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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended March 31, 2017

or

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

For the transition period from                      to                     

Commission File Number: 001-36511

 

Eclipse Resources Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

46-4812998

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

2121 Old Gatesburg Rd, Suite 110

State College, PA

16803

(Address of principal executive offices)

(Zip code)

(814) 308-9754

(Registrant’s telephone number, including area code)

 

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

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

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

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  (Do not check if a small reporting company)

  

Small reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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

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

Number of shares of the registrant’s common stock outstanding at May 9, 2017: 262,585,250 shares

 

 

 

 


 

ECLIPSE RESOURCES CORPORATION

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

 

 

2


 

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains “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”). All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and income or losses, projected costs and capital expenditures, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “will,” “plan,” “would,” “could,” “endeavor,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are or were, when made, based on our current expectations and assumptions about future events and are or were, when made, based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2017.

Forward-looking statements may include statements about, among other things:

 

realized prices for natural gas, natural gas liquids (“NGLs”) and oil and the volatility of those prices;

 

write-downs of our natural gas and oil asset values due to declines in commodity prices;

 

our business strategy;

 

our reserves, including the impact of current commodity prices on our estimated year end reserves;

 

general economic conditions;

 

our financial strategy, liquidity and capital required for developing our properties and the timing related thereto;

 

the timing and amount of future production of natural gas, NGLs and oil;

 

our hedging strategy and results;

 

future drilling plans;

 

competition and government regulations, including those related to hydraulic fracturing;

 

the anticipated benefits under our commercial agreements;

 

pending legal matters relating to our leases;

 

marketing of natural gas, NGLs and oil;

 

leasehold and business acquisitions;

 

leasehold terms expiring before production can be established;

 

the costs, terms and availability of gathering, processing, fractionation and other midstream services;

 

credit markets;

 

uncertainty regarding our future operating results, including initial production rates and liquid yields in our type curve areas; and

 

plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, legal and environmental risks, drilling and other operating risks, regulatory changes, commodity price volatility and the recent significant decline of the price of natural gas, NGLs and oil, inflation, lack of availability of drilling, production and processing equipment and services, counterparty credit risk, the uncertainty inherent in estimating natural gas, NGLs and oil reserves and in projecting future rates of production, cash flow and access to capital, risks associated with our level of indebtedness, the timing of development expenditures, and the other risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K, filed with the SEC on March 3, 2017.

3


 

Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs and oil that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas, NGLs and oil that are ultimately recovered.

Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect new information obtained or events or circumstances that occur after the date of this Quarterly Report.

 

 

4


 

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

ECLIPSE RESOURCES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

March 31,

2017

 

 

December 31,

2016

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

160,458

 

 

$

201,229

 

Accounts receivable

 

 

33,823

 

 

 

44,423

 

Assets held for sale

 

 

468

 

 

 

468

 

Other current assets

 

 

3,352

 

 

 

4,295

 

Total current assets

 

 

198,101

 

 

 

250,415

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT AT COST

 

 

 

 

 

 

 

 

Oil and natural gas properties, successful efforts method:

 

 

 

 

 

 

 

 

Unproved properties

 

 

513,314

 

 

 

526,270

 

Proved oil and gas properties, net

 

 

476,676

 

 

 

414,482

 

Other property and equipment, net

 

 

6,433

 

 

 

6,748

 

Total property and equipment, net

 

 

996,423

 

 

 

947,500

 

 

 

 

 

 

 

 

 

 

OTHER NONCURRENT ASSETS

 

 

 

 

 

 

 

 

Other assets

 

 

5,766

 

 

 

729

 

TOTAL ASSETS

 

$

1,200,290

 

 

$

1,198,644

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable

 

$

51,472

 

 

$

44,049

 

Accrued capital expenditures

 

 

14,769

 

 

 

11,083

 

Accrued liabilities

 

 

38,864

 

 

 

55,044

 

Accrued interest payable

 

 

9,823

 

 

 

21,098

 

Liabilities held for sale

 

 

245

 

 

 

245

 

Total current liabilities

 

 

115,173

 

 

 

131,519

 

 

 

 

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

 

 

 

 

Debt, net of unamortized discount and debt issuance costs

 

 

492,964

 

 

 

492,278

 

Asset retirement obligations

 

 

5,054

 

 

 

4,806

 

Other liabilities

 

 

3,270

 

 

 

13,434

 

Total liabilities

 

 

616,461

 

 

 

642,037

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Preferred stock, 50,000,000 authorized, no shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.01 par value, 1,000,000,000 authorized, 262,239,978

   and 260,591,893 shares issued and outstanding, respectively

 

 

2,631

 

 

 

2,607

 

Additional paid in capital

 

 

1,960,788

 

 

 

1,958,731

 

Treasury stock, shares at cost; 837,635 and 72,704 shares, respectively

 

 

(1,767

)

 

 

(61

)

Accumulated deficit

 

 

(1,377,823

)

 

 

(1,404,670

)

Total stockholders' equity

 

 

583,829

 

 

 

556,607

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

1,200,290

 

 

$

1,198,644

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

ECLIPSE RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

REVENUES

 

 

 

 

 

 

 

 

Natural gas, oil and natural gas liquids sales

 

$

99,432

 

 

$

40,488

 

Brokered natural gas and marketing revenue

 

 

2,431

 

 

 

9,118

 

Total revenues

 

 

101,863

 

 

 

49,606

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Lease operating

 

 

2,343

 

 

 

2,677

 

Transportation, gathering and compression

 

 

32,877

 

 

 

23,137

 

Production and ad valorem taxes

 

 

1,931

 

 

 

2,563

 

Brokered natural gas and marketing expense

 

 

2,460

 

 

 

9,402

 

Depreciation, depletion and amortization

 

 

26,189

 

 

 

15,113

 

Exploration

 

 

11,581

 

 

 

15,656

 

General and administrative

 

 

10,132

 

 

 

11,274

 

Rig termination and standby

 

 

 

 

 

2,663

 

Impairment of proved oil and gas properties

 

 

 

 

 

17,665

 

Accretion of asset retirement obligations

 

 

124

 

 

 

86

 

(Gain) loss on sale of assets

 

 

(5

)

 

 

(22

)

Total operating expenses

 

 

87,632

 

 

 

100,214

 

OPERATING INCOME (LOSS)

 

 

14,231

 

 

 

(50,608

)

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

Gain (loss) on derivative instruments

 

 

25,097

 

 

 

10,550

 

Interest expense, net

 

 

(12,462

)

 

 

(13,461

)

Gain (loss) on early extinguishment of debt

 

 

 

 

 

8,664

 

Other income (expense)

 

 

(19

)

 

 

(139

)

Total other expense, net

 

 

12,616

 

 

 

5,614

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

26,847

 

 

 

(44,994

)

INCOME TAX BENEFIT (EXPENSE)

 

 

 

 

 

(540

)

NET INCOME (LOSS)

 

$

26,847

 

 

$

(45,534

)

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

 

 

Basic

 

$

0.10

 

 

$

(0.20

)

Diluted

 

$

0.10

 

 

$

(0.20

)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

 

261,105

 

 

 

222,784

 

Diluted

 

 

264,215

 

 

 

222,784

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

 

6


 

ECLIPSE RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

 

 

 

Number of

Shares

 

 

Common

Stock

($0.01 Par)

 

 

Additional

Paid-in-

Capital

 

 

Treasury

Stock

 

 

Accumulated

Deficit

 

 

Total

 

Balances, December 31,

   2016

 

 

260,591,893

 

 

$

2,607

 

 

$

1,958,731

 

 

$

(61

)

 

$

(1,404,670

)

 

$

556,607

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,081

 

 

 

 

 

 

 

 

 

2,081

 

Issuance of common stock

   upon vesting

   of equity-based

   compensation awards,

   net of shares withheld for

   income tax

   withholdings

 

 

1,648,085

 

 

 

24

 

 

 

(24

)

 

 

(1,706

)

 

 

 

 

 

(1,706

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,847

 

 

 

26,847

 

Balances, March 31,

   2017

 

 

262,239,978

 

 

$

2,631

 

 

$

1,960,788

 

 

$

(1,767

)

 

$

(1,377,823

)

 

$

583,829

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

7


 

ECLIPSE RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Three Months Ended

March 31,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (loss)

 

$

26,847

 

 

$

(45,534

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

26,189

 

 

 

15,113

 

Exploration expense

 

 

4,988

 

 

 

9,361

 

Stock-based compensation

 

 

2,081

 

 

 

1,473

 

Impairment of proved oil and gas properties

 

 

 

 

 

17,665

 

Accretion of asset retirement obligations

 

 

124

 

 

 

86

 

(Gain) loss on sale of assets

 

 

(5

)

 

 

(22

)

(Gain) loss on derivative instruments

 

 

(25,097

)

 

 

(10,550

)

Net cash receipts (payments) on settled derivatives

 

 

(3,989

)

 

 

18,378

 

(Gain) loss on early extinguishment of debt

 

 

 

 

 

(8,664

)

Deferred income taxes

 

 

 

 

 

540

 

Amortization of deferred financing costs

 

 

502

 

 

 

504

 

Amortization of debt discount

 

 

330

 

 

 

352

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10,478

 

 

 

10,447

 

Other assets

 

 

943

 

 

 

(1,201

)

Accounts payable and accrued liabilities

 

 

(14,992

)

 

 

(27,457

)

Net cash provided by (used in) operating activities

 

 

28,399

 

 

 

(19,509

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Capital expenditures for oil and gas properties

 

 

(66,005

)

 

 

(23,912

)

Capital expenditures for other property and equipment

 

 

(178

)

 

 

(460

)

Proceeds from sale of assets

 

 

24

 

 

 

4,800

 

Net cash used in investing activities

 

 

(66,159

)

 

 

(19,572

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Debt issuance costs

 

 

(1,231

)

 

 

(200

)

Repayments of long-term debt

 

 

(74

)

 

 

(9,252

)

Employee tax withholding for settlement of equity compensation awards

 

 

(1,706

)

 

 

(51

)

Net cash used in financing activities

 

 

(3,011

)

 

 

(9,503

)

Net decrease in cash and cash equivalents

 

 

(40,771

)

 

 

(48,584

)

Cash and cash equivalents at beginning of period

 

 

201,229

 

 

 

184,405

 

Cash and cash equivalents at end of period

 

$

160,458

 

 

$

135,821

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

23,066

 

 

$

24,766

 

Cash paid for income taxes

 

$

 

 

$

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES

 

 

 

 

 

 

 

 

Asset retirement obligations incurred, including changes in estimate

 

$

124

 

 

$

 

Additions to oil and natural gas properties - changes in accounts payable,

   accrued liabilities, and accrued capital expenditures

 

$

13,126

 

 

$

(6,229

)

Assets held for sale

 

$

 

 

$

(6

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

8


 

ECLIPSE RESOURCES CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1—Organization and Nature of Operations

Eclipse Resources Corporation (the “Company”) is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin of the United States, which encompasses the Utica Shale and Marcellus Shale prospective areas.

 

 

Note 2—Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited except the condensed consolidated balance sheet at December 31, 2016, which is derived from the Company’s audited financial statements, and are presented in accordance with the requirements of accounting principles generally accepted in the United States (“U.S. GAAP”) for interim reporting. They do not include all disclosures normally made and contained in annual financial statements. In management’s opinion, all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods disclosed have been made. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and the notes to those statements, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2017.

Operating results for interim periods may not necessarily be indicative of the results of operations for the full year ending December 31, 2017 or any other future periods.

Preparation in accordance with U.S. GAAP requires the Company to (1) adopt accounting policies within accounting rules set by the Financial Accounting Standards Board (“FASB”) and (2) make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other disclosed amounts. Note 3—Summary of Significant Accounting Policies describes our significant accounting policies. The Company’s management believes the major estimates and assumptions impacting the condensed consolidated financial statements are the following:

 

estimates of proved reserves of oil and natural gas, which affect the calculations of depreciation, depletion and amortization and impairment of capitalized costs of oil and natural gas properties;

 

estimates of asset retirement obligations;

 

estimates of the fair value of oil and natural gas properties the Company owns, particularly properties that the Company has not yet explored, or fully explored, by drilling and completing wells;

 

impairment of undeveloped properties and other assets; and

 

depreciation and depletion of property and equipment.

Actual results may differ from estimates and assumptions of future events and these revisions could be material. Future production may vary materially from estimated oil and natural gas proved reserves. Actual future prices may vary significantly from price assumptions.

 

 

Note 3—Summary of Significant Accounting Policies

(a) Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash in banks and highly liquid instruments with original maturities of three months or less, primarily consisting of bank time deposits and investments in institutional money market funds. The carrying amounts approximate fair value due to the short-term nature of these items. Cash in bank accounts at times may exceed federally insured limits.

9


 

(b) Accounts Receivable

Accounts receivable are carried at estimated net realizable value. Receivables deemed uncollectible are charged directly to expense. Trade credit is generally extended on a short-term basis, and therefore, accounts receivable do not bear interest, although a finance charge may be applied to such receivables that are past due. A valuation allowance is provided for those accounts for which collection is estimated as doubtful and uncollectible accounts are written off and charged against the allowance. In estimating the allowance, management considers, among other things, how recently and how frequently payments have been received and the financial position of the counterparty. The Company did not deem any of its accounts receivables to be uncollectible as of March 31, 2017 or December 31, 2016.

The Company accrues revenue due to timing differences between the delivery of natural gas, natural gas liquids (NGLs), and crude oil and the receipt of a delivery statement. These revenues are recorded based upon volumetric data from the Company’s records and management’s estimates of the related commodity sales and transportation and compression fees. The Company had $32.5 million and $41.4 million of accrued revenues, net of certain expenses, at March 31, 2017 and December 31, 2016, respectively, which were included in accounts receivable within the Company’s condensed consolidated balance sheets.

(c) Property and Equipment

Oil and Natural Gas Properties

The Company follows the successful efforts method of accounting for its oil and natural gas operations. Acquisition costs for oil and natural gas properties, costs of drilling and equipping productive wells, and costs of unsuccessful development wells are capitalized and amortized on an equivalent unit-of-production basis over the life of the remaining related oil and gas reserves. The estimated future costs of dismantlement, restoration, plugging and abandonment of oil and gas properties and related disposal are capitalized when asset retirement obligations are incurred and amortized as part of depreciation, depletion and amortization expense (see “Depreciation, Depletion and Amortization” below).

Costs incurred to acquire producing and non-producing leaseholds are capitalized. All unproved leasehold acquisition costs are initially capitalized, including the cost of leasing agents, title work and due diligence. If the Company acquires leases in a prospective area, these costs are capitalized as unproved leasehold costs. If no leases are acquired by the Company with respect to the initial costs incurred or the Company discontinues leasing in a prospective area, the costs are charged to exploration expense. Unproved leasehold costs that are determined to have proved oil and gas reserves are transferred to proved leasehold costs.

Upon the sale or retirement of a complete field of a proved property, the cost is eliminated from the property accounts, and the resultant gain or loss is reclassified to the Company’s condensed consolidated statements of operations. Upon the sale of an individual well, the proceeds are credited to accumulated depreciation and depletion within the Company’s condensed consolidated balance sheets. Upon sale of an entire interest in an unproved property where the property had been assessed for impairment individually, a gain or loss is recognized in the Company’s condensed consolidated statements of operations. Upon sale of an entire interest in an unproved property where the property had been assessed for impairment on a group basis, no gain or loss is recognized in the Company’s consolidated statements of operations unless the proceeds exceed the original cost of the property, in which case a gain is recognized in the amount of such excess. If a partial interest in an unproved property is sold, any funds received are accounted for as a reduction of the cost in the interest retained.

A summary of property and equipment including oil and natural gas properties is as follows (in thousands):

 

 

 

March 31, 2017

 

 

December 31, 2016

 

Oil and natural gas properties:

 

 

 

 

 

 

 

 

Unproved

 

$

513,314

 

 

$

526,270

 

Proved

 

 

1,633,750

 

 

 

1,545,860

 

Gross oil and natural gas properties

 

 

2,147,064

 

 

 

2,072,130

 

Less accumulated depreciation depletion and amortization

 

 

(1,157,074

)

 

 

(1,131,378

)

Oil and natural gas properties, net

 

 

989,990

 

 

 

940,752

 

Other property and equipment

 

 

11,625

 

 

 

11,447

 

Less accumulated depreciation

 

 

(5,192

)

 

 

(4,699

)

Other property and equipment, net

 

 

6,433

 

 

 

6,748

 

Property and equipment, net

 

$

996,423

 

 

$

947,500

 

 

10


 

Exploration expenses, including geological and geophysical expenses and delay rentals for unevaluated oil and gas properties are charged to expense as incurred. Exploratory drilling costs are initially capitalized as unproved property, not subject to depletion, but charged to expense if and when the well is determined not to have found proved oil and gas reserves.

The Company capitalized interest expense totaling $0.4 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively.

Other Property and Equipment

Other property and equipment include land, buildings, leasehold improvements, vehicles, computer equipment and software, telecommunications equipment, and furniture and fixtures. These items are recorded at cost, or fair value if acquired through a business acquisition.

(d) Revenue Recognition

Oil and natural gas sales revenue is recognized when produced quantities of oil and natural gas are delivered to a custody transfer point such as a pipeline, processing facility or a tank lifting has occurred, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sales is reasonably assured and the sales price is fixed or determinable. Revenues from the sales of natural gas, crude oil and NGLs in which the Company has an interest with other producers are recognized using the sales method on the basis of the Company’s net revenue interest. The Company did not have any material imbalances as of March 31, 2017 or December 31, 2016.

In accordance with the terms of joint operating agreements, from time to time, the Company may be paid monthly fees for operating or drilling wells for outside owners. The fees are meant to recoup some of the operator’s general and administrative costs in connection with well and drilling operations and are accounted for as credits to general and administrative expense.

Brokered natural gas and marketing revenues include revenues from brokered gas or revenue the Company receives as a result of selling and buying natural gas that is not related to its production and revenue from the release of transportation capacity. The Company realizes brokered margins as a result of buying and selling natural gas utilizing separate purchase and sale transactions, typically with separate counterparties, whereby the Company or the counterparty takes title to the natural gas purchased or sold. Revenues and expenses related to brokering natural gas are reported gross as part of revenue and expense in accordance with U.S. GAAP. The Company considers these activities as ancillary to its natural gas sales and thus, reports them within one operating segment.

(e) Concentration of Credit Risk

The Company’s principal exposures to credit risk are through the sale of its oil and natural gas production and related products and services, joint interest owner receivables and receivables resulting from commodity derivative contracts. The inability or failure of the Company’s significant customers or counterparties to meet their obligations or their insolvency or liquidation may adversely affect the Company’s financial results. The following table summarizes the Company’s concentration of receivables, net of allowances, by product or service as of March 31, 2017 and December 31, 2016 (in thousands):

 

 

 

March 31, 2017

 

 

December 31, 2016

 

Receivables by product or service:

 

 

 

 

 

 

 

 

Sale of oil and natural gas and related products

   and services

 

$

32,544

 

 

$

41,398

 

Joint interest owners

 

 

1,265

 

 

 

2,850

 

Derivatives

 

 

 

 

 

122

 

Other

 

 

14

 

 

 

53

 

Total

 

$

33,823

 

 

$

44,423

 

 

Oil and natural gas customers include pipelines, distribution companies, producers, gas marketers and industrial users primarily located in the State of Ohio. As a general policy, collateral is not required for receivables, but customers’ financial condition and credit worthiness are evaluated regularly. By using derivative instruments that are not traded on an exchange to hedge exposures to changes in commodity prices, the Company exposes itself to the credit risk of counterparties. Credit risk is the potential failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty is expected to owe the Company, which creates credit risk. To minimize the credit risk in derivative instruments, the

11


 

Company’s policy is to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market-makers. Additionally, the Company uses master netting agreements to minimize credit-risk exposure. The creditworthiness of the Company’s counterparties is subject to periodic review. The fair value of the Company’s unsettled commodity derivative contracts was a net liability position of ($22.7) million and ($48.1) million at March 31, 2017 and December 31, 2016, respectively. Other than as provided by its revolving credit facility, the Company is not required to provide credit support or collateral to any of its counterparties under the Company’s contracts, nor are such counterparties required to provide credit support to the Company. As of March 31, 2017 and December 31, 2016, the Company did not have past-due receivables from or payables to any of such counterparties.

(f) Depreciation, Depletion and Amortization

Oil and Natural Gas Properties

Depreciation, depletion and amortization (“DD&A”) of capitalized costs of proved oil and natural gas properties is computed using the unit-of-production method on a field level basis using total estimated proved reserves. The reserve base used to calculate DD&A for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate DD&A for drilling, completion and well equipment costs, which include development costs and successful exploration drilling costs, includes only proved developed reserves. DD&A expense relating to proved oil and natural gas properties totaled approximately $25.7 million and $14.6 million for the three months ended March 31, 2017 and 2016, respectively.

Other Property and Equipment

Depreciation with respect to other property and equipment is calculated using straight-line methods based on expected lives of the individual assets or groups of assets ranging from 5 to 40 years. Depreciation totaled approximately $0.5 million and $0.5 million for the three months ended March 31, 2017 and 2016, respectively. This amount is included in DD&A expense in the condensed consolidated statements of operations.

(g) Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value if such carrying amount exceeds the fair value.

The review for impairment of the Company’s oil and gas properties is done by determining if the historical cost of proved and unproved properties less the applicable accumulated DD&A and abandonment is less than the estimated expected undiscounted future cash flows. The expected future cash flows are estimated based on the Company’s plans to continue to produce and develop proved reserves and a risk-adjusted portion of probable reserves. Expected future cash flow from the sale of production of reserves is calculated based on estimated future prices. The Company estimates prices based upon current contracts in place, adjusted for basis differentials and market-related information, including published futures prices. The estimated future level of production is based on assumptions surrounding future prices and costs, field decline rates, market demand and supply and the economic and regulatory climates. If the carrying value exceeds the expected future cash flows, an impairment loss is recognized for the difference between the estimated fair market value (as determined by discounted future cash flows) and the carrying value of the assets. As a result of the decline in commodity prices, the Company recognized impairment expenses of approximately $17.7 million for the three months ended March 31, 2016 relating to proved properties in the Marcellus Shale. There were no impairments of proved properties for the three months ended March 31, 2017.

The aforementioned impairment charge represented a significant Level 3 measurement in the fair value hierarchy. The primary input used was the Company’s forecasted discount net cash flows.

The determination of oil and natural gas reserve estimates is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results.

Unproved oil and natural gas properties are periodically assessed for impairment by considering future drilling and exploration plans, results of exploration activities, commodity price outlooks, planned future sales and expiration of all or a portion of the properties. An impairment charge is recorded if conditions indicate the Company will not explore the acreage prior to expiration of the

12


 

applicable leases. The Company recorded impairment charges of unproved oil and gas properties related to lease expirations of approximately $4.1 million and $9.4 million for the three months ended March 31, 2017 and 2016, respectively. The decrease in impairment charges during the three months ended March 31, 2017 is the result of a decrease in expected lease expirations due to the increase in the Company’s planned future drilling activity. These costs are included in exploration expense in the condensed consolidated statements of operations.

(h) Income Taxes

The Company accounts for income taxes, as required, under the liability method as set out in the FASB’s Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes.” 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 bases 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.

ASC Topic 740 further provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of the uncertain tax position guidance and in subsequent periods. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has not recorded a reserve for any uncertain tax positions to date.

(i) Fair Value of Financial Instruments

The Company has established a hierarchy to measure its financial instruments at fair value which requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy defines three levels of inputs that may be used to measure fair value:

Level 1—Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumption market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.

Valuation techniques that maximize the use of observable inputs are favored. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

(j) Derivative Financial Instruments

The Company uses derivative financial instruments to reduce exposure to fluctuations in the prices of the energy commodities it sells.

Derivatives are recorded at fair value and are included on the condensed consolidated balance sheets as current and noncurrent assets and liabilities. Derivatives are classified as current or noncurrent based on the contractual expiration date. Derivatives with expiration dates within the next 12 months are classified as current. The Company netted the fair value of derivatives by counterparty in the accompanying condensed consolidated balance sheets where the right to offset exists. The Company’s derivative instruments were not designated as hedges for accounting purposes for any of the periods presented. Accordingly, the changes in fair value are recognized in the condensed consolidated statements of operations in the period of change. Gains and losses on derivatives are included in cash flows from operating activities. Premiums for options are included in cash flows from operating activities.

The valuation of the Company’s derivative financial instruments represents a Level 2 measurement in the fair value hierarchy.

13


 

(k) Asset Retirement Obligation

The Company recognizes a legal liability for its asset retirement obligations (“ARO”) in accordance with ASC Topic 410, “Asset Retirement and Environmental Obligations,” associated with the retirement of a tangible long-lived asset, in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of the related long-lived asset. The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The Company measures the fair value of its ARO using expected future cash outflows for abandonment discounted back to the date that the abandonment obligation was measured using an estimated credit adjusted rate, which was 10.33% for each of the three months ended March 31, 2017 and 2016.

Estimating the future ARO requires management to make estimates and judgments based on historical estimates regarding timing and existence of a liability, as well as what constitutes adequate restoration, inherent in the fair value calculation are numerous assumptions and judgments including the ultimate costs, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the related asset.

The following table sets forth the changes in the Company’s ARO liability for the three months ended March 31, 2017 (in thousands):

 

 

 

Three Months Ended

March 31, 2017

 

Asset retirement obligations, beginning of period

 

$

4,806

 

Additional liabilities incurred

 

 

124

 

Accretion

 

 

124

 

Asset retirement obligations, end of period

 

$

5,054

 

 

The inputs used to determine such fair value are primarily based upon costs incurred historically for similar work, as well as estimates from independent third parties for costs that would be incurred to restore leased property to the contractually stipulated condition. Additions to ARO represent a significant nonrecurring Level 3 measurement.

(l) Lease Obligations

The Company leases office space under an operating lease that expires in 2024. The lease terms begin on the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. The Company does not assume renewals in its determination of the lease terms unless the renewals are deemed to be reasonably assured at lease inception.

(m) Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

(n) Segment Reporting

The Company operates in one industry segment: the oil and natural gas exploration and production industry in the United States. All of its operations are conducted in one geographic area of the United States. All revenues are derived from customers located in the United States.

(o) Debt Issuance Costs

The expenditures related to issuing debt are capitalized and reported as a reduction of the Company’s debt balance in the accompanying balance sheets. These costs are amortized over the expected life of the related instruments using the effective interest rate method. When debt is retired before maturity or modifications significantly change the cash flows, related unamortized costs are expensed.

(p) Recent Accounting Pronouncements

The FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606) (“Update 2014-09”)”, which supersedes the revenue recognition requirements (and some cost guidance) in Topic 605, Revenue Recognition, and most industry-specific

14


 

guidance throughout the industry topics of the Accounting Standards Codification. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, assets within the scope of Topic 360, “Property, Plant and Equipment”, and intangible assets within the scope of Topic 350, “Intangibles—Goodwill and Other”) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in Update 2014-09. Topic 606 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this, an entity should identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies the performance obligations. These requirements are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period with early adoption permitted.

The Company plans to adopt this standard effective January 1, 2018 and is currently evaluating its transition method.  As part of the implementation process, the Company continues to assess the impact of the new requirements on its internal systems and policies, and is currently reviewing all existing contracts.  The Company does not expect this standard to have a significant impact on its financial position or results of operations but will require that the Company’s revenue recognition policy disclosures include further detail regarding its performance obligations as to the nature, amount, timing and estimates of revenue and cash flows generated from the Company’s contracts with customers.  The Company continues to monitor relevant industry guidance regarding implementation of the standard and adjust its implementation strategies as necessary.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The new standard provides guidance to increase transparency and comparability among organizations and industries by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. An entity will be required to recognize all leases in the statement of financial position as assets and liabilities regardless of the leases classification. These requirements are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. The Company is evaluating the impact of the adoption on its financial position, results of operations and related disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.”  The new standard provides guidance on how certain cash receipts and cash payments are presented and classified on the statement of cash flows.  These requirements are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The Company is evaluating the impact of the adoption on its financial position, results of operations and related disclosures.

(q) Correction of Immaterial Error

During the three months ended March 31, 2017, the Company determined that its estimated accrual for production and ad valorem tax expense was overstated for prior periods. The Company evaluated the materiality of this error on both a quantitative and qualitative basis under the guidance of ASC 250 “Accounting Changes and Errors Corrections,” and determined that it did not have a material impact to previously issued financial statements.

Although the error was immaterial to prior periods, the prior period financial statements were revised, in accordance with SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, due to the significance of the out-of-period correction to the current period. Immaterial errors related to periods prior to the year ended December 31, 2016 are reflected as an adjustment to beginning accumulated deficit for that year. Periods not presented herein will be revised, as applicable, in future filings.

A reconciliation of the effects of the revision to amounts in the previously reported consolidated financial statements is as follows:

 

 

 

As of December 31, 2016

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

43,638

 

 

$

785

 

 

$

44,423

 

Total current assets

 

 

249,630

 

 

 

785

 

 

 

250,415

 

Total assets

 

 

1,197,859

 

 

 

785

 

 

 

1,198,644

 

Accrued liabilities

 

 

64,150

 

 

 

(9,106

)

 

 

55,044

 

Total current liabilities

 

 

140,625

 

 

 

(9,106

)

 

 

131,519

 

Total liabilities

 

 

651,143

 

 

 

(9,106

)

 

 

642,037

 

Accumulated deficit

 

 

(1,414,561

)

 

 

9,891

 

 

 

(1,404,670

)

Total stockholders' equity

 

 

546,716

 

 

 

9,891

 

 

 

556,607

 

Total liabilities and stockholders' equity

 

 

1,197,859

 

 

 

785

 

 

 

1,198,644

 

15


 

 

 

 

As of December 31, 2016

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Statement of Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit

 

$

(1,414,561

)

 

$

9,891

 

 

$

(1,404,670

)

Total stockholders' equity

 

 

546,716

 

 

 

9,891

 

 

 

556,607

 

 

 

 

As of March 31, 2016

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Statement of Operations and Comprehensive Income

   (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

Production and ad valorem taxes

 

$

(2,284

)

 

$

4,847

 

 

$

2,563

 

Total operating expenses

 

 

95,367

 

 

 

4,847

 

 

 

100,214

 

Operating loss

 

 

(45,761

)

 

 

(4,847

)

 

 

(50,608

)

Loss before income taxes

 

 

(40,147

)

 

 

(4,847

)

 

 

(44,994

)

Net loss

 

 

(40,687

)

 

 

(4,847

)

 

 

(45,534

)

Basic and diluted loss per share

 

$

(0.18

)

 

$

(0.02

)

 

$

(0.20

)

 

 

 

As of March 31, 2016

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Statement of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(40,687

)

 

$

(4,847

)

 

$

(45,534

)

Accounts receivable

 

$

10,619

 

 

$

(172

)

 

$

10,447

 

Accounts payable and accrued liabilities

 

 

(32,476

)

 

 

5,019

 

 

 

(27,457

)

 

 

Note 4—Sale of Oil and Natural Gas Property Interests

During the three months ended March 31, 2016, the Company received $4.8 million from the sale of unproved leases to a third party. No gain or loss was recognized for this transaction, which was recorded as a reduction of oil and natural gas properties.

 

 

Note 5—Derivative Instruments

Commodity Derivatives

The Company is exposed to market risk from changes in energy commodity prices within its operations. The Company utilizes derivatives to manage exposure to the variability in expected future cash flows from forecasted sales of natural gas and oil. The Company currently uses a mix of over-the-counter (“OTC”) fixed price swaps, basis swaps and put options spreads and collars to manage its exposure to commodity price fluctuations. All of the Company’s derivative instruments are used for risk management purposes and none are held for trading or speculative purposes.

The Company is exposed to credit risk in the event of non-performance by counterparties. To mitigate this risk, the Company enters into derivative contracts only with counterparties that are rated “A” or higher by S&P or Moody’s. The creditworthiness of counterparties is subject to periodic review. As of March 31, 2017, the Company’s derivative instruments were with Bank of Montreal, Citibank, N.A., and Key Bank, N.A. The Company has not experienced any issues of non-performance by derivative counterparties. Below is a summary of the Company’s derivative instrument positions, as of March 31, 2017, for future production periods:

16


 

Natural Gas Derivatives

 

Description

 

Volume

(MMBtu/d)

 

 

Production Period

 

Weighted Average

Price ($/MMBtu)

 

Natural Gas Swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

April 2017 – December 2017

 

$

2.98

 

 

 

 

10,000

 

 

April 2017 – December 2017

 

$

3.21

 

Natural Gas Collars:

 

 

 

 

 

 

 

 

 

 

Floor purchase price (put)

 

 

60,000

 

 

April 2017 – December 2017

 

$

2.75

 

Ceiling sold price (call)

 

 

60,000

 

 

April 2017 – December 2017

 

$

3.27

 

Floor purchase price (put)

 

 

20,000

 

 

April 2017 – December 2018

 

$

2.90

 

Ceiling sold price (call)

 

 

20,000

 

 

April 2017 – December 2018

 

$

3.25

 

Floor purchase price (put)

 

 

40,000

 

 

January 2018 – December 2018

 

$

2.75

 

Ceiling sold price (call)

 

 

40,000

 

 

January 2018 – December 2018

 

$

3.28

 

Natural Gas Three-way Collars:

 

 

 

 

 

 

 

 

 

 

Floor purchase price (put)

 

 

30,000

 

 

April 2017 – December 2017

 

$

2.75

 

Ceiling sold price (call)

 

 

30,000

 

 

April 2017 – December 2017

 

$

3.57

 

Floor sold price (put)

 

 

30,000

 

 

April 2017 – December 2017

 

$

2.25

 

Floor purchase price (put)

 

 

50,000

 

 

April 2017 – December 2017

 

$

3.00

 

Ceiling sold price (call)

 

 

50,000

 

 

April 2017 – December 2017

 

$

3.40

 

Floor sold price (put)

 

 

50,000

 

 

April 2017 – December 2017

 

$

2.25

 

Floor purchase price (put)

 

 

20,000

 

 

April 2017 – December 2017

 

$

2.75

 

Ceiling sold price (call)

 

 

20,000

 

 

April 2017 – December 2017

 

$

3.29

 

Floor sold price (put)

 

 

20,000

 

 

April 2017 – December 2017

 

$

2.25

 

Floor purchase price (put)

 

 

30,000

 

 

April 2017 – March 2019

 

$

3.00

 

Ceiling sold price (call)

 

 

30,000

 

 

April 2017 – March 2019

 

$

3.40

 

Floor sold price (put)

 

 

30,000

 

 

April 2017 – March 2019

 

$

2.20

 

Floor purchase price (put)

 

 

60,000

 

 

January 2018 – March 2018

 

$

2.90

 

Ceiling sold price (call)

 

 

60,000

 

 

January 2018 – March 2018

 

$

3.75

 

Floor sold price (put)

 

 

60,000

 

 

January 2018 – March 2018

 

$

2.40

 

Floor purchase price (put)

 

 

60,000

 

 

April 2018 – December 2018

 

$

2.90

 

Ceiling sold price (call)

 

 

60,000

 

 

April 2018 – December 2018

 

$

3.25

 

Floor sold price (put)

 

 

60,000

 

 

April 2018 – December 2018

 

$

2.40

 

Floor purchase price (put)

 

 

20,000

 

 

January 2018 – December 2018

 

$

2.90

 

Ceiling sold price (call)

 

 

20,000

 

 

January 2018 – December 2018

 

$

3.50

 

Floor sold price (put)

 

 

20,000

 

 

January 2018 – December 2018

 

$

2.20

 

Floor purchase price (put)

 

 

20,000

 

 

October 2017 – December 2018

 

$

2.90

 

Ceiling sold price (call)

 

 

20,000

 

 

October 2017 – December 2018

 

$

3.50

 

Floor sold price (put)

 

 

20,000

 

 

October 2017 – December 2018

 

$

2.20

 

Natural Gas Call/Put Options: