oil Revenue [Member]
Revenue from Contract with Customer	1,296	2,477	4,547	8,207
Oil Revenue [Member] | Operated [Member]
Revenue from Contract with Customer	1,257	2,365	4,007	7,881
Oil Revenue [Member] | Non-operated [Member]
Revenue from Contract with Customer	39	112	540	326
Gas Revenue [Member]
Revenue from Contract with Customer	20,164	24,681	60,363	79,975
Gas Revenue [Member] | Operated [Member]
Revenue from Contract with Customer	17,665	21,679	52,156	66,743
Gas Revenue [Member] | Non-operated [Member]
Revenue from Contract with Customer	2,499	3,002	8,207	13,232
NGL Revenue [Member]
Revenue from Contract with Customer	3	3	7	11
NGL Revenue [Member] | Operated [Member]
Revenue from Contract with Customer
NGL Revenue [Member] | Non-operated [Member]
Revenue from Contract with Customer	3	3	7	11
Oil and Gas Service [Member]
Revenue from Contract with Customer	$ 21,463	$ 27,161	$ 64,917	$ 88,193

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Note 3 - Asset Retirement Obligations - Schedule of Asset Retirement Obligations (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Balance	$ 4,169
Liabilities incurred	138
Dispositions	(12)
Accretion expense	228
Balance	4,523
Current liability	0
Long term liability	$ 4,523	$ 4,169

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Note 4 - Debt (Details Textual) $ / shares in Units, $ in Thousands, shares in Millions							3 Months Ended			9 Months Ended
		Oct. 30, 2020 USD ($)	May 31, 2019 USD ($) $ / shares	May 29, 2019 USD ($)	May 14, 2019 USD ($)	Oct. 17, 2017	Sep. 30, 2020 USD ($)		Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)		Sep. 30, 2019 USD ($)	May 31, 2020 USD ($)	Dec. 31, 2019 USD ($)		Oct. 11, 2019 USD ($)	May 30, 2019 USD ($)	Oct. 12, 2016 USD ($) shares
Gain (Loss) on Extinguishment of Debt, Total												$ (1,846)
Debt Instrument, Face Amount							110,727			110,727				$ 105,869
Long-term Debt, Gross							109,529			109,529				104,435
Costless Warrants Associated with the Convertible Second Lien Notes [Member]
Warrants and Rights Outstanding, Term (Year)																		10 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) | shares																		2.5
New Convertible Second Lien Notes, New 2L Notes [Member]
Long-term Debt Gross Paid in Kind Interest							2,300			2,300				1,000
Debt Instrument, Unamortized Discount, Total			$ 1,400				1,000			1,000				1,100
Debt Issuance Costs, Net, Total							$ 200			$ 200			$ 300	300
Debt Instrument, Interest Rate, Stated Percentage			13.50%				13.50%			13.50%
Debt Instrument, Interest Rate During Period	[1]						18.60%		21.90%	20.10%		21.60%
Amortization of Debt Discount (Premium)							$ 100		$ 100	$ 400		$ 200
Paid-in-Kind Interest							500		$ 400	1,400		$ 500
Debt Instrument, Covenant Compliance Unrestricted Cash, Maximum			$ 10,000
Debt Instrument, Covenant, Compliance Total Proved Asset Coverage Ratio			1.5
Debt Instrument, Face Amount			$ 12,000				14,327	[2]		14,327	[2]			12,969	[2]
Long-term Debt, Gross			10,600				$ 13,129	[2]		$ 13,129	[2]			11,535	[2]		$ 12,000
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature			$ 1,400
Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares			$ 21.33
Convertible Second Lien Notes [Member]
Debt Instrument, Unamortized Discount, Total																		$ 11,000
Debt Instrument, Interest Rate, Stated Percentage							13.50%			13.50%								13.50%
Debt Instrument, Interest Rate During Period	[3]											24.10%
Amortization of Debt Discount (Premium)												$ 2,300
Paid-in-Kind Interest												$ 3,000
Gain (Loss) on Extinguishment of Debt, Total				$ (1,600)
Debt Instrument, Face Amount																		$ 40,000
Long-term Debt, Gross																$ 40,000		29,000
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature																		$ 11,000
Debt Conversion, Original Debt, Amount				$ 56,700
The 2017 Senior Credit Facility [Member]
Debt Instrument, Interest Rate During Period												7.20%
Line of Credit Facility, Maximum Borrowing Capacity					$ 250,000
Line of Credit Facility, Current Borrowing Capacity					75,000
Line of Credit Facility, Commitment Fee Percentage						0.50%
Gain (Loss) on Extinguishment of Debt, Total					(200)
The 2017 Senior Credit Facility [Member] | Minimum [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate						1.75%
The 2017 Senior Credit Facility [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate						2.75%
The 2017 Senior Credit Facility [Member] | Maximum [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate						2.75%
The 2017 Senior Credit Facility [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate						3.75%
The 2019 Senior Credit Facility [Member]
Debt Issuance Costs, Net, Total							$ 1,900			$ 1,900
Debt Instrument, Interest Rate During Period							4.60%		6.20%	4.90%		6.10%
Line of Credit Facility, Maximum Borrowing Capacity					$ 500,000
Line of Credit Facility, Current Borrowing Capacity							$ 120,000			$ 120,000
Line of Credit Facility, Interest Rate at Period End, Default Rate					2.00%
Line of Credit Facility, Interest Rate at Period End							3.93%			3.93%
Debt Instrument, Covenant, Current Ratio					1
Debt Instrument, Covenant Compliance Unrestricted Cash, Maximum					$ 10,000
Debt Instrument, Covenant, Compliance Total Proved Asset Coverage Ratio					1.5
Long-term Line of Credit, Total							$ 96,400			$ 96,400
Debt Instrument, Covenant Compliance Debt to EBITDAX										4
Debt Instrument, Face Amount	[4]						96,400			$ 96,400				92,900
Long-term Debt, Gross	[4]						$ 96,400			$ 96,400				$ 92,900
The 2019 Senior Credit Facility [Member] | Subsequent Event [Member]
Debt Instrument, Covenant Compliance Debt to EBITDAX		3.5
Debt Instrument, Anti-cash Hoarding Covenant, Balance Sheet Cash Threshold Amount for Prepayments on Debt Outstanding		$ 10,000
The 2019 Senior Credit Facility [Member] | Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity					$ 10,000
The 2019 Senior Credit Facility [Member] | Minimum [Member]
Line of Credit Facility, Commitment Fee Percentage					0.375%
The 2019 Senior Credit Facility [Member] | Minimum [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate					1.50%
The 2019 Senior Credit Facility [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate					2.50%
The 2019 Senior Credit Facility [Member] | Maximum [Member]
Line of Credit Facility, Commitment Fee Percentage					0.50%
The 2019 Senior Credit Facility [Member] | Maximum [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate					2.50%
The 2019 Senior Credit Facility [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate					3.50%

[1] The New 2L Notes have a coupon interest rate of 13.50%; however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 18.6% and 20.1%, respectively, for the three and nine months ended September 30, 2020 and 21.9% and 21.6%, respectively, for the three and nine months ended September 30, 2019. Interest expense for the three months ended September 30, 2020 included $0.1 million of debt discount amortization and $0.5 million of accrued interest to be paid in-kind, and interest expense for the nine months ended September 30, 2020 included $0.4 million of debt discount amortization and $1.4 million of accrued interest to be paid in-kind. Interest expense for the three and nine months ended September 30, 2019 included $0.1 million and $0.2 million of debt discount amortization, respectively, and $0.4 million and $0.5 million of accrued interest to be paid in-kind, respectively.

[2] The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal includes $2.3 million and $1.0 million of paid in-kind interest as of September 30, 2020 and December 31, 2019, respectively. The carrying value includes $1.0 million and $1.1 million of unamortized debt discount and $0.2 million and $0.3 million of unamortized issuance cost as of September 30, 2020 and December 31, 2019, respectively.

[3] The Convertible Second Lien Notes had a coupon interest rate of 13.50%; however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 24.1% for the nine months ended September 30, 2019. Interest expense for the nine months ended September 30, 2019 included $2.3 million of debt discount amortization and $3.0 million of paid in-kind interest.

[4] The carrying amount for the 2019 Senior Credit Facility represents fair value as it was fully secured.

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Note 4 - Debt - Components of Debt (Details) - USD ($) $ in Thousands		Sep. 30, 2020		Dec. 31, 2019		May 31, 2019	May 30, 2019
Principal		$ 110,727		$ 105,869
Carrying amount		109,529		104,435
The 2019 Senior Credit Facility [Member]
Principal	[1]	96,400		92,900
Carrying amount	[1]	96,400		92,900
New Convertible Second Lien Notes, New 2L Notes [Member]
Principal		14,327	[2]	12,969	[2]	$ 12,000
Carrying amount		$ 13,129	[2]	$ 11,535	[2]	$ 10,600	$ 12,000

[1] The carrying amount for the 2019 Senior Credit Facility represents fair value as it was fully secured.

[2] The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal includes $2.3 million and $1.0 million of paid in-kind interest as of September 30, 2020 and December 31, 2019, respectively. The carrying value includes $1.0 million and $1.1 million of unamortized debt discount and $0.2 million and $0.3 million of unamortized issuance cost as of September 30, 2020 and December 31, 2019, respectively.

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Note 4 - Debt - Components of Debt, Interest Expense and Effective Interest Rate (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Interest Expense		$ 1,733	$ 1,981	$ 5,410	$ 9,036
The 2017 Senior Credit Facility [Member]
Interest Expense					$ 872
Effective Interest Rate					7.20%
The 2019 Senior Credit Facility [Member]
Interest Expense		$ 1,129	$ 1,377	$ 3,534	$ 2,072
Effective Interest Rate		4.60%	6.20%	4.90%	6.10%
Convertible Second Lien Notes [Member]
Interest Expense	[1]				$ 5,304
Effective Interest Rate	[1]				24.10%
New Convertible Second Lien Notes, New 2L Notes [Member]
Interest Expense	[2]	$ 604	$ 604	$ 1,876	$ 788
Effective Interest Rate	[2]	18.60%	21.90%	20.10%	21.60%

[1] The Convertible Second Lien Notes had a coupon interest rate of 13.50%; however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 24.1% for the nine months ended September 30, 2019. Interest expense for the nine months ended September 30, 2019 included $2.3 million of debt discount amortization and $3.0 million of paid in-kind interest.

[2] The New 2L Notes have a coupon interest rate of 13.50%; however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 18.6% and 20.1%, respectively, for the three and nine months ended September 30, 2020 and 21.9% and 21.6%, respectively, for the three and nine months ended September 30, 2019. Interest expense for the three months ended September 30, 2020 included $0.1 million of debt discount amortization and $0.5 million of accrued interest to be paid in-kind, and interest expense for the nine months ended September 30, 2020 included $0.4 million of debt discount amortization and $1.4 million of accrued interest to be paid in-kind. Interest expense for the three and nine months ended September 30, 2019 included $0.1 million and $0.2 million of debt discount amortization, respectively, and $0.4 million and $0.5 million of accrued interest to be paid in-kind, respectively.

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Note 5 - Equity (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value	$ 100,000	$ 100,000	$ 1,000,000	$ 100,000
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation			$ 300,000
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)			39,700
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.01		$ 0.01		$ 0.01
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period (in shares)		12,000		12,000
Treasury Stock, Value, Acquired, Cost Method		$ 100,000		$ 500,000
Treasury Stock, Shares, Acquired (in shares)		352		47,133
Costless Warrants Associated with Convertible Second Lien Notes [Member]
Class of Warrant or Right, Exercised During Period (in shares)		0		150,000
Warrants and Rights Outstanding, Term (Year)		10 years		10 years
Common Stock, Par or Stated Value Per Share (in dollars per share)		$ 1		$ 1
Stock Issued During Period, Shares, New Issues (in shares)				150,000
Class of Warrant or Right, Outstanding (in shares)		0		0
Common Stock [Member]
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture, Total	$ 6,000		$ 136,000

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Note 6 - Net Income (Loss) Per Common Share (Details Textual)	9 Months Ended
	Sep. 30, 2020
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Performance Award of Initial Units Granted, Percent	0.00%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Performance Award of Initial Units Granted, Percent	250.00%

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Note 6 - Net Income (Loss) Per Common Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net income (loss) applicable to common stock		$ (22,690)	$ 1,988	$ (35,312)	$ 14,215
Weighted average shares of common stock outstanding - basic (in shares)		12,618,000	12,257,000	12,564,000	12,208,000
Net income (loss) per common share - basic (in dollars per share)		$ (1.80)	$ 0.16	$ (2.81)	$ 1.16
Interest, discount and amortization on New 2L Notes					$ 565
Adjusted net income (loss) per common share		$ (22,690)	$ 1,988	$ (35,312)	$ 14,780
Common shares issuable upon conversion of the New 2L Notes (in shares)					588,000
Common shares issuable on assumed conversion of restricted stock ** (in shares)	[1]		498,000		416,000
Weighted average shares of common stock outstanding - diluted (in shares)		12,618,000	14,040,000	12,564,000	14,497,000
Net income (loss) per common share - diluted (in dollars per share)	[2],[3],[4]	$ (1.80)	$ 0.14	$ (2.81)	$ 1.02
Convertible Debt Securities [Member]
(1) Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019. (in shares)		672	588	672
Warrant [Member]
(1) Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019. (in shares)		1,329		1,329
Restricted Stock [Member]
(1) Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019. (in shares)	[1]	420		231
Warrants Associated with Unsecured Claim Holders [Member]
Common shares issuable upon conversion of warrants (in shares)			1,285,000		1,285,000

[1] ** Common shares issuable on assumed conversion of share-based compensation assumes a payout of the Company's performance share awards at 100% of the initial units granted (or a ratio of one unit to one common share). The range of common stock shares which may be earned ranges from zero to 250% of the initial performance units granted.

[2] Common shares issuable upon conversion of the New 2L Notes not included in the computation of diluted net income (loss) per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.

[3] Common shares issuable upon conversion of the restricted stock not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.

[4] Common shares issuable upon conversion of the unsecured claims warrants not included in the computation of diluted net loss per common share since their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2020.

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Note 7 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Dec. 31, 2019
Income Tax Expense (Benefit), Total	$ 0	$ 0	$ 0	$ 0
Deferred Tax Assets, Valuation Allowance, Total						$ 74,200
Proceeds From Deferred Tax Assets					$ 400
Unrecognized Tax Benefits, Ending Balance	$ 0		$ 0

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Note 8 - Commodity Derivative Activities (Details Textual) $ in Millions	Sep. 30, 2020 USD ($)
Commodity Contract [Member] | RBC Capital Markets [Member]
Loss Contingency, Estimate of Possible Loss	$ 0.6

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Note 8 - Commodity Derivative Activities - Summary of Gains and Losses on Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Gain (loss) on commodity derivatives not designated as hedges	$ (11,079)	$ 3,752	$ (3,629)	$ 15,397
Commodity Contract [Member]
Gain on commodity derivatives not designated as hedges, settled	1,597	5,922	14,905	6,135
Gain (loss) on commodity derivatives not designated as hedges, not settled	(12,676)	(2,170)	(18,534)	9,262
Gain (loss) on commodity derivatives not designated as hedges	$ (11,079)	$ 3,752	$ (3,629)	$ 15,397

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Note 8 - Commodity Derivative Activities - Outstanding Commodity (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020 USD ($) MMBTU $ / item $ / MMBTU	Sep. 30, 2020 USD ($) MMBTU $ / item $ / MMBTU bbl
Fair value | $	$ (12,753)	$ (12,753)
Not Designated as Hedging Instrument [Member] | Natural Gas Swap with Truist Bank, RBC Capital Markets and Citizens Commercial Banking Contracted April 1, 2021 and Terminating September 30, 2021 [Member]
Weighted Average Fixed Price (in USD per Per Share) | $ / MMBTU	2.73	2.73
Average Daily Volume (Millions of British Thermal Unit) | MMBTU	20,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit) | $ / MMBTU	2.73	2.73
Not Designated as Hedging Instrument [Member] | The 2020 Oil Swaps [Member]
Average daily volume, oil swaps (Barrel of Oil) | bbl		200
Total volume, oil swaps (Barrel of Oil) | bbl		18,400
Weighted Average Fixed Price (in USD per Per Share)	57.51	57.51
Fair value | $	$ 310	$ 310
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	57.51	57.51
Not Designated as Hedging Instrument [Member] | Natural Gas Collar with Truist Bank, RBC Capital Markets and Citizens Commercial Banking Contracted April 1, 2021 and Terminating March 31, 2022 [Member]
Average Daily Volume (Millions of British Thermal Unit) | MMBTU	30,000
Not Designated as Hedging Instrument [Member] | Natural Gas Collar with Truist Bank, RBC Capital Markets and Citizens Commercial Banking Contracted April 1, 2021 and Terminating March 31, 2022 [Member] | Minimum [Member]
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit) | $ / MMBTU	2.5	2.5
Not Designated as Hedging Instrument [Member] | Natural Gas Collar with Truist Bank, RBC Capital Markets and Citizens Commercial Banking Contracted April 1, 2021 and Terminating March 31, 2022 [Member] | Maximum [Member]
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit) | $ / MMBTU	3.5	3.5
Not Designated as Hedging Instrument [Member] | The 2021 Oil Swaps [Member]
Average daily volume, oil swaps (Barrel of Oil) | bbl		200
Total volume, oil swaps (Barrel of Oil) | bbl		18,000
Weighted Average Fixed Price (in USD per Per Share)	56.58	56.58
Fair value | $	$ 269	$ 269
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	56.58	56.58
Not Designated as Hedging Instrument [Member] | Total Crude Oil [Member]
Fair value | $	$ 579	$ 579
Not Designated as Hedging Instrument [Member] | The 2020 Natural Gas Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.59	2.59
Fair value | $	$ 58	$ 58
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		45,000
Total Volume (Millions of British Thermal Unit) | MMBTU		4,109,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.59	2.59
Not Designated as Hedging Instrument [Member] | The 2021 Natural Gas Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.56	2.56
Fair value | $	$ (7,089)	$ (7,089)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		63,167
Total Volume (Millions of British Thermal Unit) | MMBTU		23,089,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.56	2.56
Not Designated as Hedging Instrument [Member] | The 2022 Natural Gas Swaps [Member]
Fair value | $	$ (2,735)	$ (2,735)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		70,000
Total Volume (Millions of British Thermal Unit) | MMBTU		6,300,000
Not Designated as Hedging Instrument [Member] | The 2022 Natural Gas Swaps [Member] | Maximum [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.53	2.53
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.53	2.53
Not Designated as Hedging Instrument [Member] | The 2020 Natural Gas Collar [Member]
Fair value | $	$ (195)	$ (195)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		25,000
Total Volume (Millions of British Thermal Unit) | MMBTU		2,300,000
Not Designated as Hedging Instrument [Member] | The 2020 Natural Gas Collar [Member] | Minimum [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.4	2.4
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.4	2.4
Not Designated as Hedging Instrument [Member] | The 2020 Natural Gas Collar [Member] | Maximum [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.6262	2.6262
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.6262	2.6262
Not Designated as Hedging Instrument [Member] | The 2021 Natural Gas Collar [Member]
Fair value | $	$ (966)	$ (966)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		29,250
Total Volume (Millions of British Thermal Unit) | MMBTU		10,680,000
Not Designated as Hedging Instrument [Member] | The 2021 Natural Gas Collar [Member] | Minimum [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.4	2.4
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.4	2.4
Not Designated as Hedging Instrument [Member] | The 2021 Natural Gas Collar [Member] | Maximum [Member]
Weighted Average Fixed Price (in USD per Per Share)	3.505	3.505
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	3.505	3.505
Not Designated as Hedging Instrument [Member] | The 2022 Natural Gas Collars [Member]
Fair value | $	$ (97)	$ (97)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		30,000
Total Volume (Millions of British Thermal Unit) | MMBTU		2,700,000
Not Designated as Hedging Instrument [Member] | The 2022 Natural Gas Collars [Member] | Minimum [Member]
Weighted Average Fixed Price (in USD per Per Share)	2.5	2.5
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	2.5	2.5
Not Designated as Hedging Instrument [Member] | The 2022 Natural Gas Collars [Member] | Maximum [Member]
Weighted Average Fixed Price (in USD per Per Share)	3.505	3.505
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	3.505	3.505
Not Designated as Hedging Instrument [Member] | The 2020 Natural Gas Basis Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	0.209	0.209
Fair value | $	$ 252	$ 252
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		50,000
Total Volume (Millions of British Thermal Unit) | MMBTU		4,600,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	0.209	0.209
Not Designated as Hedging Instrument [Member] | The 2021 Natural Gas Basis Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	0.209	0.209
Fair value | $	$ (384)	$ (384)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		50,000
Total Volume (Millions of British Thermal Unit) | MMBTU		18,250,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	0.209	0.209
Not Designated as Hedging Instrument [Member] | The 2022 Natural Gas Basis Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	0.209	0.209
Fair value | $	$ (517)	$ (517)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		50,000
Total Volume (Millions of British Thermal Unit) | MMBTU		18,250,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	0.209	0.209
Not Designated as Hedging Instrument [Member] | The 2023 Natural Gas Basis Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	0.209	0.209
Fair value | $	$ (642)	$ (642)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		50,000
Total Volume (Millions of British Thermal Unit) | MMBTU		18,250,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	0.209	0.209
Not Designated as Hedging Instrument [Member] | The 2024 Natural Gas Basis Swaps [Member]
Weighted Average Fixed Price (in USD per Per Share)	0.209	0.209
Fair value | $	$ (1,017)	$ (1,017)
Average Daily Volume (Millions of British Thermal Unit) | MMBTU		50,000
Total Volume (Millions of British Thermal Unit) | MMBTU		18,300,000
Weighted Average Fixed Price (in USD per Millions of British Thermal Unit)	0.209	0.209
Not Designated as Hedging Instrument [Member] | Total Natural Gas [Member]
Fair value | $	$ (13,332)	$ (13,332)

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Note 8 - Commodity Derivative Activities - Reconciliation of Gross Amounts to Amounts As Presented on Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair value of oil and natural gas derivatives - Current Assets	$ 579	$ 8,537
Fair value of oil and natural gas derivatives - Current Liabilities	(6,181)
Fair value of oil and natural gas derivatives - Non-current Liabilities	(7,151)	$ (2,786)
Total	(12,753)
Not Designated as Hedging Instrument [Member] | Commodity Contract [Member]
Fair value of oil and natural gas derivatives - Current Assets	579
Fair value of oil and natural gas derivatives - Current Liabilities	(6,181)
Fair value of oil and natural gas derivatives - Non-current Liabilities	(7,151)
Total	(12,753)
Not Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of oil and natural gas derivatives - Current Assets
Fair value of oil and natural gas derivatives - Current Liabilities
Fair value of oil and natural gas derivatives - Non-current Liabilities
Total
Not Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of oil and natural gas derivatives - Current Assets	579
Fair value of oil and natural gas derivatives - Current Liabilities	(6,181)
Fair value of oil and natural gas derivatives - Non-current Liabilities	(7,151)
Total	(12,753)
Not Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Fair Value, Inputs, Level 3 [Member]
Fair value of oil and natural gas derivatives - Current Assets
Fair value of oil and natural gas derivatives - Current Liabilities
Fair value of oil and natural gas derivatives - Non-current Liabilities
Total

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Note 8 - Commodity Derivative Activities - Derivative Table, Fair Value with Netting (Details) - Not Designated as Hedging Instrument [Member] - Commodity Contract [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Derivative Asset, Gross Amount	$ (12,753)	$ 5,782
Derivative Asset, Amount Offset
Derivative Asset, As Presented	(12,753)	5,782
Current Assets [Member]
Derivative Asset, Gross Amount	3,403	9,401
Derivative Asset, Amount Offset	(2,824)	(864)
Derivative Asset, As Presented	579	8,537
Non-current Assets [Member]
Derivative Asset, Gross Amount	1,356	847
Derivative Asset, Amount Offset	(1,356)	(816)
Derivative Asset, As Presented		31
Current Liabilities [Member]
Derivative Asset, Gross Amount	(9,005)	(864)
Derivative Asset, Amount Offset	2,824	864
Derivative Asset, As Presented	(6,181)
Non-current Liabilities [Member]
Derivative Asset, Gross Amount	(8,507)	(3,602)
Derivative Asset, Amount Offset	1,356	816
Derivative Asset, As Presented	$ (7,151)	$ (2,786)

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Note 10 - Leases (Details Textual) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Operating Lease, Weighted Average Remaining Lease Term (Year)	219 days		219 days
Operating Lease, Weighted Average Discount Rate, Percent	8.00%		8.00%
Operating Lease, Payments	$ 0.4	$ 0.4	$ 1.2	$ 1.2

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Note 10 - Leases - Lease Cost and Information (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Lease, Cost, Total		$ 382	$ 418	$ 1,175	$ 1,269
General and Administrative Expense [Member]
Building lease cost		385	368	1,155	1,124
Variable lease cost (1)	[1]	$ (3)	$ 50	$ 20	$ 145

[1] Includes building operating expenses.

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Note 10 - Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Lease asset, net	$ 731	$ 1,670
Total lease liabilities	1,164
Furniture, Fixtures and Equipment and Other Capital Assets [Member]
Lease asset, gross	2,922	2,922
Accumulated Depletion, Depreciation, and Amortization [Member]
Accumulated depreciation	2,191	1,252
Accounts Payable and Accrued Liabilities [Member]
Current lease liability	1,164	1,414
Other Noncurrent Liabilities [Member]
Non-current lease liability		800
Furniture, Fixtures and Equipment and Other Capital Assets Accrued Liabilities and Other Noncurrent Liabilities [Member]
Total lease liabilities	$ 1,164	$ 2,214

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Note 10 - Leases - Lease Liability Maturities (Details) $ in Thousands	Sep. 30, 2020 USD ($)
2020	$ 385
2021	813
2022
2023
2024
Thereafter
Total lease payments	1,198
Less imputed interest	34
Present value of lease liabilities	$ 1,164