UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
| FORM |
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number:
| GOODRICH PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code): (
Securities registered pursuant to Section 12(b) of the Act:
| |
| Title of each class | Trading Symbol | Name of each exchange on which registered |
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.
Indicate by check mark whether the registrant has submitted electronically 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).
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 | ☐ |
|
|
|
|
|
|
| | ☐ |
| 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
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
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1—Financial Statements
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, trade and other, net of allowance | ||||||||
| Accrued oil and natural gas revenue | ||||||||
| Fair value of oil and natural gas derivatives | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other | ||||||||
| Total current assets | ||||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Unevaluated properties | ||||||||
| Oil and natural gas properties (full cost method) | ||||||||
| Furniture, fixtures and equipment and other capital assets | ||||||||
| Less: Accumulated depletion, depreciation and amortization | ( | ) | ( | ) | ||||
| Net property and equipment | ||||||||
| Other | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | $ | ||||||
| Fair value of oil and natural gas derivatives | ||||||||
| Accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Long term debt, net | ||||||||
| Accrued abandonment cost | ||||||||
| Fair value of oil and natural gas derivatives | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note 9) | ||||||||
| STOCKHOLDERS’ (DEFICIT) EQUITY: | ||||||||
| Preferred stock: shares $ par value authorized, and issued and outstanding | ||||||||
| Common stock: $ par value, shares authorized, and shares issued as of September 30, 2021 and shares issued and outstanding as of December 31, 2020, respectively | ||||||||
| Treasury stock ( and shares, respectively) | ( | ) | ||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ (deficit) equity | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
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, |
|||||||||||||
| 2021 |
2020 |
2021 |
2020 |
|||||||||||||
| REVENUES: |
||||||||||||||||
| Oil and natural gas revenues |
$ | $ | $ | $ | ||||||||||||
| Other |
||||||||||||||||
| OPERATING EXPENSES: |
||||||||||||||||
| Lease operating expense |
||||||||||||||||
| Production and other taxes |
||||||||||||||||
| Transportation and processing |
||||||||||||||||
| Depreciation, depletion and amortization |
||||||||||||||||
| General and administrative |
||||||||||||||||
| Impairment of oil and natural gas properties |
||||||||||||||||
| Other |
( |
) | ( |
) | ( |
) | ||||||||||
| Operating income (loss) |
( |
) | ( |
) | ||||||||||||
| OTHER INCOME (EXPENSE): |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest income and other expense |
||||||||||||||||
| Loss on commodity derivatives not designated as hedges |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss on early extinguishment of debt |
( |
) | ||||||||||||||
| ( |
) | ( |
) | ( |
) | ( |
) | |||||||||
| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense |
||||||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| PER COMMON SHARE |
||||||||||||||||
| Net loss per common share - basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per common share - diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average shares of common stock outstanding - basic |
||||||||||||||||
| Weighted average shares of common stock outstanding - diluted |
||||||||||||||||
See accompanying notes to consolidated financial statements.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
| 2021 |
2020 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depletion, depreciation and amortization |
||||||||
| Impairment of oil and natural gas properties |
||||||||
| Right of use asset depreciation |
||||||||
| Loss on commodity derivatives not designated as hedges |
||||||||
| Net cash received (paid) for settlement of derivative instruments |
( |
) | ||||||
| Share-based compensation (non-cash) |
||||||||
| Loss on early extinguishment of debt |
||||||||
| Amortization of finance cost, debt discount, paid in-kind interest and accretion |
||||||||
| Change in assets and liabilities: |
||||||||
| Accounts receivable, trade and other, net of allowance |
( |
) | ( |
) | ||||
| Accrued oil and natural gas revenue |
( |
) | ||||||
| Prepaid expenses and other |
||||||||
| Accounts payable |
||||||||
| Accrued liabilities |
( |
) | ||||||
| Net cash provided by operating activities |
||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Capital expenditures |
( |
) | ( |
) | ||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Principal payments of bank borrowings |
( |
) | ( |
) | ||||
| Proceeds from bank borrowings |
||||||||
| Proceeds from 2023 Second Lien Notes |
||||||||
| Debt issuance costs |
( |
) | ||||||
| Purchase of treasury stock |
( |
) | ( |
) | ||||
| Net cash provided by financing activities |
||||||||
| Increase (decrease) in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents, beginning of period |
||||||||
| Cash and cash equivalents, end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid for interest |
$ | $ | ||||||
| Increase (decrease) in non-cash capital expenditures |
$ | $ | ( |
) | ||||
See accompanying notes to consolidated financial statements.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(In thousands)
(Unaudited)
| Preferred Stock |
Common Stock |
Additional Paid-in |
Treasury Stock |
Accumulated Earnings |
Total Stockholders’ |
|||||||||||||||||||||||||||||||
| Shares |
Value |
Shares |
Value |
Capital |
Shares |
Value |
(Deficit) |
(Deficit) Equity |
||||||||||||||||||||||||||||
| Balance at December 31, 2019 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Net income |
- | - | - | |||||||||||||||||||||||||||||||||
| Share-based compensation |
||||||||||||||||||||||||||||||||||||
| Treasury stock activity | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Balance at March 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Share-based compensation |
- | 130 | - | |||||||||||||||||||||||||||||||||
| Discount from 2021/2022 Second Lien Notes Modification (See Note 4) |
- | - | - | |||||||||||||||||||||||||||||||||
| Treasury stock activity | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Share-based compensation |
( |
) | ||||||||||||||||||||||||||||||||||
| Treasury stock activity | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance at September 30, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||
| Balance at December 31, 2020 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
| Net income |
- | - | - | |||||||||||||||||||||||||||||||||
| Share-based compensation |
( |
) | ||||||||||||||||||||||||||||||||||
| UCC warrant exchange |
- | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Discount from 2023 Second Lien Notes (See Note 4) |
- | - | - | |||||||||||||||||||||||||||||||||
| Treasury stock activity | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance at March 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Share-based compensation |
- | - | - | |||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Share-based compensation |
- | 6 | - | |||||||||||||||||||||||||||||||||
| Treasury stock activity |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| UCC warrant exchange |
- | ( |
) | - | - | - | ||||||||||||||||||||||||||||||
| Balance at September 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
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,” the “Company,” or the “Registrant”) 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 (“the SEC”) 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, 2020. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year or for any interim period.
During the first nine months of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded, although the impact of the COVID-19 pandemic and related economic, business and market disruptions remain uncertain.
The primary impact of COVID-19 experienced by the Company was a severe decline in the demand and price of crude oil. Because we predominately produce natural gas and natural gas demand and prices were not 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 COVID-19 pandemic 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 2021 and into 2022.
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, 2021 and December 31, 2020:
| (In thousands) | September 30, 2021 | December 31, 2020 | ||||||
| Trade payables | $ | $ | ||||||
| Revenue payables | ||||||||
| Prepayments from partners | ||||||||
| Miscellaneous payables | ||||||||
| Total Accounts payable | $ | $ | ||||||
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Accrued Liabilities—Accrued liabilities consisted of the following amounts as of September 30, 2021 and December 31, 2020:
| (In thousands) | September 30, 2021 | December 31, 2020 | ||||||
| Accrued capital expenditures | $ | $ | ||||||
| Accrued lease operating expense | ||||||||
| Accrued production and other taxes | ||||||||
| Accrued transportation and gathering | ||||||||
| Accrued performance bonus | ||||||||
| Accrued interest | ||||||||
| Accrued office lease | ||||||||
| Accrued general and administrative expense and other | ||||||||
| Total Accrued liabilities | $ | $ | ||||||
Inventory –Inventory consists of equipment, 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 principle 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 development. We believe application of the Full Cost Method better reflects the true economics of exploring for and developing our oil and natural gas reserves.
Under the Full Cost Method, we capitalize all costs associated with acquisitions, exploration, development and estimated abandonment costs into a single full cost pool. 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, 2021 and 2020, we transferred less than $
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 thousand cubic feet equivalent of natural gas (“Mcfe”) as the denominator and the net book value of evaluated oil and natural gas asset together with the estimated future development cost of the proved reserves as the numerator. The rate calculated per Mcfe is applied against the period's production also converted to Mcfe to arrive at the period's 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 to 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 discounted at 10%, excluding cash flows related to estimated abandonment costs already recorded, net of deferred taxes (the “Ceiling”), 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 net of deferred taxes exceed the Ceiling, we are required to write-down the value of our oil and natural gas properties to the value of the Ceiling. Estimated future net cash flows from proved reserves are calculated based on a trailing 12-month average pricing assumption.
The Full Cost Ceiling Test for the three months ended September 30, 2021 and 2020 resulted in a and $
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, second lien notes 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 and the equity component determined as a result of fair valuing debt instruments that include a conversion feature. |
As of September 30, 2021 and December 31, 2020, 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. As of September 30, 2021and December 31, 2020, 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 gain or losses on our derivative contracts are the result of cash settlements. We have not designated any of our derivative contracts as hedges for accounting purposes; accordingly, changes in fair value are reflected in earnings. See Note 8.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes—We account for income taxes during interim periods based on annual projections of our effective tax rate.
We account for income taxes on an annual basis, 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 net 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 net 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 or exercise of other 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 on a straight-line basis over the requisite service period.
Guarantee—As of September 30, 2021, our Subsidiary was the Subsidiary Guarantor of our 2023 Second Lien Notes (as defined below). Goodrich has no independent assets or operations, the guarantee is full and unconditional and Goodrich has no subsidiaries other than the Subsidiary.
Debt Issuance Cost—The Company records debt issuance costs associated with its 2023 Second Lien Notes (and previously with its 2021/2022 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 as this method is not materially different from the effective interest method. Debt issuance costs associated with our revolving credit facility debt are recorded in other assets in our Consolidated Balance Sheets, which are amortized straight-line over the life of such debt.
New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 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 ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by ASU 2020-04 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. Currently, the Company's only existing contract with potential impact from reference rate reform is the 2019 Senior Credit Facility, which utilizes LIBOR as a benchmark rate. In October 2020, the Third Amendment of the 2019 Senior Credit Facility included provisions for alternate benchmark rates should LIBOR be discontinued due to reference rate reform. We will continue to evaluate 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 (“ASU 2020-06”). The amendments in ASU 2020-06 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 ASU 2020-06. 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 ASU 2020-06 affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in ASU 2020-06 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 FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB has also 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.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2—Revenue Recognition
In accordance with Accounting Standards Codification (“ASC”) 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, 2021 and December 31, 2020, receivables from contracts with customers were $
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, 2021 and 2020:
| Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||
| (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 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Non-operated | ||||||||||||||||||||||||||||||||
| Total oil and natural gas revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Non-operated | ||||||||||||||||||||||||||||||||
| Total oil and natural gas revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
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 obligations for the nine months ended September 30, 2021 is as follows (in thousands):
| Nine Months Ended September 30, 2021 |
||||
| Beginning balance at December 31, 2020 |
$ | |||
| Liabilities incurred |
||||
| Accretion expense |
||||
| Ending balance at September 30, 2021 |
$ | |||
| Current liability |
||||
| Long term liability |
$ | |||
NOTE 4—Debt
Debt consisted of the following balances as of September 30, 2021 and December 31, 2020 (in thousands):
| September 30, 2021 | December 31, 2020 | |||||||||||||||
| Principal | Carrying Amount | Principal | Carrying Amount | |||||||||||||
| 2019 Senior Credit Facility (1) | $ | $ | $ | $ | ||||||||||||
| 2021/2022 Second Lien Notes (2) | ||||||||||||||||
| 2023 Second Lien Notes (3) | ||||||||||||||||
| Total debt | $ | $ | $ | $ | ||||||||||||
(1) The carrying amount for the 2019 Senior Credit Facility represents fair value as its variable interest rate approximates market rates.
(2) The debt discount was being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal included $
(3) The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2023. The principal includes $
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, 2021 and 2020 (amounts in thousands, except effective interest rates):
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||
| Interest Expense | Effective Interest Rate | Interest Expense | Effective Interest Rate | Interest Expense | Effective Interest Rate | Interest Expense | Effective Interest Rate | |||||||||||||||||||||||||
| 2019 Senior Credit Facility | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| 2021/2022 Second Lien Notes (1) | % | % | % | % | ||||||||||||||||||||||||||||
| 2023 Second Lien Notes (2) | % | % | % | % | ||||||||||||||||||||||||||||
| Total interest expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||
(1) The 2021/2022 Second Lien Notes had a coupon interest rate of however, the discount recorded due to the convertibility of the notes increased the effective interest rate to
(2) The 2023 Second Lien Notes have a coupon interest rate of however, the discount recorded due to the convertibility of the notes increased the effective interest rate to
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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, 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 the earlier of (a) May 14, 2024 or (b) December 2, 2022, if the 2023 Second Lien Notes (as defined below) have not been voluntarily redeemed, repurchased, refinanced or otherwise retired by December 2, 2022, which is the date that is 180 days prior to the May 31, 2023 “Maturity Date” of the 2023 Second Lien Notes. The 2019 Senior Credit Facility provides for a maximum credit amount of $
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
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
As of September 30, 2021, the Company had a borrowing base of $
As of September 30, 2021, the Company was in compliance with all covenants within the 2019 Senior Credit Facility.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Convertible Second Lien Notes
In October 2016, the Company issued $
The 2019 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 2019 Second Lien Notes bore interest at the rate of
Upon issuance of the 2019 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 $
On May 14, 2019, the Company and the Subsidiary entered into a purchase agreement with certain purchasers pursuant to which the Company issued to such purchasers $
Upon issuance of the 2021/2022 Second Lien 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 $
On March 9, 2021, the Company and the Subsidiary entered into a note purchase and exchange agreement (“the Note Purchase and Exchange Agreement”) with certain purchasers (each such purchaser, together with its successors and assigns, a “2023 Second Lien Notes Purchaser”) pursuant to which the Company issued to the 2023 Second Lien Notes Purchasers (A) $
The 2023 Second Lien Notes, as set forth in the indenture governing the 2023 Second Lien Notes (the “2023 Second Lien Notes Indenture”), are scheduled to mature on May 31, 2023. The 2023 Second Lien 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 2023 Second Lien Notes by increasing the principal amount of the outstanding 2023 Second Lien Notes.
The 2023 Second Lien 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 2023 Second Lien Notes Indenture also contains a financial covenant that 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 2023 Second Lien Notes Indenture) to Total Secured Debt (net of any Unrestricted Cash not to exceed $
The 2023 Second Lien Notes are convertible into the Company’s common stock at the conversion rate, which is the sum of the outstanding principal amount of 2023 Second Lien Notes to be converted, including any accrued and unpaid interest, divided by the conversion price, which shall initially be $
Upon issuance of the 2023 Second Lien Notes on March 9, 2021, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, we recorded a debt discount of $
As of September 30, 2021, $
As of September 30, 2021, the Company was in compliance with all covenants with respect to the 2023 Second Lien Notes Indenture.
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5—Equity
During the three and nine months ended September 30, 2021, the Company had vestings of its share-based compensation units representing a total fair value of less than $
During the three and nine months ended September 30, 2021, certain holders of costless unsecured claim (“UCC”) warrants exercised such warrants into approximately
In connection with the issuance of the 2023 Second Lien Notes, we recorded an equity component of $
NOTE 6—Net Income (Loss) Per Common Share
Net loss applicable to common stock was used as the numerator in computing basic and diluted net loss per common share for the three and nine months ended September 30, 2021 and 2020. 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 loss per common share:
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||
| Basic net loss per common share: | ||||||||||||||||
| Net loss applicable to common stock | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares of common stock outstanding | ||||||||||||||||
| Basic net loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted net loss per common share: | ||||||||||||||||
| Net loss applicable to common stock | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted weighted average shares of common stock outstanding | ||||||||||||||||
| Diluted net loss per common share (1) (2) (3) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (1) Common shares issuable upon conversion of the 2023 Second Lien Notes and 2021/2022 Second Lien Notes, respectively, 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, 2021 and September 30, 2020. | ||||||||||||||||
| (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, 2021 and September 30, 2020. | ||||||||||||||||
| (3) Common shares issuable upon vesting 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, 2021 and September 30, 2020. ** | ||||||||||||||||
** Common shares issuable on assumed vesting 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 to
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7—Income Taxes
We recorded
As of September 30, 2021, we have no unrecognized tax benefits. There were
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, 2021 and 2020:
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||
| Oil and Natural Gas Derivatives (in thousands) | ||||||||||||||||
| Gain (loss) on commodity derivatives not designated as hedges, settled | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Loss on commodity derivatives not designated as hedges, not settled | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total gain (loss) on commodity derivatives not designated as hedges | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
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 loss of $
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2021, 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, 2021 (In thousands) | |||||||||||
| Natural Gas swaps (MMBtu) | |||||||||||||||
| 2021 |
| $ | ( | ) | |||||||||||
| 2022 (through September 30, 2022) |
| ( | ) | ||||||||||||
| Natural Gas collars (MMBtu) | |||||||||||||||
| 2021 | 0 -50 | ( | ) | ||||||||||||
| 2022 | 8 -40 | ( | ) | ||||||||||||
| 2023 (through March 31, 2023) | 5 -51 | ( | ) | ||||||||||||
| Natural Gas basis swaps (MMBtu) | |||||||||||||||
| 2021 |
| ||||||||||||||
| 2022 |
| ||||||||||||||
| 2023 |
| ( | ) | ||||||||||||
| 2024 |
| ( | ) | ||||||||||||
| Total natural gas | $ | ( | ) | ||||||||||||
| Contract Type | Daily Volume | Weighted Average Fixed Price | Contract Start Date | Contract Termination | ||||
| Natural gas swap (MMBtu) | $ | August 1, 2021 | December 31, 2021 | |||||
| Natural gas swap (MMBtu) | | $ | January 1, 2022 | March 31, 2022 | ||||
| Natural gas swap (MMBtu) | | $ | April 1, 2022 | September 1, 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, 2021 (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 | $ | $ | $ | $ | ||||||||||||
| Fair value of oil and natural gas derivatives - Non-current Assets | ||||||||||||||||
| Fair value of oil and natural gas derivatives - Current Liabilities | ( | ) | ( | ) | ||||||||||||
| Fair value of oil and natural gas derivatives - Non-current Liabilities | ( | ) | ( | ) | ||||||||||||
| Total | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
We enter into commodity 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, 2021 and December 31, 2020:
| September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
| 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 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Fair value of oil and natural gas derivatives - Non-current Assets | ( | ) | ( | ) | ||||||||||||||||||||
| Fair value of oil and natural gas derivatives - Current Liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Fair value of oil and natural gas derivatives - Non-current Liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Total | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||
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, 2021 and 2020.
Pursuant to a purchase and sale agreement related to acreage acquired in September 2021, the Company has an unrecorded commitment to drill and complete producing wells over a four year time period, no later than September 2025. In the event the Company fails to perform this obligation, each of the eight wells is subject to liquidated damages of $
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 other equipment which are immaterial to our financial statements and/or have lease terms less than 12 months and have therefore not been recorded on our Consolidated Balance Sheets.
The lease cost components for the three and nine months ended September 30, 2021 and 2020 are classified as follows:
| (in thousands) | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | Consolidated Statements of Operations Classification | ||||||||||||
| Building lease cost | $ | $ | $ | $ | General and administrative expense | ||||||||||||
| Variable lease cost (1) | ( | ) | General and administrative expense | ||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
(1) Includes building operating expenses.
The following are additional details related to our lease portfolio as of September 30, 2021 and December 31, 2020:
| (in thousands) | September 30, 2021 | December 31, 2020 | Consolidated Balance Sheets Classification | ||||||
| Lease asset, gross | $ | $ | Furniture, fixtures and equipment and other capital assets | ||||||
| Accumulated depreciation | ( | ) | ( | ) | Accumulated depletion, depreciation and amortization | ||||
| Lease asset, net | $ | $ | |||||||
| Current lease liability | $ | $ | Accrued liabilities | ||||||
| Non-current lease liability | Other non-current liabilities | ||||||||
| Total lease liabilities | $ | $ | |||||||
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents operating lease liability maturities as of September 30, 2021:
| (in thousands) | September 30, 2021 | |||
| 2021 | ||||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| Thereafter | ||||
| Total lease payments | $ | |||
| Less imputed interest | ||||
| Present value of lease liabilities | $ | |||
As of September 30, 2021, our office building operating lease has a weighted-average remaining lease term of
NOTE 11—Subsequent Events
Subsequent to September 30, 2021, certain holders of unsecured claims warrants of the Company exercised such warrants, which resulted in the issuance of approximately
On November 5, 2021, we entered into a Fifth Amendment to Credit Agreement with Subsidiary, the Administrative Agent and the lenders party thereto, pursuant to which, among other things, the lenders made certain changes to the restricted payments and redemption covenants. See Note 4—Debt.
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 (the “Securities Act”), 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:
| • | public health crises, such as the Coronavirus Disease 2019 (“COVID-19”) outbreak in 2020 and 2021; | |
| • |
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 and production from our wells; |
| • |
the creditworthiness of our hedging counter-parties and the effect of our 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; |
| • |
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 Quarterly Report on Form 10-Q and Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.
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.
Management strives 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. When establishing our capital expenditure budget, 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.
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. The prices we receive for our production are largely beyond our control. We have historically been able to hedge our natural gas production at prices that are higher than current strip prices in an attempt to minimize the volatility of short term commodity price fluctuations on our earnings and operating cash flow. However, depending on volatility in the commodity price environment, our ability to enter into comparable derivative arrangements may be more limited.
The COVID-19 pandemic and related economic repercussions have created significant volatility, uncertainty and turmoil in the oil and gas industry. Throughout 2020, the effect of COVID-19 significantly lowered the demand for and prices of crude oil which resulted in an oversupply of crude oil with significant downward pressure on commodity prices for much of the year. During the first half of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded. However, the effect of the COVID-19 pandemic and related economic, business and market disruptions remain uncertain. The most direct and immediate impact that the Company experienced from the COVID-19 pandemic was decreased demand for and prices of crude oil. While the prices of and demand for crude oil have recovered from the lows seen in the initial stages of the pandemic, further outbreaks or the emergence of new strains of the virus could result in the reimposition of federal, state and local regulations directing individuals to stay at home, limiting travel, requiring facility closures and imposing similar measures. Widespread reimposition of these or similar restrictions could result in reductions in the prices of and demand for crude oil, as well as logistic constraints, increases in our costs, workforce shortages and unavailability of raw materials. 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 COVID-19 pandemic 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 initiated a company-wide cost reduction program eliminating outside services that are not core to our business, on which we continue to focus, as well as a reduction in headcount year over year. Additionally, we have substantial volumes of our production hedged through the first quarter of 2022, and to a lesser extent, volumes hedged from April 2022 to March 2023.
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 2022.
We remain committed to the following priorities while navigating through the COVID-19 pandemic:
| • |
Ensuring the health and safety of our employees and the contractors that provide services to us; |
| • |
Continuing 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 |
| • |
Ensuring we emerge from the COVID-19 pandemic in as strong of a position as possible as we continue to move forward with our long-term strategies. |
While the COVID-19 pandemic may potentially adversely affect our operations or employees’ health in the future, 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 employees working remotely where possible and in compliance with governmental orders and Centers for Disease Control and Prevention recommendations.
Primary Operating Areas
Haynesville Shale Trend
We have acquired or farmed-in leases totaling approximately 56,000 gross (32,000 net) acres as of September 30, 2021 in the Haynesville Shale Trend. We completed and produced 4 gross (2.2 net) new wells in the third quarter of 2021 and had 8 gross (2.3 net) wells in the drilling or completions phase as of September 30, 2021. Our Haynesville Shale Trend drilling activities are currently located in leasehold areas in Caddo, DeSoto and Red River parishes, Louisiana. Our net production volumes from our Haynesville Shale Trend wells represented approximately 99% of our total equivalent production on a Mcfe basis and substantially all of our natural gas production for the third quarter of 2021. 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 2021 drilling efforts.
Tuscaloosa Marine Shale Trend
As of September 30, 2021, we own approximately 48,000 gross (34,000 net) lease acres in the TMS, an oil shale play in Southwest Mississippi and Southwest Louisiana, which is predominately 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 1% of our total equivalent production on a Mcfe basis and 99% of our total oil production for the third quarter of 2021. Despite no capital expenditures, we are seeking to maintain production through strategic expense workover operations in the TMS.
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, 2021.
Results of Operations
The items that had the most material financial effect on our net loss of $48.0 million and $55.0 million for the three and nine months ended September 30, 2021, compared to prior year respective periods, were higher losses on derivatives not designated as hedges, largely non-cash mark-to-market losses, of $77.4 million and $103.1 million, respectively. These higher losses were partially offset by no impairment expense in the current year and increased oil and natural gas revenues due to increased natural gas and oil prices and higher production from new wells brought online.
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.
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) |
2021 |
2020 |
Variance |
2021 |
2020 |
Variance |
||||||||||||||||||||||||||
| Revenues: |
||||||||||||||||||||||||||||||||
| Natural gas |
$ | 56,888 | $ | 20,167 | $ | 36,721 | 182 | % | $ | 122,981 | $ | 60,370 | $ | 62,611 | 104 | % | ||||||||||||||||
| Oil and condensate |
1,845 | 1,296 | 549 | 42 | % | 5,727 | 4,547 | 1,180 | 26 | % | ||||||||||||||||||||||
| Natural gas, oil and condensate |
58,733 | 21,463 | 37,270 | 174 | % | 128,708 | 64,917 | 63,791 | 98 | % | ||||||||||||||||||||||
| Net Production: |
||||||||||||||||||||||||||||||||
| Natural gas (Mmcf) |
15,108 | 11,346 | 3,762 | 33 | % | 40,113 | 35,937 | 4,176 | 12 | % | ||||||||||||||||||||||
| Oil and condensate (MBbls) |
26 | 33 | (7 | ) | (21 | )% | 89 | 107 | (18 | ) | (17 | )% | ||||||||||||||||||||
| Total (Mmcfe) |
15,265 | 11,543 | 3,722 | 32 | % | 40,646 | 36,576 | 4,070 | 11 | % | ||||||||||||||||||||||
| Average daily production (Mcfe/d) |
165,925 | 125,462 | 40,463 | 32 | % | 148,885 | 133,487 | 15,398 | 12 | % | ||||||||||||||||||||||
| Average realized sales price per unit: |
||||||||||||||||||||||||||||||||
| Natural gas (per Mcf) |
$ | 3.77 | $ | 1.78 | $ | 1.99 | 112 | % | $ | 3.07 | $ | 1.68 | $ | 1.39 | 83 | % | ||||||||||||||||
| Natural gas (per Mcf) including the effect of realized gains/losses on derivatives |
$ | 2.94 | $ | 1.89 | $ | 1.05 | 56 | % | $ | 2.70 | $ | 2.06 | $ | 0.64 | 31 | % | ||||||||||||||||
| Oil and condensate (per Bbl) |
$ | 70.40 | $ | 39.63 | $ | 30.77 | 78 | % | $ | 64.50 | $ | 42.76 | $ | 21.74 | 51 | % | ||||||||||||||||
| Oil and condensate (per Bbl) including the effect of realized gains/losses on derivatives |
$ | 70.40 | $ | 49.90 | $ | 20.50 | 41 | % | $ | 64.25 | $ | 55.06 | $ | 9.19 | 17 | % | ||||||||||||||||
| Average realized price (per Mcfe) |
$ | 3.85 | $ | 1.86 | $ | 1.99 | 107 | % | $ | 3.17 | $ | 1.77 | $ | 1.40 | 79 | % | ||||||||||||||||
Natural gas, oil and condensate revenues increased by $37.3 million and $63.8 million, respectively, for the three and nine months ended September 30, 2021, compared to the same periods in 2020. The increase was primarily driven by higher realized natural gas and oil prices coupled with increased natural gas production volumes. The rise in natural gas and oil prices increased revenues by $23.6 million and $52.1 million, respectively, for the three and nine months ended September 30, 2021, and higher natural gas volumes had a $14.2 million and $12.8 million impact on revenues for the three and nine months ended September 30, 2021, respectively.
Operating Expenses
As described below, total operating expenses increased $2.1 million for the three months ended September 30, 2021 and decreased $18.9 million for the nine months ended September 30, 2021, compared to the same periods in 2020. The increase in total operating expenses for the three months ended September 30, 2021 was primarily due to expenses associated with higher production volumes, including lease operating expenses, production and other taxes, transportation and processing and depletion and amortization expense, partially offset by no impairment expense in 2021. The decrease in total operating expenses for the nine months ended September 30, 2021 was primarily due to no impairment expense in 2021 and lower transportation and processing and general and administrative expense, partially offset by higher lease operating expenses due to increased production volumes. On a per unit basis, excluding the impact of impairment expense in 2020, operating costs decreased $0.15 and $0.23 per Mcfe for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The year over year comparisons for operating expenses are discussed further below.
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||
| Operating Expenses (in thousands) |
2021 |
2020 |
Variance |
2021 |
2020 |
Variance |
||||||||||||||||||||||||||
| Lease operating expenses |
$ | 3,277 | $ | 2,831 | $ | 446 | 16 | % | $ | 10,429 | $ | 9,384 | $ | 1,045 | 11 | % | ||||||||||||||||
| Production and other taxes |
1,291 | 591 | 700 | 118 | % | 2,756 | 2,361 | 395 | 17 | % | ||||||||||||||||||||||
| Transportation and processing |
4,811 | 4,336 | 475 | 11 | % | 13,457 | 14,586 | (1,129 | ) | (8 | )% | |||||||||||||||||||||
| Operating Expenses per Mcfe |
||||||||||||||||||||||||||||||||
| Lease operating expenses |
$ | 0.21 | $ | 0.25 | $ | (0.04 | ) | (16 | )% | $ | 0.26 | $ | 0.26 | $ | - | 0 | % | |||||||||||||||
| Production and other taxes |
$ | 0.08 | $ | 0.05 | $ | 0.03 | 60 | % | $ | 0.07 | $ | 0.06 | $ | 0.01 | 17 | % | ||||||||||||||||
| Transportation and processing |
$ | 0.32 | $ | 0.38 | $ | (0.06 | ) | (16 | )% | $ | 0.34 | $ | 0.41 | $ | (0.07 | ) | (17 | )% | ||||||||||||||
Lease Operating Expense
Lease operating expense (“LOE”) increased $0.4 million and $1.0 million, respectively, for the three and nine months ended September 30, 2021, compared to the same periods in 2020. The increase in LOE is primarily attributed to an increase in production volumes and the number of producing wells in 2021 versus 2020 as well as additional workover expense for the nine months ended September 30, 2021. Per unit LOE was $0.21 per Mcfe and $0.26 per Mcfe for the three and nine months ended September 30, 2021, respectively, of which $0.02 per Mcfe was attributed to the $0.3 million in workover expense incurred in the three months ended September 30, 2021, and $0.04 per Mcfe was attributed to the $1.8 million in workover expense incurred in the nine months ended September 30, 2021.
Production and Other Taxes
Production and other taxes includes severance and ad valorem taxes. Severance taxes were $1.0 million and $2.0 million for the three and nine months ended September 30, 2021, respectively, and ad valorem taxes were $0.2 million and $0.7 million for the three and nine months ended September 30, 2021, respectively.
Severance taxes increased $0.7 million and $0.6 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The increase is primarily due to higher production volumes upon which the volumetric tax is based as wells have begun to incur severance tax in Louisiana after the exemption ended, partially offset by a lower severance tax rate in Louisiana. The State of Louisiana has enacted an exemption from the existing 12.5% severance tax on oil and from the $0.125 per Mcf (from July 1, 2019 through June 30, 2020), $0.0934 per Mcf (from July 1, 2020 to June 30, 2021) and $0.091 per Mcf (from July 1, 2021 to June 30, 2022) severance tax on 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, operated Haynesville Shale Trend wells in Northwest Louisiana are benefiting from this exemption upon initial production.
Ad valorem tax remained flat and decreased $0.2 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, due to more favorable tax calculation methodologies on certain of our properties with respective taxing agencies.
Transportation and Processing
Our natural gas production incurs substantially all of our transportation and processing expense. Transportation and processing expense for the three and nine months ended September 30, 2021 increased $0.5 million and decreased $1.1 million, respectively, compared to the same periods in 2020. The increase in transportation and processing expense for the three months ended September 30, 2021 was primarily due to increased production from our Haynesville Shale Trend wells, partially offset by more favorable rates contracted with third parties. The decrease in transportation and processing expense for the nine months ended September 30, 2021 was primarily due to the more favorable rates contracted with third parties despite an increase in production volumes. Additionally, the mix of operated versus non-operated volumes impacts our transportation and processing expense as our operated natural gas volumes, particularly from our recent operated wells brought online, generally carry less transportation cost than those from wells we do not operate.
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||
| Operating Expenses (in thousands): |
2021 |
2020 |
Variance |
2021 |
2020 |
Variance |
||||||||||||||||||||||||||
| Depreciation, depletion and amortization |
$ | 13,389 | $ | 10,341 | $ | 3,048 | 29 | % | $ | 35,671 | $ | 35,484 | $ | 187 | 1 | % | ||||||||||||||||
| General and administrative |
4,329 | 3,891 | 438 | 11 | % | 11,302 | 13,327 | (2,025 | ) | (15 | )% | |||||||||||||||||||||
| Impairment of oil and natural gas properties |
- | 3,040 | (3,040 | ) | (100 | )% | - | 17,170 | (17,170 | ) | (100 | )% | ||||||||||||||||||||
| Other |
4 | (11 | ) | 15 | 136 | % | (183 | ) | (13 | ) | (170 | ) | (1308 | )% | ||||||||||||||||||
| Operating Expenses per Mcfe |
||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization |
$ | 0.88 | $ | 0.90 | $ | (0.02 | ) | (2 | )% | $ | 0.88 | $ | 0.97 | $ | (0.09 | ) | (9 | )% | ||||||||||||||
| General and administrative |
$ | 0.28 | $ | 0.34 | $ | (0.06 | ) | (18 | )% | $ | 0.28 | $ | 0.36 | $ | (0.08 | ) | (22 | )% | ||||||||||||||
| Impairment of oil and natural gas properties |
$ | - | $ | 0.26 | $ | (0.26 | ) | (100 | )% | $ | - | $ | 0.47 | $ | (0.47 | ) | (100 | )% | ||||||||||||||
| Other |
$ | - | $ | - | $ | - | — | % | $ | - | $ | - | $ | - | — | % | ||||||||||||||||
Depreciation, Depletion and Amortization (“DD&A”)
DD&A expense increased $3.0 million and $0.2 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The increase for the three months ended September 30, 2021 was attributed to increased production volumes, partially offset by a lower per unit cost discussed below. The increase in DD&A expense for the nine months ended September, 2021 compared to the prior year period was attributed primarily to increased production volumes partially offset by a lower per unit cost based on the year-end 2020 and mid-year 2021 reserve reports, largely as a result of recognizing impairment expense of $36.1 million in the prior year.
Impairment Expense
The Full Cost Method ceiling test for the three and nine months ended September 30, 2021 resulted in no impairment of oil and natural gas properties compared to the impairment expense of $3.0 million and $17.2 million recorded for the three and nine months ended September 30, 2020, respectively.
General and Administrative (“G&A”)
The Company recorded $4.3 million and $11.3 million in G&A expense for the three and nine months ended September 30, 2021, respectively, which included non-cash expenses for share-based compensation of $0.5 million and $1.2 million, respectively. G&A expense increased for the three months ended September 30, 2021 by $0.4 million primarily due to higher bonus accruals due to better performance measures than target related to the annual and long-term incentive plans, partially offset by lower rent expense associated with a renegotiated lease for office space. For the nine months ended September 30, 2021, G&A expense decreased by $2.0 million compared to the same period in 2020 primarily due to reduced employee expenses including salaries and stock compensation expense as well as decreased rent expense, partially offset by a higher bonus accrual related to a the cash-based long-term incentive plan due to better performance measures than target for the current year.
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.
Other Operating Expenses
Other operating expense credits of $0.2 million for the nine months ended September 30, 2021 were attributed primarily to the receipt of ad valorem tax credits from a vendor related to prior periods.
Other Income (Expense)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||
| Other income (expense) (in thousands): |
2021 |
2020 |
Variance |
2021 |
2020 |
Variance |
||||||||||||||||||||||||||
| Interest expense |
$ | (2,232 | ) | $ | (1,733 | ) | $ | 499 | 29 | % | $ | (6,255 | ) | $ | (5,410 | ) | $ | 845 | 16 | % | ||||||||||||
| Interest income and other |
- | 5 | (5 | ) | (100 | )% | - | 147 | (147 | ) | (100 | )% | ||||||||||||||||||||
| Loss on commodity derivatives not designated as hedges |
(77,369 | ) | (11,079 | ) | (66,290 | ) | (598 | )% | (103,111 | ) | (3,629 | ) | (99,482 | ) | (2741 | )% | ||||||||||||||||
| Loss on early extinguishment of debt |
- | - | - | — | % | (935 | ) | - | (935 | ) | (100 | )% | ||||||||||||||||||||
| Average funded borrowings adjusted for debt discount |
$ | 124,403 | $ | 107,268 | $ | 17,135 | 16 | % | $ | 119,068 | $ | 104,925 | $ | 14,143 | 13 | % | ||||||||||||||||
| Average funded borrowings |
$ | 127,168 | $ | 110,505 | $ | 16,663 | 15 | % | $ | 121,934 | $ | 108,323 | $ | 13,611 | 13 | % | ||||||||||||||||
Interest Expense
Interest expense for the three months ended September 30, 2021 included $1.0 million incurred on the 2019 Senior Credit Facility (as defined below) and $1.2 million incurred on the Company's 13.50% Convertible Second Lien Senior Secured Notes due 2023 (the “2023 Second Lien Notes”). Interest expense for the nine months ended September 30, 2021 included $3.0 million incurred on the 2019 Senior Credit Facility, $2.7 million incurred on the Company's 2023 Second Lien Notes and $0.5 million incurred on the Company's 13.50% Convertible Second Lien Senior Secured Notes due 2022 (the “2021/2022 Second Lien Notes”) until exchanged on March 9, 2021. The interest on the 2021/2022 Second Lien Notes and 2023 Second Lien Notes was all non-cash consisting of paid in-kind interest of $1.1 million, amortization of debt discount of $0.1 million and amortization of debt issuance costs of less than $0.1 million for the three months ended September 30, 2021, and paid in-kind interest of $2.7 million, amortization of debt discount of $0.4 million and amortization of debt issuance costs of $0.1 million for the nine months ended September 30, 2021. The interest on the 2019 Senior Credit Facility included $0.9 million and $2.6 million of interest payable in cash for the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.4 million of non-cash amortization of debt issuance costs for the three and nine months ended September 30, 2021, respectively.
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 2021/2022 Second Lien 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.
Gain (Loss) on Commodity Derivatives Not Designated as Hedges
We produce and sell oil and natural gas into a market where prices are historically volatile. We enter into swap contracts, collars or other derivative agreements from time to time to manage our exposure to commodity price risk for a portion of our production. We do not designate our derivative contracts as hedges for accounting purposes. Consequently, the changes in our mark-to-market valuations are recorded directly to income or loss on our financial statements.
The loss on commodity derivatives not designated as hedges of $77.4 million for the three months ended September 30, 2021 was comprised of a mark-to-market loss of $64.9 million, representing the change of fair value on our open natural gas derivative contracts, and a $12.5 million loss on net cash settlements of natural gas derivative contracts. The loss on commodity derivatives not designated as hedges of $103.1 million for the nine months ended September 30, 2021 was comprised of a mark-to-market loss of $88.6 million, representing the change of fair value on our open natural gas derivative contracts, and a $14.5 million loss on net cash settlements 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 derivative contracts there can be large swings in our reported gain or losses between periods. These commodity derivative losses were recorded as a result of the significant increase in natural gas strip prices as of September 30, 2021 compared to our hedged prices.
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 derivative contracts, 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.
Income Tax Benefit
We recorded no income tax expense or benefit for the three and nine months ended September 30, 2021 and 2020. We maintained a valuation allowance at September 30, 2021, 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 led to a conclusion that based upon the more-likely-than-not standard of the accounting literature our deferred tax assets were unrecoverable.
The loss on early extinguishment of debt for the nine months ended September 30, 2021 was recorded as a result of the Company exchanging the 2021/2022 Second Lien Notes for the 2023 Second Lien Notes on March 9, 2021. The $0.9 million loss was comprised of the remaining unamortized debt discount of $0.8 million and remaining unamortized debt issuance costs of $0.1 million on the 2021/2022 Second Lien Notes.
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, 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”) Topic 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 net income (loss) to Adjusted EBITDA:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| (In thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
| Net loss (US GAAP) |
$ | (47,969 | ) | $ | (16,360 | ) | $ | (55,025 | ) | $ | (36,265 | ) | ||||
| Interest expense |
2,232 | 1,733 | 6,255 | 5,410 | ||||||||||||
| Depreciation, depletion and amortization |
13,389 | 10,341 | 35,671 | 35,484 | ||||||||||||
| Impairment of oil and natural gas properties |
- | 3,040 | - | 17,170 | ||||||||||||
| Share-based compensation expense (non-cash) |
517 | 1,035 | 1,207 | 3,564 | ||||||||||||
| Loss on commodity derivatives not designated as hedges, not settled |
64,871 | 12,676 | 88,596 | 18,534 | ||||||||||||
| Loss on early extinguishment of debt |
- | - | 935 | - | ||||||||||||
| Other items (1) |
177 | 266 | 246 | 684 | ||||||||||||
| Adjusted EBITDA |
$ | 33,217 | $ | 12,731 | $ | 77,885 | $ | 44,581 | ||||||||
| (1) |
Other items included $0.2 million, $0.3 million, $0.2 million and $0.8 million, respectively, from the impact of accounting for operating leases under ASC Topic 842 as well as interest income for the three and nine months ended September 30, 2021 and 2020, 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.
Liquidity and Capital Resources
Overview
Our primary sources of cash during the first nine months of 2021 were cash from operating activities, cash on hand and borrowings under our 2019 Senior Credit Facility (as defined below). We used cash primarily to fund capital expenditures. We currently plan to fund our operations and capital expenditures for the remainder of 2021 through a combination of cash on hand, cash from operating activities and borrowing 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, 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 the earlier of (a) May 14, 2024 or (b) December 2, 2022, if the 2023 Second Lien Notes (as defined below) have not been voluntarily redeemed, repurchased, refinanced or otherwise retired by December 2, 2022, which is the date that is 180 days prior to the May 31, 2023 “Maturity Date” of the 2023 Second Lien Notes. The 2019 Senior Credit Facility provides for a maximum credit amount of $500 million subject to a borrowing base limitation, which was $120.0 million as of September 30, 2021 and was increased to $150.0 million during the Fall 2021 borrowing base redetermination. The borrowing base is redetermined in March and September of each calendar year, and is subject to additional adjustments from time to time, including, without limitation, 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. Under the Fifth Amendment to 2019 Credit Agreement entered into on November 5, 2021, the Company is permitted to make restricted payments under the 2019 Credit Agreement so long as (i) no borrowing base deficiency, default or event of default exists or would result therefrom, (ii) after giving pro forma effect to such restricted payment, availability is no less than 20% of the aggregate amount of the available commitments under the 2019 Credit Agreement and (iii) after giving pro forma effect to such restricted payment, the ratio of net funded debt of the Company to EBITDAX shall not be greater than 1.50 to 1.00. The Fifth Amendment to 2019 Credit Agreement also permits the Company to make redemptions of the Second Lien Debt (as defined in the 2019 Credit Agreement) and payments of interest on the 2023 Second Lien Notes so long as each such redemption and interest payment would be permitted as a restricted payment. 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 March 9, 2021, the Company and the Subsidiary entered into a purchase and exchange agreement with certain purchasers (each such purchaser, together with its successors and assigns, a “2023 Second Lien Notes Purchaser”) pursuant to which the Company issued to the 2023 Second Lien Notes Purchasers (A) $15.2 million aggregate principal amount of the 2023 Second Lien Notes in exchange for an equal amount of 2021/2022 Second Lien Notes and (B) $15.0 million of the 2023 Second Lien Notes in exchange for cash. Proceeds from the sale of the 2023 Second Lien Notes were used to pay down outstanding borrowings under the 2019 Senior Credit Facility. In connection with the purchase and exchange agreement, we recorded a $0.9 million loss on early extinguishment of debt related to the remaining unamortized debt discount and debt issuance costs from the 2021/2022 Second Lien Notes.
The 2023 Second Lien Notes, as set forth in the indenture governing the 2023 Second Lien Notes (the “2023 Second Lien Notes Indenture”), are scheduled to mature on May 31, 2023. The 2023 Second Lien 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 2023 Second Lien Notes by increasing the principal amount of the outstanding 2023 Second Lien Notes.
The 2023 Second Lien Notes are convertible into the Company’s common stock at the conversion rate, which is the sum of the outstanding principal amount of 2023 Second Lien 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 2023 Second Lien 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 2023 Second Lien Notes Indenture, (2) cash or (3) a combination of shares of its common stock and cash; however, the Company’s ability to redeem the 2023 Second Lien Notes with cash is subject to the terms of the 2019 Credit Agreement.
We exited the third quarter of 2021 with $5.5 million cash on hand and $90.4 million of outstanding borrowings with $29.6 million of availability under the 2019 Senior Credit Facility borrowing base of $120.0 million in effect as of September 30, 2021.
Outlook
We plan to focus all of our capital on drilling and development of our Haynesville Shale Trend natural gas properties in North Louisiana, and we currently contemplate drilling and developing 22 gross (10.4 net) wells utilizing improved completion techniques during 2021.
We believe the results of the capital investments we made in prior years and the nine months of 2021 will generate additional cash flows and additional value that will allow us to continue our capital development in the future and raise capital as needed.
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. |
In addition, to support future cash flows and protect against a sharp drop in commodity prices, we enter into strategic derivative positions as reflected in Note 8—“Commodity Derivative Activities” and Note 11—“Subsequent Events” in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.
We have had an on-going company-wide cost reduction program eliminating outside services that are not core to our business, which we continue to focus on, as well as a reduction in headcount year over year. As a result of the steps we have taken to enhance our liquidity in addition to the current natural gas pricing environment, 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 over the next year.
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, |
|||||||||||||||
| 2021 |
2020 |
2021 |
2020 |
|||||||||||||
| Cash flow statement information: |
||||||||||||||||
| Net cash: |
||||||||||||||||
| Provided by operating activities |
$ | 29,935 | $ | 13,512 | $ | 66,604 | $ | 44,592 | ||||||||
| Used in investing activities |
(25,045 | ) | (14,816 | ) | (71,065 | ) | (48,012 | ) | ||||||||
| Provided by (used in) financing activities |
(161 | ) | 991 | 8,612 | 3,219 | |||||||||||
| Increase (decrease) in cash and cash equivalents |
$ | 4,729 | $ | (313 | ) | $ | 4,151 | $ | (201 | ) | ||||||
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, 2021 and 2020. 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, 2021 was $29.9 million including operating cash flows before negative working capital changes of $32.3 million including net cash payments of $12.5 million in settlement of derivative contracts. Net cash provided by operating activities for the nine months ended September 30, 2021 was $66.6 million including operating cash flows before negative working capital changes of $75.4 million including net cash payments of $14.5 million in settlement of derivative contracts. The changes in cash provided by operating activities compared to prior year was primarily attributable to changes in oil and natural gas revenues driven by increased realized prices and increased production, offset by the use of cash based on timing of working capital expenditures.
Investing activities: Net cash used in investing activities, which represents our cash expended for capital projects, was $25.0 million and $71.1 million for the three and nine months ended September 30, 2021, respectively. We recorded $27.9 million in capital expenditures during the three months ended September 30, 2021. The difference in capital expenditures and cash expended on capital projects for the three months ended September 30, 2021 was primarily attributed to a net capital accrual increase of $2.3 million and capitalization of $0.4 million of asset retirement and non-cash internal costs. We recorded $77.0 million in capital expenditures during the nine months ended September 30, 2021. The difference in capital expenditures and cash expended on capital projects for the nine months ended September 30, 2021 was attributed to a net capital accrual increase of $4.6 million and, utilization of $0.6 million in cash calls and the capitalization of $0.7 million of asset retirement and non-cash internal costs. During the nine months ended September 30, 2021, we conducted drilling and completion operations on 24 gross (10.5 net) wells bringing 16 gross (8.1 net) wells on production with 8 gross (2.3 net) wells remaining in the drilling and completion process at September 30, 2021.
Financing activities: Net cash provided by (used in) financing activities for the three and nine months ended September 30, 2021 and 2020 primarily reflected net borrowings under our 2019 Senior Credit Facility and proceeds from the issuance of the 2023 Second Lien Notes, offset by debt issuance costs paid in connection with issuance of the 2023 Second Lien Notes and cash paid for treasury shares in connection with restricted stock vesting.
Debt consisted of the following balances as of the dates indicated (in thousands):
| September 30, 2021 |
December 31, 2020 |
|||||||||||||||
| Principal |
Carrying Amount |
Principal |
Carrying Amount |
|||||||||||||
| 2019 Senior Credit Facility (1) |
$ | 90,400 | $ | 90,400 | $ | 96,400 | $ | 96,400 | ||||||||
| 2021/2022 Second Lien Notes (2) |
- | - | 14,811 | 13,759 | ||||||||||||
| 2023 Second Lien Notes (3) |
32,535 | 31,349 | - | - | ||||||||||||
| Total debt |
$ | 122,935 | $ | 121,749 | $ | 111,211 | $ | 110,159 | ||||||||
(1) The carrying amount for the 2019 Senior Credit Facility represents fair value as its variable interest rate approximates market rates.
(2) The debt discount was being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal included $2.8 million of paid in-kind interest as of December 31, 2020. The carrying value included $0.9 million of unamortized debt discount and $0.2 million of unamortized issuance cost as of December 31, 2020.
(3) The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2023. The principal includes $2.3 million of paid in-kind interest as of September 30, 2021. The carrying value includes $0.9 million of unamortized debt discount and $0.3 million of unamortized issuance cost as of September 30, 2021.
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, 2020 includes a discussion of our critical accounting policies, and there have been no material changes to such policies during the nine months ended September 30, 2021.
Item 3—Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item 3.
Item 4—Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Exchange Act Rules 13a-15 and 15d-15, 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 September 30, 2021. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021.
Changes in Internal Control over Financial Reporting
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.
A discussion of any 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, 2021, we did not have any material outstanding and pending litigation.
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, 2020, 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.
Potential future legislation or the imposition of new or increased taxes or fees may generally affect the taxation of natural gas and oil exploration and development companies and may adversely affect our operations on cash flows.
In past years, federal legislation has been proposed that would, if enacted into law, make significant changes to tax laws, including to certain key U.S. federal income tax provisions currently available to natural gas and oil exploration and development companies. For example, President Biden has set forth several tax proposals that would, if enacted into law, make significant changes to U.S. tax laws. Such proposals include, but are not limited to, (i) an increase in the U.S. income tax rate applicable to corporations and (ii) the elimination of tax subsidies for fossil fuels. Congress could consider some or all of these proposals in connection with tax reform to be undertaken by the Biden administration. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws or the imposition of new or increased taxes on natural gas and oil extraction could adversely affect our operations and cash flows.
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds
During the three and nine months ended September 30, 2021, we issued to certain holders of unsecured claim warrants approximately 780,000 and 790,000 shares of our common stock, respectively, upon exercise of such warrants. In issuing these shares, we relied on an exemption from the registration requirements provided by Section 1145(a)(1) of the Bankruptcy Code.
| 3.1 |
|||
| 3.2 |
|||
| 10.1* | Fifth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 5, 2021, 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. | ||
| 22 | Subsidiary Guarantors of Guaranteed Securities | ||
| Goodrich Petroleum Company L.L.C. - Organized in the State of Louisiana. | |||
| 31.1* |
|||
| 31.2* |
|||
| 32.1** |
|||
| 32.2** |
|||
| 101.INS* |
Inline XBRL Instance Document |
||
| 101.SCH* |
Inline XBRL Schema Document |
||
| 101.CAL* |
Inline XBRL Calculation Linkbase Document |
||
| 101.LAB* |
Inline XBRL Labels Linkbase Document |
||
| 101.PRE* |
Inline XBRL Presentation Linkbase Document |
||
| 101.DEF* |
Inline XBRL Definition Linkbase Document |
||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * |
Filed herewith |
| ** |
Furnished herewith |
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 8, 2021 |
By: |
/S/ Walter G. Goodrich |
|
|
|
Walter G. Goodrich |
|
|
|
Chairman & Chief Executive Officer |
|
|
|
|
| Date: November 8, 2021 |
By: |
/S/ Kristen McWatters |
|
|
|
Kristen McWatters |
|
|
|
Senior Vice President, Chief Financial Officer, and Chief Accounting Officer |
Exhibit 10.1
Execution Version
FIFTH AMENDMENT TO CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of November 5, 2021, by and among GOODRICH PETROLEUM CORPORATION, a Delaware corporation (“Parent”), GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited liability company (the “Borrower”), each of the Lenders which is signatory hereto, and TRUIST BANK, succesor by merger to SunTrust Bank, as Administrative Agent for the Lenders (in such capacity, together with its successors in such capacity “Administrative Agent”) and as Issuing Bank under the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Parent, Borrower, Administrative Agent, the Lenders and the Issuing Bank are parties to that certain Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of May 14, 2019 (as amended, restated, supplemented or otherwise modified prior to the date hereof, and as amended by this Amendment and as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), whereby upon the terms and conditions therein stated the Lenders have agreed to make certain loans to the Borrower upon the terms and conditions set forth therein;
WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement as set forth below; and
WHEREAS, subject to the terms and conditions hereof, the Lenders are willing to agree to the amendments to the Credit Agreement as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, the parties to this Amendment hereby agree as follows:
SECTION 1. Definitions. Unless otherwise defined in this Amendment, each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement. The interpretive provisions set forth in Section 1.04 of the Credit Agreement shall apply to this Amendment.
SECTION 2. Amendments to Credit Agreement. Effective on the Amendment Effective Date, the Credit Agreement is amended as follows:
(a) Section 1.02 of the Credit Agreement is amended by inserting the following definitions in proper alphabetical order:
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (f) of Section 3.03.
“Benchmark” means, initially, the Adjusted LIBO Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to Adjusted LIBO Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) or clause (c) of Section 3.03.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative Agent reasonably determines that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion with the consent of the Borrower (which may not be unreasonably withheld or delayed).
“Erroneous Payment” has the meaning assigned to it in Section 11.14(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 11.14(d).
“Erroneous Payment Impacted Loans” has the meaning assigned to it in Section 11.14(d).
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 11.14(d).
“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 11.14(d).
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted LIBO Rate.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Adjusted LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not the Adjusted LIBO Rate, the time determined by the Administrative Agent in its reasonable discretion.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Term SOFR Notice” means a notification by the Administrative Agent to the Lenders and the Borrower of the occurrence of a Term SOFR Transition Event.
“Term SOFR Transition Event” means the determination by the Administrative Agent that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Administrative Agent and (c) a Benchmark Transition Event has previously occurred resulting in a Benchmark Replacement in accordance with Section 3.03 that is not Term SOFR.
(b) The following definitions in Section 1.02 of the Credit Agreement are hereby amended and restated in their respective entireties as follows:
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(3) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;
provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Loan Document, upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso above). If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent:
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “alternative Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent determines (in consultation with the Borrower) in its reasonable discretion may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably determines that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary (in consultation with the Borrower) in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of
(a) the date of the public statement or publication of information referenced therein; and
(b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or
(3) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after the date a Term SOFR Notice is provided to the Lenders and the Borrower pursuant to Section 3.03(c); or
(4) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Majority Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.03 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.03.
“Early Opt-in Election” means, if the then-current Benchmark is the Adjusted LIBO Rate, the occurrence of:
(1) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and
(2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from the Adjusted LIBO Rate and the provision by the Administrative Agent of written notice of such election to the Lenders.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
(c) Section 1.02 of the Credit Agreement is amended by deleting the following definitions: “Benchmark Transition Start Date” and “Federal Reserve Bank of New York’s Website”.
(d) The definition of “Interest Period” in Section 1.02 of the Credit Agreement is amended to delete “two (2),”.
(e) Clause (a) of the definition of “Secured Obligations” in Section 1.02 of the Credit Agreement is amended to add the parenthetical “(including obligations pursuant to the Administrative Agent’s Erroneous Payment Subrogation Rights)” after the words “Loan Document”.
(f) Article I of the Credit Agreement is amended by adding the following as a new Section 1.09:
“Section 1.09 LIBOR. The London interbank offered rate for U.S. dollars (“LIBOR”) is intended to represent the rate at which contributing banks could obtain short-term borrowings from one another in the London interbank market. On March 5, 2021, the Financial Conduct Authority (“FCA”), the regulatory supervisor of LIBOR's administrator, announced in a public statement the future cessation of the 35 LIBOR benchmark settings currently published by ICE Benchmark administration. This public statement constitutes a Benchmark Transition Event. To the extent the Maturity Date goes beyond the cessation dates indicated in the FCA’s announcement, an alternate rate of interest will be determined at the appropriate time in accordance with Section 3.03(b) for any applicable tenors of LIBOR.
Upon the occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, Section 3.03(b) and (c) provide the mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 3.03(e), of any change to the reference rates upon which the interest rates on Eurodollar Loans are based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to LIBOR or other rates in the definition of “Adjusted LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate implemented pursuant to Section 3.03(b) or (c), whether upon the occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, and (ii) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 3.03(d)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the Adjusted LIBO Rate or have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability.”
(g) Section 3.03 of the Credit Agreement is amended and restated in its entirety as follows:
“Section 3.03 Alternate Rate of Interest.
(a) Unless and until a Benchmark Replacement is implemented in accordance with Section 3.03(b) below, if, prior to the first day of any Interest Period:
(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that, by reason of circumstances affecting the relevant interbank market, ad‐equate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate (including, without limitation, because the Screen Rate is not available or published on a current basis) for such Interest Period; or
(ii) the Administrative Agent shall have received notice from the Majority Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give written notice (or telephonic notice, promptly confirmed in writing) to the Borrower and the Lenders as soon as practicable thereafter. Until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) the obligations of the Lenders to make Eurodollar Loans or to continue or convert outstanding Loans as or into Eurodollar Loans shall be suspended and (ii) all such affected Loans shall be converted into Alternate Base Rate Loans on the last day of the then current Interest Period applicable thereto unless the Borrower prepays such Loans in accordance with this Agreement. Unless the Borrower notifies the Administrative Agent at least one (1) Business Day before the date of any Eurodollar Borrowing for which a Borrowing Request or an Interest Election Request has previously been given that it elects not to borrow, continue or convert to a Eurodollar Borrowing on such date, then such Borrowing shall be made as, continued as or converted into an Alternate Base Rate Borrowing.
(b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders.
(c) Notwithstanding anything to the contrary herein or in any other Loan Document and subject to the proviso below in this clause (c), if a Term SOFR Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document; provided that this clause (c) shall not be effective unless the Administrative Agent has delivered to the Lenders and the Borrower a Term SOFR Notice.
(d) In connection with the implementation of a Benchmark Replacement, the Administrative Agent, in consultation with the Borrower, will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective as and when provided in the related notice from the Administrative Agent described in clause (e) below without any further action or consent of any other party to this Agreement or any other Loan Document.
(e) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.03, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 3.03.
(f) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or the Adjusted LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(g) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Alternate Base Rate Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Alternate Base Rate.”
(h) Section 9.04(g) of the Credit Agreement is amended and restated in its entirety as follows:
“(g) the Parent may make Restricted Payments with respect to its Equity Interests that are payable in cash; provided that: (i) no Borrowing Base Deficiency, Default or Event of Default exists or would result therefrom, (ii) after giving pro forma effect to such Restricted Payment, Availability is no less than 20% of the aggregate amount of the Commitments, and (iii) after giving pro forma effect to such Restricted Payment, the Net Funded Debt Ratio shall not be greater than 1.50 to 1.00; and”
(i) Section 9.22(b) of the Credit Agreement is amended and restated in its entirety as follows:
“(b) Prior to the date that is three months after the Maturity Date, neither Parent nor the Borrower shall, nor shall they permit any of the other Loan Parties to (i) call, make or offer to make any Redemption of or otherwise Redeem any Second Lien Debt (including any optional or mandatory prepayment of Second Lien Debt), except (x) with respect to any mandatory prepayment or mandatory Redemption of Second Lien Debt, to the extent such mandatory prepayment or mandatory Redemption would also be required by the terms of Section 3.04(c) or Section 3.04(d) hereof and the Lenders have waived the requirement to make such mandatory prepayment or mandatory Redemption in accordance with the terms hereof, (y) a refinancing of the Second Lien Debt in accordance with this Agreement and (to the extent that such refinancing debt is secured by a Lien junior to the Lien securing the Secured Obligations) the terms and conditions of the Intercreditor Agreement and (z) a Redemption in full or in part of the 2023 Notes from amounts that would otherwise be permitted to be paid as a Restricted Payment pursuant to Section 9.04(g), or (ii) pay any interest in cash on the 2023 Notes (including, for the avoidance of doubt, any refinancing or replacement of the 2023 Notes that is secured by a Lien junior to the Lien securing the Secured Obligations), including in respect of any portion thereof payable in kind, except from amounts that would otherwise be permitted to be paid as a Restricted Payment pursuant to Section 9.04(g).”
(j) Section 10.02(c)(i) of the Credit Agreement is amended to add the words “amounts owed pursuant to Erroneous Payment Subrogation Rights,” after the word “fees,”.
(k) Article XI of the Credit Agreement is amended by adding the following as a new Section 11.14:
“Section 11.14 Erroneous Payments.
(a) If the Administrative Agent notifies a Lender, Issuing Bank or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or Secured Party (any such Lender, Issuing Bank, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender, Issuing Bank or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or Secured Party such Lender or Issuing Bank, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Bank or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender, Issuing Bank or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 11.14(b).
(c) Each Lender, Issuing Bank or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Bank or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Bank or Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender or Issuing Bank that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender or Issuing Lender at any time, (i) such Lender or Issuing Bank shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Loans”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Loans, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to a platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender or Issuing Bank shall deliver any promissory notes evidencing such Loans to the Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender or Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuing Bank shall cease to be a Lender or Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender or assigning Issuing Bank, and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. Subject to Section 12.04 (but excluding, in all events, any assignment consent or approval requirements), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender or Issuing Bank shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender or Issuing Bank (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender or Issuing Bank and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender, Issuing Bank or Secured Party under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”); provided that, the Loan Parties' Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Secured Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment.
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party (provided that, clause (d) and (e) shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Secured Obligations of the Borrower relative to the amount (and/or timing for payment) of the Secured Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent), except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
(f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
Each party’s obligations, agreements and waivers under this Section 11.14 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.”
(l) Section 12.01(a)(ii) of the Credit Agreement is amended to update the Issuing Bank’s written notice information as follows:
“if to the Issuing Bank, to it at: Truist Bank
Attn: Standby Letter of Credit Dept.
303 Peachtree Street NE
3rd FL, Mail Code 803-05-25-60
Atlanta, Georgia 30308
Telephone: (800) 951-7847”
(m) Section 12.02(b) of the Credit Agreement is amended by deleting “Subject to Section 3.03(b)-(e) with respect to the implementation of a Benchmark Replacement or Benchmark Replacement Conforming Changes (as set forth therein) and Section 12.02(c) below,” and replacing it with “Except as otherwise expressly provided in this Agreement, including, without limitation, as provided in Section 3.03 with respect to the implementation of a Benchmark Replacement Rate or Benchmark Conforming Changes (as set forth therein) and Section 12.02(c) below,”.
SECTION 3. Borrowing Base. Effective as of the Amendment Effective Date, the Borrowing Base is increased to $150,000,000 until the next redetermination or adjustment thereof pursuant to the Credit Agreement. The Borrowing Base redetermination provided for by this Amendment is the September 1, 2021 Scheduled Redetermination under the Credit Agreement. This Amendment shall serve as a New Borrowing Base Notice under the Credit Agreement.
SECTION 4. Conditions of Effectiveness
(a) This Amendment shall become effective as of the date (the “Amendment Effective Date”) that each of the following conditions precedent shall have been satisfied (or waived in accordance with Section 12.02 of the Credit Agreement):
(1) The Administrative Agent shall have received (which may be by electronic transmission), in form and substance satisfactory to the Administrative Agent, a counterpart of this Amendment which shall have been executed by the Administrative Agent, the Issuing Bank, the Lenders, the Borrower and the Parent (which may be by PDF transmission);
(2) Each of the representations and warranties set forth in Section 5 of this Amendment shall be true and correct;
(3) Since December 31, 2020, there has been no event, development or circumstance that has had or would reasonably be expected to have a Material Adverse Effect;
(4) Borrower shall have paid all fees and expenses due to the Lenders, the Administrative Agent, the Issuing Bank and the Arranger (including, but not limited to, reasonable attorneys’ fees of counsel to the Administrative Agent); and
(5) The Administrative Agent shall have received evidence reasonably satisfactory to the Administrative Agent that the Second Lien Agent and the Required Second Lien Secured Parties (as defined in the Intercreditor Agreement) have consented to the amendment to Section 9.22(b) of the Credit Agreement contemplated by this Amendment.
(b) Without limiting the generality of the provisions of Sections 6.01 and 6.02 of the Credit Agreement, for purposes of determining compliance with the conditions specified in Section 4(a), each Lender that has signed this Amendment (and its permitted successors and assigns) shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required hereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Amendment Effective Date specifying its objection thereto.
SECTION 5. Representations and Warranties. Each of the Parent and the Borrower represents and warrants to Administrative Agent and the Lenders, with full knowledge that such Persons are relying on the following representations and warranties in executing this Amendment, as follows:
(a) It has the organizational power and authority to execute, deliver and perform this Amendment, and all organizational action on the part of it requisite for the due execution, delivery and performance of this Amendment has been duly and effectively taken.
(b) The Credit Agreement, the Loan Documents and each and every other document executed and delivered to the Administrative Agent and the Lenders in connection with this Amendment to which such Loan Party is a party constitute the legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(c) This Amendment does not and will not violate any provisions of any of limited liability company agreement, bylaws and other organizational and governing documents of such Loan Party.
(d) No consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, is required in connection with the execution, delivery or performance by, or enforcement against, such Loan Party of this Amendment.
(e) Before and after giving effect to this Amendment, the representations and warranties of such Loan Party contained in Article VII of the Credit Agreement or in any other Loan Document are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct), except that any representation and warranty which by its terms is made as of a an earlier date shall be required to be so true and correct in all material respects only as of such earlier date.
(f) Before and after giving effect to this Amendment, no Default, Event of Default or Borrowing Base Deficiency will exist and be continuing.
(g) Since December 31, 2020, there has been no event, development or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.
SECTION 6. Miscellaneous.
(a) Reference to the Credit Agreement. Upon the effectiveness hereof, on and after the date hereof, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, shall mean and be a reference to the Credit Agreement as amended hereby.
(b) Effect on the Credit Agreement; Ratification. Except as specifically amended by this Amendment, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed. By its acceptance hereof, each of the Parent and the Borrower hereby ratifies and confirms each Loan Document to which it is a party in all respects, after giving effect to the amendments set forth herein.
(c) Extent of Amendments. Except as otherwise expressly provided herein, the Credit Agreement and the other Loan Documents are not amended, modified or affected by this Amendment. Each of the Parent and the Borrower hereby ratifies and confirms that (i) except as expressly amended hereby, all of the terms, conditions, covenants, representations, warranties and all other provisions of the Credit Agreement remain in full force and effect, (ii) each of the other Loan Documents are and remain in full force and effect in accordance with their respective terms, and (iii) the Collateral and the Liens on the Collateral securing the Secured Obligations are unimpaired by this Amendment and remain in full force and effect.
(d) Loan Documents. The Loan Documents, as such may be amended in accordance herewith, are and remain legal, valid and binding obligations of the parties thereto, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. This Amendment is a Loan Document.
(e) Claims. As additional consideration to the execution, delivery, and performance of this Amendment by the parties hereto and to induce Administrative Agent and Lenders to enter into this Amendment, the Borrower represents and warrants that, as of the date hereof, it does not know of any defenses, counterclaims or rights of setoff to the payment of any Secured Obligations of the Borrower to Administrative Agent, Issuing Bank or any Lender.
(f) Execution and Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or pdf shall be equally as effective as delivery of a manually executed counterpart.
(g) Governing Law. This Amendment and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby and thereby shall be construed in accordance with and be governed by the law (without giving effect to the conflict of law principles thereof) of the State of New York.
(h) Headings. Section headings in this Amendment are included herein for convenience and reference only and shall not constitute a part of this Amendment for any other purpose.
SECTION 7. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES TO THE LOAN DOCUMENTS SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AMENDMENT AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE BORROWER, THE PARENT, ADMINISTRATIVE AGENT, ISSUING BANK AND/OR LENDERS REPRESENT THE FINAL AGREEMENT BETWEEN SUCH PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES.
SECTION 8. No Waiver. The Borrower hereby agrees that, no Event of Default and no Default has been waived or remedied by the execution of this Amendment by the Administrative Agent or any Lender. Nothing contained in this Amendment (a) shall constitute or be deemed to constitute a waiver of any Defaults or Events of Default which may exist under the Credit Agreement or the other Loan Documents, or (b) shall constitute or be deemed to constitute an election of remedies by the Administrative Agent, Issuing Bank or any Lender, or a waiver of any of the rights or remedies of the Administrative Agent, Issuing Bank or any Lender provided in the Credit Agreement, the other Loan Documents, or otherwise afforded at law or in equity.
Signatures Pages Follow
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
|
PARENT: |
GOODRICH PETROLEUM CORPORATION |
|
By: /s/ Michael J. Killelea |
|
|
Name: Michael J. Killelea |
|
|
Title: Executive Vice President, General Counsel and Corporate Secretary |
|
|
BORROWER: |
GOODRICH PETROLEUM COMPANY, L.L.C. |
|
By: /s/ Michael J. Killelea |
|
|
Name: Michael J. Killelea |
|
|
Title: Executive Vice President, General Counsel and Corporate Secretary |
| TRUIST BANK, SUCCESSOR BY MERGER TO SUNTRUST BANK, | |
| as Administrative Agent, as Issuing Bank and as a Lender | |
|
By: /s/ Benjamin L. Brown |
|
|
Name: Benjamin L. Brown |
|
|
Title: Director |
|
ROYAL BANK OF CANADA |
|
|
By: /s/ Michael Sharp |
|
|
Name: Michael Sharp |
|
|
Title: Authorized Signatory |
|
CITIZENS BANK, N.A. |
|
|
By: /s/ Kelly Graham |
|
|
Name: Kelly Graham |
|
|
Title: Vice President |
|
CIT BANK, N.A. |
|
|
By: /s/ John Feeley |
|
|
Name: John Feeley |
|
|
Title: Director |
|
CATHAY BANK |
|
|
By: /s/ Dale T Wilson |
|
|
Name: Dale T Wilson |
|
|
Title: Senior Vice President |
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 (the “Report”) 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 8, 2021 |
|
|
|
|
|
/s/ Walter G. Goodrich |
|
|
Walter G. Goodrich |
|
|
Chief Executive Officer |
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, Kristen McWatters, certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q (the “Report”) 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 8, 2021 |
|
|
|
|
|
/s/ Kristen McWatters |
|
|
Kristen McWatters |
|
|
Senior Vice President, Chief Financial Officer, and Chief Accounting Officer |
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, 2021 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 8, 2021 |
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.
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, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kristen McWatters, 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/ Kristen McWatters |
|
|
Kristen McWatters |
|
|
Senior Vice President, Chief Financial Officer, and Chief Accounting Officer |
|
|
November 8, 2021 |
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.
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Preferred Stock, Shares Issued (in shares) | 0 | 0 |
| Preferred Stock, Shares Outstanding (in shares) | 0 | 0 |
| Preferred Stock, Par Value (in dollars per share) | $ 1.00 | $ 1.00 |
| 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) | 14,187,561 | 13,392,625 |
| Common stock, shares outstanding (in shares) | 14,187,561 | 13,392,625 |
| Treasury stock, shares (in shares) | 4,035 | 0 |
Note 1 - Description of Business and Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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,” the “Company,” or the “Registrant”) 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 (“the SEC”) 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, 2020. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year or for any interim period.
During the first nine months of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded, although the impact of the COVID-19 pandemic and related economic, business and market disruptions remain uncertain.
The primary impact of COVID-19 experienced by the Company was a severe decline in the demand and price of crude oil. Because we predominately produce natural gas and natural gas demand and prices were not 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 COVID-19 pandemic 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 2021 and into 2022.
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, 2021 and December 31, 2020:
Accrued Liabilities—Accrued liabilities consisted of the following amounts as of September 30, 2021 and December 31, 2020:
Inventory –Inventory consists of equipment, 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 principle 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 development. We believe application of the Full Cost Method better reflects the true economics of exploring for and developing our oil and natural gas reserves.
Under the Full Cost Method, we capitalize all costs associated with acquisitions, exploration, development and estimated abandonment costs into a single full cost pool. 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, 2021 and 2020, we transferred less than $0.1 million from unevaluated properties to proved oil and natural gas properties. For the nine months ended September 30, 2021 and 2020, we transferred $0.3 million and less than $0.1 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 thousand cubic feet equivalent of natural gas (“Mcfe”) as the denominator and the net book value of evaluated oil and natural gas asset together with the estimated future development cost of the proved reserves as the numerator. The rate calculated per Mcfe is applied against the period's production also converted to Mcfe to arrive at the period's 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 to 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 discounted at 10%, excluding cash flows related to estimated abandonment costs already recorded, net of deferred taxes (the “Ceiling”), 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 net of deferred taxes exceed the Ceiling, we are required to write-down the value of our oil and natural gas properties to the value of the Ceiling. Estimated future net cash flows from proved reserves are calculated based on a trailing 12-month average pricing assumption.
The Full Cost Ceiling Test for the three months ended September 30, 2021 and 2020 resulted in a and $3.0 million impairment of the oil and natural gas properties, respectively. For the nine months ended September 30, 2021 and 2020, we recorded no impairment and $17.2 million, respectively.
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:
As of September 30, 2021 and December 31, 2020, 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. As of September 30, 2021and December 31, 2020, 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 gain or losses on our derivative contracts are the result of cash settlements. We have not designated any of our derivative contracts as hedges for accounting purposes; accordingly, changes in fair value are reflected in earnings. See Note 8.
Income Taxes—We account for income taxes during interim periods based on annual projections of our effective tax rate.
We account for income taxes on an annual basis, 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 net 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 net 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 or exercise of other 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 on a straight-line basis over the requisite service period.
Guarantee—As of September 30, 2021, our Subsidiary was the Subsidiary Guarantor of our 2023 Second Lien Notes (as defined below). Goodrich has no independent assets or operations, the guarantee is full and unconditional and Goodrich has no subsidiaries other than the Subsidiary.
Debt Issuance Cost—The Company records debt issuance costs associated with its 2023 Second Lien Notes (and previously with its 2021/2022 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 as this method is not materially different from the effective interest method. Debt issuance costs associated with our revolving credit facility debt are recorded in other assets in our Consolidated Balance Sheets, which are amortized straight-line over the life of such debt.
New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 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 ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by ASU 2020-04 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. Currently, the Company's only existing contract with potential impact from reference rate reform is the 2019 Senior Credit Facility, which utilizes LIBOR as a benchmark rate. In October 2020, the Third Amendment of the 2019 Senior Credit Facility included provisions for alternate benchmark rates should LIBOR be discontinued due to reference rate reform. We will continue to evaluate 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 (“ASU 2020-06”). The amendments in ASU 2020-06 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 ASU 2020-06. 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 ASU 2020-06 affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in ASU 2020-06 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 FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB has also 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.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 2 - Revenue Recognition |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Text Block] |
NOTE 2—Revenue Recognition
In accordance with Accounting Standards Codification (“ASC”) 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, 2021 and December 31, 2020, receivables from contracts with customers were $24.6 million and 2 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, 2021 and 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 3 - Asset Retirement Obligations |
9 Months Ended | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||
| Asset Retirement Obligation Disclosure [Text Block] |
NOTE 3—Asset Retirement Obligations
The reconciliation of the beginning and ending asset retirement obligations for the nine months ended September 30, 2021 is as follows (in thousands):
|
|||||||||||||||||||||||||||||||||||
Note 4 - Debt |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
NOTE 4—Debt
Debt consisted of the following balances as of September 30, 2021 and December 31, 2020 (in thousands):
(1) The carrying amount for the 2019 Senior Credit Facility represents fair value as its variable interest rate approximates market rates. (2) The debt discount was being amortized using the effective interest rate method based upon a maturity date of May 31, 2022. The principal included $2.8 million of paid in-kind interest as of December 31, 2020. The carrying value included $0.9 million of unamortized debt discount and $0.2 million of unamortized issuance cost as of December 31, 2020. (3) The debt discount is being amortized using the effective interest rate method based upon a maturity date of May 31, 2023. The principal includes $2.3 million of paid in-kind interest as of September 30, 2021. The carrying value includes $0.9 million of unamortized debt discount and $0.3 million of unamortized issuance cost as of September 30, 2021.
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, 2021 and 2020 (amounts in thousands, except effective interest rates):
(1) The 2021/2022 Second Lien Notes had a coupon interest rate of 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 19.1% for the nine months ended September 30, 2021 until exchanged on March 9, 2021. 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 paid in-kind interest. Interest expense for the nine months ended September 30, 2021 until exchanged on March 9, 2021 included $0.1 million of debt discount amortization and $0.4 million of paid in-kind interest. (2) The 2023 Second Lien Notes have a coupon interest rate of however, the discount recorded due to the convertibility of the notes increased the effective interest rate to 15.7% and 16.1% for the three and nine months ended September 30, 2021, respectively. Interest expense for the three months ended September 30, 2021 included $0.1 million of debt discount and issuance cost amortization and $1.1 million of accrued interest to be paid in-kind, and interest expense for the nine months ended September 30, 2021 included $0.4 million of debt discount and issuance cost amortization and $2.3 million of accrued interest to be paid in-kind.
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, 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 the earlier of (a) May 14, 2024 or (b) December 2, 2022, if the 2023 Second Lien Notes (as defined below) have not been voluntarily redeemed, repurchased, refinanced or otherwise retired by December 2, 2022, which is the date that is 180 days prior to the May 31, 2023 “Maturity Date” of the 2023 Second Lien Notes. The 2019 Senior Credit Facility provides for a maximum credit amount of $500 million subject to a borrowing base limitation, which was $120.0 million as of September 30, 2021 and was increased to $150.0 million during the Fall 2021 borrowing base redetermination. The borrowing base is redetermined in March and September of each calendar year, and is subject to additional adjustments from time to time, including, without limitation, 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. Under the Fifth Amendment to 2019 Credit Agreement entered into on November 5, 2021, the Company is permitted to make restricted payments under the 2019 Credit Agreement so long as (i) no borrowing base deficiency, default or event of default exists or would result therefrom, (ii) after giving pro forma effect to such restricted payment, availability is no less than 20% of the aggregate amount of the available commitments under the 2019 Credit Agreement and (iii) after giving pro forma effect to such restricted payment, the ratio of net funded debt of the Company to EBITDAX shall not be greater than 1.50 to 1.00. The Fifth Amendment to 2019 Credit Agreement also permits the Company to make redemptions of the Second Lien Debt (as defined in the 2019 Credit Agreement) and payments of interest on the 2023 Second Lien Notes so long as each such redemption and interest payment would be permitted as a restricted payment. 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, 2021, the weighted average interest rate on the borrowings from the 2019 Senior Credit Facility was 3.4%. 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 2023 Second Lien Notes remain outstanding, a ratio of total proved PV-10 attributable to the Company’s and the 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 November 5, 2021, we entered into a Fifth Amendment to 2019 Credit Agreement with Subsidiary, the Administrative Agent and the lenders party thereto, pursuant to which, among other things, the lenders made certain changes to the restricted payments and redemption covenants.
As of September 30, 2021, the Company had a borrowing base of $120.0 million with $90.4 million of borrowings outstanding and outstanding letters of credit. The Company also had $1.4 million of unamortized debt issuance costs recorded as of September 30, 2021 related to the 2019 Senior Credit Facility.
As of September 30, 2021, the Company was in compliance with all covenants within the 2019 Senior Credit Facility.
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 “2019 Second Lien Notes”) along with 10-year costless warrants to acquire 2.5 million shares of common stock. Holders of the 2019 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 2019 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 2019 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 2019 Second Lien Notes by increasing the principal amount of the outstanding 2019 Second Lien Notes or by issuing additional second lien notes.
Upon issuance of the 2019 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 2019 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 2019 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.
On May 14, 2019, the Company and the Subsidiary entered into a purchase agreement with certain purchasers pursuant to which the Company issued to such purchasers $12.0 million aggregate principal amount of the Company’s 13.50% Convertible Second Lien Senior Secured Notes due 2021 (the “2021/2022 Second Lien Notes”). Proceeds from the sale of the 2021/2022 Second Lien Notes were primarily used to pay down outstanding borrowings under the 2019 Senior Credit Facility. In May 2020, the maturity date of the 2021/2022 Second Lien Notes was extended to May 31, 2022.
Upon issuance of the 2021/2022 Second Lien 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 fair value of the debt instrument without the conversion feature and the resulting equity component was valued using a binomial lattice model. 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.
On March 9, 2021, the Company and the Subsidiary entered into a note purchase and exchange agreement (“the Note Purchase and Exchange Agreement”) with certain purchasers (each such purchaser, together with its successors and assigns, a “2023 Second Lien Notes Purchaser”) pursuant to which the Company issued to the 2023 Second Lien Notes Purchasers (A) $15.2 million aggregate principal amount of the Company’s 13.50% Convertible Second Lien Senior Secured Notes due 2023 (the “2023 Second Lien Notes”) in exchange for an equal amount of 2021/2022 Second Lien Notes and (B) $15.0 million of the 2023 Second Lien Notes in exchange for cash. Proceeds from the sale of the 2023 Second Lien Notes were used to pay down outstanding borrowings under the 2019 Senior Credit Facility. In connection with the Note Purchase and Exchange Agreement, we recorded a $0.9 million loss on early extinguishment of debt related to the remaining unamortized debt discount and debt issuance costs from the 2021/2022 Second Lien Notes.
The 2023 Second Lien Notes, as set forth in the indenture governing the 2023 Second Lien Notes (the “2023 Second Lien Notes Indenture”), are scheduled to mature on May 31, 2023. The 2023 Second Lien 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 2023 Second Lien Notes by increasing the principal amount of the outstanding 2023 Second Lien Notes.
The 2023 Second Lien 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 2023 Second Lien Notes Indenture also contains a financial covenant that 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 2023 Second Lien 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 2023 Second Lien Notes are convertible into the Company’s common stock at the conversion rate, which is the sum of the outstanding principal amount of 2023 Second Lien 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 2023 Second Lien 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 2023 Second Lien Notes Indenture, (2) cash or (3) a combination of shares of its common stock and cash; however, the Company’s ability to redeem the 2023 Second Lien Notes with cash is subject to the terms of the 2019 Credit Agreement.
Upon issuance of the 2023 Second Lien Notes on March 9, 2021, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, we recorded a debt discount of $1.2 million, thereby reducing the $30.2 million carrying value upon issuance to $29.0 million and recorded an equity component of $1.2 million. The fair value of the debt instrument without the conversion feature and the resulting equity component was valued using a binomial lattice model. The debt discount is amortized using the effective interest rate method based upon an original term through May 31, 2023. In connection with the extinguishment of the 2021/2022 Second Lien Notes, we recorded a loss on early extinguishment of debt of $0.9 million consisting of $0.8 million of remaining unamortized debt discount and $0.1 million of remaining unamortized debt issuance costs on the 2021/2022 Second Lien Notes.
As of September 30, 2021, $0.9 million of debt discount and $0.3 million of debt issuance costs remained to be amortized on the 2023 Second Lien Notes.
As of September 30, 2021, the Company was in compliance with all covenants with respect to the 2023 Second Lien Notes Indenture.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 5 - Equity |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Stockholders' Equity Note Disclosure [Text Block] |
NOTE 5—Equity
During the three and nine months ended September 30, 2021, the Company had vestings of its share-based compensation units representing a total fair value of less than $0.1 million, which resulted in the issuance of approximately 6,000 common stock shares. The Company withheld shares for payment of taxes due upon vesting and unrestriction of share-based compensation, which resulted in 4,035 shares held in treasury as of September 30, 2021. 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, which resulted 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 39,700 shares held in treasury as of September 30, 2020.
During the three and nine months ended September 30, 2021, certain holders of costless unsecured claim (“UCC”) warrants exercised such warrants into approximately 780,000 and 790,000 common stock shares, respectively. The UCC warrants, held by certain past unsecured creditors, became exercisable when the required equity strike price (as defined per the warrant agreement) of $230.0 million was achieved on July 14, 2021.
In connection with the issuance of the 2023 Second Lien Notes, we recorded an equity component of $1.2 million in March 2021. The equity component recorded for the 2023 Second Lien Notes is not remeasured as long as it continues to meet the condition for equity classification. For further details, see Note 4.
|
Note 6 - Net Income (Loss) Per Common Share |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Text Block] |
NOTE 6—Net Income (Loss) Per Common Share
Net loss applicable to common stock was used as the numerator in computing basic and diluted net loss per common share for the three and nine months ended September 30, 2021 and 2020. 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 loss per common share:
** Common shares issuable on assumed vesting 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 to 200% of the initial performance units granted.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 7 - Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
NOTE 7—Income Taxes
We recorded no income tax expense or benefit for the three and nine months ended September 30, 2021 and 2020. We maintained a valuation allowance at September 30, 2021, which resulted in no net deferred tax asset or liability appearing on our consolidated balance sheets. We continued to maintain this valuation allowance after an evaluation of all available evidence led to a conclusion that based upon the more-likely-than-not standard of the accounting literature our deferred tax assets are unrecoverable. The valuation allowance was $86.7 million as of December 31, 2020. The valuation allowance has no impact on our ability to utilize our net operating losses for tax purposes. However, we are subject to IRC Section 382, which may limit our ability to utilize net operating losses to offset future taxable income.
As of September 30, 2021, we have no unrecognized tax benefits. There were no significant changes to our tax position since December 31, 2020.
|
Note 8 - Commodity Derivative Activities |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2021 and 2020:
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 loss of $0.9 million had ARM Energy been unable to fulfill their obligations as of September 30, 2021.
As of September 30, 2021, 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:
During the third quarter of 2021, we entered into the following contracts with Truist Bank, RBC Capital Markets, and Citizens Commercial Banking:
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, 2021 (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.
We enter into commodity 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, 2021 and December 31, 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 9 - Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| 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, 2021 and 2020.
Pursuant to a purchase and sale agreement related to acreage acquired in September 2021, the Company has an unrecorded commitment to drill and complete producing wells over a four year time period, no later than September 2025. In the event the Company fails to perform this obligation, each of the eight wells is subject to liquidated damages of $0.6 million, or $4.5 million in total as of September 30, 2021. The Company anticipates satisfying this drilling obligation within the required timeframe.
|
Note 10 - Leases |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 other equipment which are immaterial to our financial statements and/or have lease terms less than 12 months and have therefore not been recorded on our Consolidated Balance Sheets.
The lease cost components for the three and nine months ended September 30, 2021 and 2020 are classified as follows:
(1) Includes building operating expenses.
The following are additional details related to our lease portfolio as of September 30, 2021 and December 31, 2020:
The following table presents operating lease liability maturities as of September 30, 2021:
As of September 30, 2021, our office building operating lease has a weighted-average remaining lease term of 5.6 years and a weighted-average discount rate of 8.8 percent. We have the option to terminate our building operating lease effective May 1, 2024 upon prior written notice and the payment of $0.1 million as an early termination fee. Cash paid for amounts included in the measurement of operating lease liabilities was million and $0.8 million for the three and nine months ended September 30, 2021, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was million and $1.2 million for the three and nine months ended September 30, 2020, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 11 - Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Subsequent Events [Text Block] |
NOTE 11—Subsequent Events
Subsequent to September 30, 2021, certain holders of unsecured claims warrants of the Company exercised such warrants, which resulted in the issuance of approximately 202,000 shares of common stock.
On November 5, 2021, we entered into a Fifth Amendment to Credit Agreement with Subsidiary, the Administrative Agent and the lenders party thereto, pursuant to which, among other things, the lenders made certain changes to the restricted payments and redemption covenants. See Note 4—Debt.
|
Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 (“the SEC”) 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, 2020. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year or for any interim period.
During the first nine months of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded, although the impact of the COVID-19 pandemic and related economic, business and market disruptions remain uncertain.
The primary impact of COVID-19 experienced by the Company was a severe decline in the demand and price of crude oil. Because we predominately produce natural gas and natural gas demand and prices were not 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 COVID-19 pandemic 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 2021 and into 2022.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2021 and December 31, 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Liabilities, Policy [Policy Text Block] | Accrued Liabilities—Accrued liabilities consisted of the following amounts as of September 30, 2021 and December 31, 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory, Policy [Policy Text Block] | Inventory –Inventory consists of equipment, 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 principle 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 development. We believe application of the Full Cost Method better reflects the true economics of exploring for and developing our oil and natural gas reserves.
Under the Full Cost Method, we capitalize all costs associated with acquisitions, exploration, development and estimated abandonment costs into a single full cost pool. 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, 2021 and 2020, we transferred less than $0.1 million from unevaluated properties to proved oil and natural gas properties. For the nine months ended September 30, 2021 and 2020, we transferred $0.3 million and less than $0.1 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 thousand cubic feet equivalent of natural gas (“Mcfe”) as the denominator and the net book value of evaluated oil and natural gas asset together with the estimated future development cost of the proved reserves as the numerator. The rate calculated per Mcfe is applied against the period's production also converted to Mcfe to arrive at the period's 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 to 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 present value of estimated future net cash flows from proved reserves discounted at 10%, excluding cash flows related to estimated abandonment costs already recorded, net of deferred taxes (the “Ceiling”), 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 net of deferred taxes exceed the Ceiling, we are required to write-down the value of our oil and natural gas properties to the value of the Ceiling. Estimated future net cash flows from proved reserves are calculated based on a trailing 12-month average pricing assumption.
The Full Cost Ceiling Test for the three months ended September 30, 2021 and 2020 resulted in a and $3.0 million impairment of the oil and natural gas properties, respectively. For the nine months ended September 30, 2021 and 2020, we recorded no impairment and $17.2 million, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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:
As of September 30, 2021 and December 31, 2020, 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. As of September 30, 2021and December 31, 2020, the net liability for natural gas balancing was immaterial. Differences 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 gain or losses on our derivative contracts are the result of cash settlements. We have not designated any of our derivative contracts as hedges for accounting purposes; 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 during interim periods based on annual projections of our effective tax rate.
We account for income taxes on an annual basis, 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 net 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 net 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 or exercise of other 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 on a straight-line basis over the requisite service period.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantee, Policy [Policy Text Block] | Guarantee—As of September 30, 2021, our Subsidiary was the Subsidiary Guarantor of our 2023 Second Lien Notes (as defined below). Goodrich has no independent assets or operations, the guarantee is full and unconditional and Goodrich has no subsidiaries other than the Subsidiary.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt, Policy [Policy Text Block] | Debt Issuance Cost—The Company records debt issuance costs associated with its 2023 Second Lien Notes (and previously with its 2021/2022 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 as this method is not materially different from the effective interest method. Debt issuance costs associated with our revolving credit facility debt are recorded in other assets in our Consolidated Balance Sheets, which are amortized straight-line over the life of such debt.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 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 ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by ASU 2020-04 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. Currently, the Company's only existing contract with potential impact from reference rate reform is the 2019 Senior Credit Facility, which utilizes LIBOR as a benchmark rate. In October 2020, the Third Amendment of the 2019 Senior Credit Facility included provisions for alternate benchmark rates should LIBOR be discontinued due to reference rate reform. We will continue to evaluate 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 (“ASU 2020-06”). The amendments in ASU 2020-06 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 ASU 2020-06. 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 ASU 2020-06 affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in ASU 2020-06 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 FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB has also 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.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1 - Description of Business and Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 2 - Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 3 - Asset Retirement Obligations (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||
| Schedule of Asset Retirement Obligations [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||
Note 4 - Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Instruments [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Interest Expense and Effective Interest on Liability Component [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 6 - Net Income (Loss) Per Common Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 8 - Commodity Derivative Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Realized and Unrealized Gains and Losses [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Price Risk Derivatives [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offsetting Liabilities [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 10 - Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease, Cost [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Lease, Assets and Liabilities [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lessee, Operating Lease, Liability, Maturity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1 - Description of Business and Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Oil and Gas Property Full Cost Method Period Increase (Decrease) | $ 100 | $ 300 | ||
| Unamortized Costs Capitalized Less Related Deferred Income Taxes Exceed Ceiling Limitations, Expense | $ 0 | $ 3,000 | $ 0 | $ 17,200 |
| Maximum [Member] | ||||
| Oil and Gas Property Full Cost Method Period Increase (Decrease) | $ 100 | |||
| Property, Plant and Equipment, Useful Life (Year) | 5 years | |||
| Minimum [Member] | ||||
| Property, Plant and Equipment, Useful Life (Year) | 3 years | |||
Note 1 - Description of Business and Significant Accounting Policies - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Trade payables | $ 9,104 | $ 12,190 |
| Revenue payables | 22,842 | 14,413 |
| Prepayments from partners | 400 | 664 |
| Miscellaneous payables | 350 | 544 |
| Total Accounts payable | 32,696 | 27,811 |
| Accrued capital expenditures | 8,737 | 4,138 |
| Accrued lease operating expense | 1,151 | 971 |
| Accrued production and other taxes | 1,058 | 509 |
| Accrued transportation and gathering | 2,114 | 1,722 |
| Accrued performance bonus | 5,023 | 3,947 |
| Accrued interest | 146 | 166 |
| Accrued office lease | 397 | 962 |
| Accrued general and administrative expense and other | 559 | 451 |
| Total Accrued liabilities | $ 19,185 | $ 12,866 |
Note 2 - Revenue Recognition (Details Textual) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accrued Oil and Gas Revenue | $ 24,568 | $ 10,179 |
Note 3 - Asset Retirement Obligations - Schedule of Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Balance | $ 4,716 | |
| Liabilities incurred | 472 | |
| Accretion expense | 260 | |
| Balance | 5,448 | |
| Current liability | 0 | |
| Long term liability | $ 5,448 | $ 4,716 |
Note 4 - Debt (Details Textual) $ / shares in Units, $ in Thousands, shares in Millions |
3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Nov. 05, 2021
USD ($)
|
Mar. 09, 2021
USD ($)
$ / shares
|
May 29, 2019
USD ($)
|
May 14, 2019
USD ($)
|
Oct. 12, 2016
USD ($)
shares
|
Sep. 30, 2021
USD ($)
|
Mar. 31, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
May 31, 2020
USD ($)
|
Oct. 11, 2019
USD ($)
|
May 31, 2019
USD ($)
|
May 30, 2019
USD ($)
|
||||||||||||||
| Debt Instrument, Interest Rate During Period | |||||||||||||||||||||||||||||
| Debt Instrument, Face Amount | $ 122,935 | $ 122,935 | $ 111,211 | ||||||||||||||||||||||||||
| Long-term Debt, Gross | 121,749 | 121,749 | 110,159 | ||||||||||||||||||||||||||
| Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature | $ 1,207 | $ 282 | |||||||||||||||||||||||||||
| Gain (Loss) on Extinguishment of Debt, Total | 0 | $ 0 | (935) | $ 0 | |||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||
| Old 2L Notes [Member] | |||||||||||||||||||||||||||||
| Long-term Debt Gross Paid in Kind Interest | 2,800 | ||||||||||||||||||||||||||||
| Debt Instrument, Unamortized Discount, Total | 800 | 800 | 900 | $ 1,400 | |||||||||||||||||||||||||
| Debt Issuance Costs, Net, Total | $ 100 | $ 100 | 200 | $ 300 | |||||||||||||||||||||||||
| Debt Instrument, Interest Rate, Stated Percentage | 13.50% | ||||||||||||||||||||||||||||
| Debt Instrument, Interest Rate During Period | [1] | 0.00% | 18.60% | 19.10% | 20.10% | ||||||||||||||||||||||||
| Debt Instrument, Face Amount | $ 12,000 | $ 0 | [2] | $ 0 | [2] | 14,811 | [2] | ||||||||||||||||||||||
| Long-term Debt, Gross | 0 | [2] | 0 | [2] | 13,759 | [2] | $ 10,600 | $ 12,000 | |||||||||||||||||||||
| Gain (Loss) on Extinguishment of Debt, Total | (900) | ||||||||||||||||||||||||||||
| Debt Instrument, Convertible, Carrying Amount of Equity Component | $ 1,400 | ||||||||||||||||||||||||||||
| The 2023 Second Lien Notes [Member] | |||||||||||||||||||||||||||||
| Long-term Debt Gross Paid in Kind Interest | 2,300 | 2,300 | |||||||||||||||||||||||||||
| Debt Instrument, Unamortized Discount, Total | $ 1,200 | 900 | 900 | ||||||||||||||||||||||||||
| Debt Issuance Costs, Net, Total | $ 300 | $ 300 | |||||||||||||||||||||||||||
| Debt Instrument, Interest Rate, Stated Percentage | 13.50% | 13.50% | 13.50% | ||||||||||||||||||||||||||
| Debt Instrument, Interest Rate During Period | [3] | 15.70% | 0.00% | 16.10% | 0.00% | ||||||||||||||||||||||||
| Amortization of Debt Discount (Premium) | $ 100 | $ 400 | |||||||||||||||||||||||||||
| Paid-in-Kind Interest | 1,100 | 2,300 | |||||||||||||||||||||||||||
| Debt Instrument, Covenant Compliance Unrestricted Cash, Maximum | $ 10,000 | ||||||||||||||||||||||||||||
| Debt Instrument, Covenant, Compliance Total Proved Asset Coverage Ratio | 1.50 | ||||||||||||||||||||||||||||
| Debt Instrument, Face Amount | $ 15,200 | 32,535 | [4] | 32,535 | [4] | 0 | [4] | ||||||||||||||||||||||
| Long-term Debt, Gross | 30,200 | $ 31,349 | [4] | 31,349 | [4] | 0 | [4] | ||||||||||||||||||||||
| Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature | $ 1,200 | ||||||||||||||||||||||||||||
| Proceeds from Issuance of Debt | $ 15,000 | ||||||||||||||||||||||||||||
| Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares | $ 21.33 | ||||||||||||||||||||||||||||
| Long-term Debt, Total | $ 29,000 | ||||||||||||||||||||||||||||
| 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 | 18.60% | 19.10% | 20.10% | ||||||||||||||||||||||||||
| Amortization of Debt Discount (Premium) | $ 100 | $ 100 | $ 400 | ||||||||||||||||||||||||||
| Paid-in-Kind Interest | $ 500 | 400 | $ 1,400 | ||||||||||||||||||||||||||
| Debt Instrument, Face Amount | $ 40,000 | ||||||||||||||||||||||||||||
| Long-term Debt, Gross | 29,000 | $ 40,000 | |||||||||||||||||||||||||||
| Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature | $ 11,000 | ||||||||||||||||||||||||||||
| Debt Conversion, Original Debt, Amount | $ 56,700 | ||||||||||||||||||||||||||||
| Gain (Loss) on Extinguishment of Debt, Total | $ (1,600) | ||||||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | |||||||||||||||||||||||||||||
| Debt Issuance Costs, Net, Total | $ 1,400 | $ 1,400 | |||||||||||||||||||||||||||
| Debt Instrument, Interest Rate During Period | 4.20% | 4.60% | 4.20% | 4.90% | |||||||||||||||||||||||||
| Line of Credit Facility, Maximum Borrowing Capacity | $ 500,000 | ||||||||||||||||||||||||||||
| Line of Credit Facility, Current Borrowing Capacity | $ 120,000 | $ 120,000 | |||||||||||||||||||||||||||
| Debt Instrument, Covenant Compliance Debt to EBITDAX | 3.50 | ||||||||||||||||||||||||||||
| Line of Credit Facility, Interest Rate at Period End, Default Rate | 2.00% | ||||||||||||||||||||||||||||
| Line of Credit Facility, Interest Rate at Period End | 3.40% | 3.40% | |||||||||||||||||||||||||||
| Debt Instrument, Covenant, Current Ratio | 1.00 | ||||||||||||||||||||||||||||
| Debt Instrument, Covenant Compliance Unrestricted Cash, Maximum | $ 10,000 | ||||||||||||||||||||||||||||
| Debt Instrument, Covenant, Compliance Total Proved Asset Coverage Ratio | 1.50 | ||||||||||||||||||||||||||||
| Long-term Line of Credit, Total | $ 90,400 | $ 90,400 | |||||||||||||||||||||||||||
| Letters of Credit Outstanding, Amount | 0 | 0 | |||||||||||||||||||||||||||
| Debt Instrument, Face Amount | [5] | 90,400 | 90,400 | 96,400 | |||||||||||||||||||||||||
| Long-term Debt, Gross | [5] | $ 90,400 | $ 90,400 | $ 96,400 | |||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | Minimum [Member] | |||||||||||||||||||||||||||||
| Line of Credit Facility, Commitment Fee Percentage | 0.375% | ||||||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | Maximum [Member] | |||||||||||||||||||||||||||||
| Line of Credit Facility, Commitment Fee Percentage | 0.50% | ||||||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | Base Rate [Member] | Minimum [Member] | |||||||||||||||||||||||||||||
| Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||||||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | Base Rate [Member] | Maximum [Member] | |||||||||||||||||||||||||||||
| Debt Instrument, Basis Spread on Variable Rate | 2.50% | ||||||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | |||||||||||||||||||||||||||||
| Debt Instrument, Basis Spread on Variable Rate | 2.50% | ||||||||||||||||||||||||||||
| The 2019 Senior Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | |||||||||||||||||||||||||||||
| Debt Instrument, Basis Spread on Variable Rate | 3.50% | ||||||||||||||||||||||||||||
| 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] | Subsequent Event [Member] | |||||||||||||||||||||||||||||
| Line of Credit Facility, Current Borrowing Capacity | $ 150,000 | ||||||||||||||||||||||||||||
| Line of Credit, Aggregate Available Commitment, Percent | 20.00% | ||||||||||||||||||||||||||||
| Debt Instrument, Covenant Compliance Debt to EBITDAX | 1.50 | ||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
Note 4 - Debt - Components of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Mar. 09, 2021 |
Dec. 31, 2020 |
May 31, 2019 |
May 30, 2019 |
May 14, 2019 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Principal | $ 122,935 | $ 111,211 | ||||||||||||
| Carrying amount | 121,749 | 110,159 | ||||||||||||
| The 2019 Senior Credit Facility [Member] | ||||||||||||||
| Principal | [1] | 90,400 | 96,400 | |||||||||||
| Carrying amount | [1] | 90,400 | 96,400 | |||||||||||
| Old 2L Notes [Member] | ||||||||||||||
| Principal | 0 | [2] | 14,811 | [2] | $ 12,000 | |||||||||
| Carrying amount | 0 | [2] | 13,759 | [2] | $ 10,600 | $ 12,000 | ||||||||
| The 2023 Second Lien Notes [Member] | ||||||||||||||
| Principal | 32,535 | [3] | $ 15,200 | 0 | [3] | |||||||||
| Carrying amount | $ 31,349 | [3] | $ 30,200 | $ 0 | [3] | |||||||||
| ||||||||||||||
Note 4 - Debt - Components of Debt, Interest Expense and Effective Interest Rate (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|||||
| Interest Expense | $ 2,232 | $ 1,733 | $ 6,255 | $ 5,410 | ||||
| Effective Interest Rate | ||||||||
| The 2019 Senior Credit Facility [Member] | ||||||||
| Interest Expense | $ 1,020 | $ 1,129 | $ 3,011 | $ 3,534 | ||||
| Effective Interest Rate | 4.20% | 4.60% | 4.20% | 4.90% | ||||
| Old 2L Notes [Member] | ||||||||
| Interest Expense | [1] | $ 0 | $ 604 | $ 500 | $ 1,876 | |||
| Effective Interest Rate | [1] | 0.00% | 18.60% | 19.10% | 20.10% | |||
| The 2023 Second Lien Notes [Member] | ||||||||
| Interest Expense | [2] | $ 1,212 | $ 0 | $ 2,744 | $ 0 | |||
| Effective Interest Rate | [2] | 15.70% | 0.00% | 16.10% | 0.00% | |||
| ||||||||
Note 5 - Equity (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Mar. 31, 2021 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Jul. 14, 2021 |
|
| Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 100 | $ 100 | $ 1,000 | ||||||
| Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture, Total (in shares) | 6,000 | 6,000 | 136,000 | ||||||
| Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares) | 4,035 | 39,700 | |||||||
| Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | $ 300 | ||||||||
| Stock Issued During Period, Shares, UCC Warrant Exchange (in shares) | 780,000 | 790,000 | |||||||
| Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature | $ 1,207 | $ 282 | |||||||
| Unsecured Claims Warrants [Member] | |||||||||
| Unaffiliated Market Capitalization That Needed to Be Achieved Before the Warrants Became Exercisable | $ 230,000 | ||||||||
Note 6 - Net Income (Loss) Per Common Share (Details Textual) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| 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 | 200.00% |
Note 6 - Net Income (Loss) Per Common Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|||
| Net loss applicable to common stock | $ (47,969) | $ (16,360) | $ (55,025) | $ (36,265) | ||
| Weighted average shares of common stock outstanding - basic (in shares) | 13,641 | 12,618 | 13,481 | 12,564 | ||
| Net loss per common share - basic (in dollars per share) | $ (3.52) | $ (1.30) | $ (4.08) | $ (2.89) | ||
| Weighted average shares of common stock outstanding - diluted (in shares) | 13,641 | 12,618 | 13,481 | 12,564 | ||
| Net loss per common share - diluted (in dollars per share) | $ (3.52) | $ (1.30) | $ (4.08) | $ (2.89) | ||
| Convertible Debt Securities [Member] | ||||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 1,525 | 672 | 1,525 | 672 | ||
| Warrant [Member] | ||||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 715 | 1,329 | 715 | 1,329 | ||
| Restricted Stock [Member] | ||||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | [1] | 251 | 420 | 150 | 231 | |
| ||||||
Note 7 - Income Taxes (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Income Tax Expense (Benefit), Total | $ 0 | $ 0 | $ 0 | $ 0 | |
| Deferred Tax Assets, Valuation Allowance, Total | $ 86,700 | ||||
| Unrecognized Tax Benefits, Ending Balance | $ 0 | $ 0 | |||
Note 8 - Commodity Derivative Activities (Details Textual) $ in Millions |
Sep. 30, 2021
USD ($)
|
|---|---|
| Commodity Contract [Member] | ARM Energy [Member] | |
| Loss Contingency, Estimate of Possible Loss | $ 0.9 |
Note 8 - Commodity Derivative Activities - Summary of Gains and Losses on Derivatives (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Total gain (loss) on commodity derivatives not designated as hedges | $ (77,369) | $ (11,079) | $ (103,111) | $ (3,629) |
| Commodity Contract [Member] | ||||
| Gain (loss) on commodity derivatives not designated as hedges, settled | (12,498) | 1,597 | (14,515) | 14,905 |
| Loss on commodity derivatives not designated as hedges, not settled | (64,871) | (12,676) | (88,596) | (18,534) |
| Total gain (loss) on commodity derivatives not designated as hedges | $ (77,369) | $ (11,079) | $ (103,111) | $ (3,629) |
Note 9 - Commitments and Contingencies (Details Textual) $ in Millions |
Sep. 30, 2021
USD ($)
|
|---|---|
| Commitment, Number of Wells to Drill | 8 |
| Commitment, Failure to Drill Liquidation Damages, Per Well | $ 0.6 |
| Commitment, Failure to Drill Liquidation Damages | $ 4.5 |
Note 10 - Leases (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
May 01, 2024 |
|
| Operating Lease, Weighted Average Remaining Lease Term (Year) | 5 years 7 months 6 days | 5 years 7 months 6 days | |||
| Operating Lease, Weighted Average Discount Rate, Percent | 8.80% | 8.80% | |||
| Operating Lease, Early Termination Fee | $ 0.1 | ||||
| Operating Lease, Payments | $ 0.2 | $ 0.4 | $ 0.8 | $ 1.2 | |
Note 10 - Leases - Lease Cost and Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|||
| Lease, Cost, Total | $ 213 | $ 382 | $ 322 | $ 1,175 | ||
| General and Administrative Expense [Member] | ||||||
| Building lease cost | 201 | 385 | 236 | 1,155 | ||
| Variable lease cost (1) | [1] | $ 12 | $ (3) | $ 86 | $ 20 | |
| ||||||
Note 10 - Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Lease asset, net | $ 3,021 | $ 3,426 |
| Total lease liabilities | 2,907 | |
| Furniture, Fixtures and Equipment and Other Capital Assets [Member] | ||
| Lease asset, gross | 5,871 | 5,871 |
| Accumulated Depletion, Depreciation, and Amortization [Member] | ||
| Accumulated depreciation | 2,850 | 2,445 |
| Accounts Payable and Accrued Liabilities [Member] | ||
| Current lease liability | 397 | 962 |
| Other Noncurrent Liabilities [Member] | ||
| Non-current lease liability | 2,510 | 2,810 |
| Furniture, Fixtures and Equipment and Other Capital Assets Accrued Liabilities and Other Noncurrent Liabilities [Member] | ||
| Total lease liabilities | $ 2,907 | $ 3,772 |
Note 10 - Leases - Lease Liability Maturities (Details) $ in Thousands |
Sep. 30, 2021
USD ($)
|
|---|---|
| 2021 | $ 159 |
| 2022 | 637 |
| 2023 | 653 |
| 2024 | 661 |
| 2025 | 678 |
| Thereafter | 914 |
| Total lease payments | 3,702 |
| Less imputed interest | 795 |
| Present value of lease liabilities | $ 2,907 |
Note 11 - Subsequent Events (Details Textual) |
Nov. 04, 2021
shares
|
|---|---|
| Unsecured Claims Warrants [Member] | Subsequent Event [Member] | |
| Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) | 202,000 |