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Share Name | Share Symbol | Market | Type |
---|---|---|---|
SRC Energy Inc | AMEX:SRCI | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.00 | 0 | 01:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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COLORADO
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20-2835920
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(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
1675 Broadway, Suite 2600, Denver, CO
|
80202
|
(Address of principal executive offices)
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(Zip Code)
|
Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Part I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements (unaudited)
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Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016
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Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016
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Notes to Condensed Consolidated Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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Part II - OTHER INFORMATION
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults of Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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Exhibits
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SIGNATURES
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ASSETS
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June 30, 2017
|
|
December 31, 2016
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
36,677
|
|
|
$
|
18,615
|
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Accounts receivable:
|
|
|
|
||||
Oil, natural gas, and NGL sales
|
37,727
|
|
|
25,728
|
|
||
Trade
|
28,630
|
|
|
6,805
|
|
||
Commodity derivative assets
|
1,579
|
|
|
297
|
|
||
Other current assets
|
4,075
|
|
|
2,739
|
|
||
Total current assets
|
108,688
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|
|
54,184
|
|
||
|
|
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|
||||
Property and equipment:
|
|
|
|
||||
Oil and gas properties, full cost method:
|
|
|
|
||||
Unproved properties and land, not subject to depletion
|
327,433
|
|
|
398,547
|
|
||
Proved properties, net of accumulated depletion
|
601,572
|
|
|
424,082
|
|
||
Wells in progress
|
127,111
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|
|
81,780
|
|
||
Oil and gas properties, net
|
1,056,116
|
|
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904,409
|
|
||
Other property and equipment, net
|
6,312
|
|
|
4,327
|
|
||
Total property and equipment, net
|
1,062,428
|
|
|
908,736
|
|
||
Cash held in escrow and other deposits
|
19,794
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|
|
18,248
|
|
||
Goodwill
|
40,711
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|
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40,711
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||
Other assets
|
2,012
|
|
|
2,234
|
|
||
Total assets
|
$
|
1,233,633
|
|
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$
|
1,024,113
|
|
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|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
97,850
|
|
|
$
|
52,453
|
|
Revenue payable
|
34,864
|
|
|
16,557
|
|
||
Production taxes payable
|
23,071
|
|
|
17,673
|
|
||
Asset retirement obligations
|
2,512
|
|
|
2,683
|
|
||
Commodity derivative liabilities
|
—
|
|
|
2,874
|
|
||
Total current liabilities
|
158,297
|
|
|
92,240
|
|
||
|
|
|
|
||||
Revolving credit facility
|
90,000
|
|
|
—
|
|
||
Notes payable, net of issuance costs
|
76,010
|
|
|
75,614
|
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||
Asset retirement obligations
|
12,673
|
|
|
13,775
|
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Other liabilities
|
2,286
|
|
|
1,745
|
|
||
Total liabilities
|
339,266
|
|
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183,374
|
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||
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||||
Commitments and contingencies (See Note 14)
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|
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|
||||
Shareholders' equity:
|
|
|
|
||||
Preferred stock - $0.01 par value, 10,000,000 shares authorized: no shares issued and outstanding
|
—
|
|
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—
|
|
||
Common stock - $0.001 par value, 300,000,000 shares authorized: 200,842,129 and 200,647,572 shares issued and outstanding, respectively
|
201
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|
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201
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|
||
Additional paid-in capital
|
1,154,912
|
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1,148,998
|
|
||
Retained deficit
|
(260,746
|
)
|
|
(308,460
|
)
|
||
Total shareholders' equity
|
894,367
|
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840,739
|
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||
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||||
Total liabilities and shareholders' equity
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$
|
1,233,633
|
|
|
$
|
1,024,113
|
|
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
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||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Oil, natural gas, and NGL revenues
|
$
|
75,036
|
|
|
$
|
23,947
|
|
|
$
|
118,826
|
|
|
$
|
42,220
|
|
Sales of purchased oil
|
—
|
|
|
—
|
|
|
1,268
|
|
|
—
|
|
||||
Total Revenues
|
75,036
|
|
|
23,947
|
|
|
120,094
|
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|
42,220
|
|
||||
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|
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|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Lease operating expenses
|
5,018
|
|
|
6,845
|
|
|
8,740
|
|
|
11,144
|
|
||||
Production taxes
|
9,464
|
|
|
2,137
|
|
|
10,930
|
|
|
3,970
|
|
||||
Costs of purchased oil
|
—
|
|
|
—
|
|
|
1,518
|
|
|
—
|
|
||||
Depreciation, depletion, and accretion
|
26,427
|
|
|
11,274
|
|
|
39,656
|
|
|
23,366
|
|
||||
Full cost ceiling impairment
|
—
|
|
|
144,149
|
|
|
—
|
|
|
189,770
|
|
||||
Unused commitment charge
|
—
|
|
|
232
|
|
|
669
|
|
|
300
|
|
||||
General and administrative
|
7,605
|
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|
7,520
|
|
|
15,805
|
|
|
14,963
|
|
||||
Total expenses
|
48,514
|
|
|
172,157
|
|
|
77,318
|
|
|
243,513
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
26,522
|
|
|
(148,210
|
)
|
|
42,776
|
|
|
(201,293
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives gain (loss)
|
1,328
|
|
|
(5,704
|
)
|
|
4,707
|
|
|
(4,024
|
)
|
||||
Interest expense, net of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest income
|
20
|
|
|
157
|
|
|
31
|
|
|
165
|
|
||||
Other income
|
66
|
|
|
10
|
|
|
302
|
|
|
4
|
|
||||
Total other income (expense)
|
1,414
|
|
|
(5,537
|
)
|
|
5,040
|
|
|
(3,855
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (Loss) before income taxes
|
27,936
|
|
|
(153,747
|
)
|
|
47,816
|
|
|
(205,148
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
—
|
|
|
101
|
|
|
—
|
|
|
101
|
|
||||
Net income (loss)
|
$
|
27,936
|
|
|
$
|
(153,848
|
)
|
|
$
|
47,816
|
|
|
$
|
(205,249
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.14
|
|
|
$
|
(0.89
|
)
|
|
$
|
0.24
|
|
|
$
|
(1.40
|
)
|
Diluted
|
$
|
0.14
|
|
|
$
|
(0.89
|
)
|
|
$
|
0.24
|
|
|
$
|
(1.40
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
200,831,063
|
|
|
172,013,551
|
|
|
200,769,817
|
|
|
146,703,144
|
|
||||
Diluted
|
201,224,172
|
|
|
172,013,551
|
|
|
201,266,609
|
|
|
146,703,144
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
47,816
|
|
|
$
|
(205,249
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depletion, depreciation, and accretion
|
39,656
|
|
|
23,366
|
|
||
Full cost ceiling impairment
|
—
|
|
|
189,770
|
|
||
Stock-based compensation
|
5,360
|
|
|
4,911
|
|
||
Mark-to-market of commodity derivative contracts:
|
|
|
|
||||
Total (gain) loss on commodity derivatives contracts
|
(4,707
|
)
|
|
4,024
|
|
||
Cash settlements on commodity derivative contracts
|
234
|
|
|
4,651
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
|
|
|
||||
Oil, natural gas, and NGL sales
|
(12,000
|
)
|
|
812
|
|
||
Trade
|
(21,628
|
)
|
|
(1,771
|
)
|
||
Accounts payable and accrued expenses
|
(2,071
|
)
|
|
859
|
|
||
Revenue payable
|
18,400
|
|
|
(1,305
|
)
|
||
Production taxes payable
|
5,714
|
|
|
(8,498
|
)
|
||
Other
|
(2,316
|
)
|
|
665
|
|
||
Net cash provided by operating activities
|
74,458
|
|
|
12,235
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Acquisition of oil and gas properties and leaseholds
|
(29,998
|
)
|
|
(498,701
|
)
|
||
Capital expenditures for drilling and completion activities
|
(178,606
|
)
|
|
(46,009
|
)
|
||
Other capital expenditures
|
(8,858
|
)
|
|
(911
|
)
|
||
Land and other property and equipment
|
(3,837
|
)
|
|
(491
|
)
|
||
Cash held in escrow
|
(1,546
|
)
|
|
(18,212
|
)
|
||
Proceeds from sales of oil and gas properties
|
77,155
|
|
|
23,496
|
|
||
Net cash used in investing activities
|
(145,690
|
)
|
|
(540,828
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from the sale of stock
|
—
|
|
|
565,398
|
|
||
Offering costs
|
—
|
|
|
(21,898
|
)
|
||
Proceeds from the employee exercise of stock options
|
114
|
|
|
—
|
|
||
Payment of employee payroll taxes in connection with shares withheld
|
(565
|
)
|
|
(408
|
)
|
||
Proceeds from the revolving credit facility
|
110,000
|
|
|
55,000
|
|
||
Principal repayments on the revolving credit facility
|
(20,000
|
)
|
|
(133,000
|
)
|
||
Financing fees on amendments to the revolving credit facility
|
(255
|
)
|
|
(196
|
)
|
||
Proceeds from issuance of the notes payable
|
—
|
|
|
80,000
|
|
||
Financing fees on issuance of the notes payable
|
—
|
|
|
(4,168
|
)
|
||
Net cash provided by financing activities
|
89,294
|
|
|
540,728
|
|
||
|
|
|
|
||||
Net increase in cash and equivalents
|
18,062
|
|
|
12,135
|
|
||
|
|
|
|
||||
Cash and equivalents at beginning of period
|
18,615
|
|
|
66,499
|
|
||
|
|
|
|
||||
Cash and equivalents at end of period
|
$
|
36,677
|
|
|
$
|
78,634
|
|
1
.
|
Organization and Summary of Significant Accounting Policies
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
Major Customers
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Company A
|
|
28%
|
|
17%
|
|
26%
|
|
21%
|
Company B
|
|
24%
|
|
*
|
|
25%
|
|
*
|
Company C
|
|
16%
|
|
*
|
|
17%
|
|
*
|
Company D
|
|
13%
|
|
*
|
|
*
|
|
*
|
Company E
|
|
*
|
|
42%
|
|
*
|
|
43%
|
Company F
|
|
*
|
|
14%
|
|
*
|
|
10%
|
Company G
|
|
*
|
|
12%
|
|
*
|
|
11%
|
Company H
|
|
*
|
|
10%
|
|
*
|
|
*
|
|
|
As of
|
|
As of
|
Major Customers
|
|
June 30, 2017
|
|
December 31, 2016
|
Company A
|
|
18%
|
|
23%
|
Company B
|
|
15%
|
|
43%
|
Company C
|
|
10%
|
|
*
|
Company D
|
|
*
|
|
10%
|
Company E
|
|
*
|
|
*
|
2
.
|
Property and Equipment
|
|
As of
|
|
As of
|
||||
|
June 30, 2017
|
|
December 31, 2016
|
||||
Oil and gas properties, full cost method:
|
|
|
|
||||
Costs of unproved properties and land, not subject to depletion:
|
|
|
|
||||
Lease acquisition and other costs
|
$
|
320,233
|
|
|
$
|
392,561
|
|
Land
|
7,200
|
|
|
5,986
|
|
||
Subtotal, unproved properties and land
|
327,433
|
|
|
398,547
|
|
||
|
|
|
|
||||
Costs of wells in progress
|
127,111
|
|
|
81,780
|
|
||
|
|
|
|
||||
Costs of proved properties:
|
|
|
|
||||
Producing and non-producing
|
1,186,594
|
|
|
969,239
|
|
||
Less, accumulated depletion and full cost ceiling impairments
|
(585,022
|
)
|
|
(545,157
|
)
|
||
Subtotal, proved properties, net
|
601,572
|
|
|
424,082
|
|
||
|
|
|
|
||||
Costs of other property and equipment:
|
|
|
|
||||
Other property and equipment
|
7,533
|
|
|
5,063
|
|
||
Less, accumulated depreciation
|
(1,221
|
)
|
|
(736
|
)
|
||
Subtotal, other property and equipment, net
|
6,312
|
|
|
4,327
|
|
||
|
|
|
|
||||
Total property and equipment, net
|
$
|
1,062,428
|
|
|
$
|
908,736
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Capitalized overhead
|
$
|
2,531
|
|
|
$
|
2,339
|
|
|
$
|
5,211
|
|
|
$
|
2,988
|
|
3
.
|
Acquisitions, Swaps, and Divestitures
|
Purchase Price
|
June 14, 2016
|
||
Consideration given:
|
|
||
Cash
|
$
|
485,141
|
|
Net liabilities assumed, including asset retirement obligations
|
1,273
|
|
|
Total consideration given
|
$
|
486,414
|
|
|
|
||
Allocation of Purchase Price
|
|
||
Proved oil and gas properties
(1)
|
$
|
132,903
|
|
Unproved oil and gas properties
|
353,511
|
|
|
Total fair value of assets acquired
|
$
|
486,414
|
|
(in thousands)
|
Three Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2016
|
|||
Oil and gas revenues
|
25,589
|
|
|
$
|
45,706
|
|
Net loss
|
(155,380
|
)
|
|
$
|
(208,538
|
)
|
|
|
|
|
|||
Net loss per common share
|
|
|
|
|||
Basic
|
(0.63
|
)
|
|
$
|
(0.94
|
)
|
Diluted
|
(0.63
|
)
|
|
$
|
(0.94
|
)
|
4
.
|
Depletion, depreciation, and accretion ("DD&A")
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Depletion of oil and gas properties
|
$
|
25,742
|
|
|
$
|
10,965
|
|
|
$
|
38,445
|
|
|
$
|
22,708
|
|
Depreciation and accretion
|
685
|
|
|
309
|
|
|
1,211
|
|
|
658
|
|
||||
Total DD&A Expense
|
$
|
26,427
|
|
|
$
|
11,274
|
|
|
$
|
39,656
|
|
|
$
|
23,366
|
|
5
.
|
Asset Retirement Obligations
|
|
Six Months Ended June 30, 2017
|
||
Asset retirement obligations, December 31, 2016
|
$
|
16,458
|
|
Obligations incurred with development activities
|
1,527
|
|
|
Obligations assumed with acquisitions
|
1,098
|
|
|
Accretion expense
|
602
|
|
|
Obligations discharged with asset retirements and divestitures
|
(4,500
|
)
|
|
Asset retirement obligation, June 30, 2017
|
$
|
15,185
|
|
Less, current portion
|
(2,512
|
)
|
|
Long-term portion
|
$
|
12,673
|
|
6
.
|
Revolving Credit Facility
|
7
.
|
Notes Payable
|
8
.
|
Commodity Derivative Instruments
|
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(Bbls
per month)
|
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|||||
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
30,667
|
|
|
$
|
40.00
|
|
|
$
|
60.00
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
20,000
|
|
|
$
|
45.00
|
|
|
$
|
70.00
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
30,667
|
|
|
$
|
40.00
|
|
|
$
|
65.00
|
|
July 1, 2017 - Aug 31, 2017
|
|
Put
|
|
20,000
|
|
|
$
|
55.00
|
|
|
—
|
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
30,667
|
|
|
$
|
40.00
|
|
|
$
|
65.00
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
15,333
|
|
|
$
|
45.00
|
|
|
$
|
65.00
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
15,333
|
|
|
$
|
45.00
|
|
|
$
|
65.10
|
|
|
|
|
|
|
|
|
|
|
|||||
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(MMBtu
per month)
|
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Natural Gas - NYMEX Henry Hub
|
|
|
|
|
|
|
|
|
|||||
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
100,000
|
|
|
$
|
2.75
|
|
|
$
|
4.00
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
153,333
|
|
|
$
|
2.75
|
|
|
$
|
3.90
|
|
Sep 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
91,500
|
|
|
$
|
2.75
|
|
|
$
|
4.10
|
|
Sep 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
15,250
|
|
|
$
|
3.00
|
|
|
$
|
4.31
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
110,400
|
|
|
$
|
3.00
|
|
|
$
|
4.30
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
199,333
|
|
|
$
|
3.00
|
|
|
$
|
3.88
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
199,333
|
|
|
$
|
3.00
|
|
|
$
|
3.91
|
|
|
|
|
|
|
|
|
|
|
|||||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|||||
July 1, 2017 - Aug 31, 2017
|
|
Collar
|
|
110,000
|
|
|
$
|
2.50
|
|
|
$
|
3.06
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
200,000
|
|
|
$
|
2.50
|
|
|
$
|
3.27
|
|
July 1, 2017 - Dec 31, 2017
|
|
Collar
|
|
100,000
|
|
|
$
|
2.60
|
|
|
$
|
3.20
|
|
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(Bbls per month) |
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|||||
Jan 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
76,042
|
|
|
$
|
40.00
|
|
|
$
|
57.60
|
|
|
|
|
|
|
|
|
|
|
|||||
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(MMBtu
per month)
|
|
Floor
Price
|
|
Ceiling
Price
|
|||||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|||||
Jan 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
456,250
|
|
|
$
|
2.25
|
|
|
$
|
2.81
|
|
|
|
|
|
As of June 30, 2017
|
||||||||||
Underlying
|
|
Balance Sheet
Location
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the
Balance Sheet
|
|
Net Amounts of Assets and Liabilities Presented in the
Balance Sheet
|
||||||
Commodity derivative contracts
|
|
Current assets
|
|
$
|
1,863
|
|
|
$
|
(284
|
)
|
|
$
|
1,579
|
|
Commodity derivative contracts
|
|
Noncurrent assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Current liabilities
|
|
$
|
284
|
|
|
$
|
(284
|
)
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
As of December 31, 2016
|
||||||||||
Underlying
|
|
Balance Sheet
Location
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the
Balance Sheet
|
|
Net Amounts of Assets and Liabilities Presented in the
Balance Sheet
|
||||||
Commodity derivative contracts
|
|
Current assets
|
|
$
|
2,045
|
|
|
$
|
(1,748
|
)
|
|
$
|
297
|
|
Commodity derivative contracts
|
|
Noncurrent assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Current liabilities
|
|
$
|
4,622
|
|
|
$
|
(1,748
|
)
|
|
$
|
2,874
|
|
Commodity derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Realized gain (loss) on commodity derivatives
|
$
|
(23
|
)
|
|
$
|
436
|
|
|
$
|
(142
|
)
|
|
$
|
2,881
|
|
Unrealized gain (loss) on commodity derivatives
|
1,351
|
|
|
(6,140
|
)
|
|
4,849
|
|
|
(6,905
|
)
|
||||
Total gain (loss)
|
$
|
1,328
|
|
|
$
|
(5,704
|
)
|
|
$
|
4,707
|
|
|
$
|
(4,024
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Monthly settlement
|
$
|
327
|
|
|
$
|
946
|
|
|
$
|
551
|
|
|
$
|
3,901
|
|
Previously incurred premiums attributable to settled commodity contracts
|
(350
|
)
|
|
(510
|
)
|
|
(693
|
)
|
|
(1,020
|
)
|
||||
Total realized gain (loss)
|
$
|
(23
|
)
|
|
$
|
436
|
|
|
$
|
(142
|
)
|
|
$
|
2,881
|
|
9
.
|
Fair Value Measurements
|
•
|
Level 1: Quoted prices available in active markets for identical assets or liabilities;
|
•
|
Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; and
|
•
|
Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash or valuation models.
|
|
Fair Value Measurements at June 30, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
1,579
|
|
|
$
|
—
|
|
|
$
|
1,579
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
297
|
|
|
$
|
—
|
|
|
$
|
297
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
2,874
|
|
|
$
|
—
|
|
|
$
|
2,874
|
|
10
.
|
Interest Expense
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revolving bank credit facility
|
$
|
227
|
|
|
$
|
13
|
|
|
$
|
270
|
|
|
$
|
154
|
|
Notes payable
|
1,800
|
|
|
320
|
|
|
3,600
|
|
|
320
|
|
||||
Amortization of issuance costs
|
677
|
|
|
314
|
|
|
1,177
|
|
|
609
|
|
||||
Less, interest capitalized
|
(2,704
|
)
|
|
(647
|
)
|
|
(5,047
|
)
|
|
(1,083
|
)
|
||||
Interest expense, net of amounts capitalized
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
11
.
|
Weighted-Average Shares Outstanding
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted-average shares outstanding - basic
|
200,831,063
|
|
|
172,013,551
|
|
|
200,769,817
|
|
|
146,703,144
|
|
Potentially dilutive common shares from:
|
|
|
|
|
|
|
|
||||
Stock options
|
360,423
|
|
|
—
|
|
|
411,819
|
|
|
—
|
|
Restricted stock units and stock bonus shares
|
32,686
|
|
|
—
|
|
|
84,973
|
|
|
—
|
|
Weighted-average shares outstanding - diluted
|
201,224,172
|
|
|
172,013,551
|
|
|
201,266,609
|
|
|
146,703,144
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Potentially dilutive common shares from:
|
|
|
|
|
|
|
|
||||
Stock options
|
4,786,500
|
|
|
5,589,500
|
|
|
4,786,500
|
|
|
5,589,500
|
|
Performance-vested stock units
1
|
951,884
|
|
|
478,510
|
|
|
951,884
|
|
|
478,510
|
|
Restricted stock units and stock bonus shares
|
872,193
|
|
|
1,069,890
|
|
|
522,014
|
|
|
1,069,890
|
|
Total
|
6,610,577
|
|
|
7,137,900
|
|
|
6,260,398
|
|
|
7,137,900
|
|
12
.
|
Stock-Based Compensation
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stock options
|
$
|
1,302
|
|
|
$
|
1,423
|
|
|
$
|
2,548
|
|
|
$
|
2,833
|
|
Performance-vested stock units
|
798
|
|
|
338
|
|
|
1,323
|
|
|
338
|
|
||||
Restricted stock units and stock bonus shares
|
1,047
|
|
|
1,106
|
|
|
2,393
|
|
|
2,318
|
|
||||
Total stock-based compensation
|
$
|
3,147
|
|
|
$
|
2,867
|
|
|
$
|
6,264
|
|
|
$
|
5,489
|
|
Less: stock-based compensation capitalized
|
(462
|
)
|
|
(475
|
)
|
|
(904
|
)
|
|
(578
|
)
|
||||
Total stock-based compensation expensed
|
$
|
2,685
|
|
|
$
|
2,392
|
|
|
$
|
5,360
|
|
|
$
|
4,911
|
|
|
Three Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2016
|
||||
Number of options to purchase common shares
|
105,000
|
|
|
594,500
|
|
||
Weighted-average exercise price
|
$
|
6.93
|
|
|
$
|
7.58
|
|
Term (in years)
|
10 years
|
|
|
10 years
|
|
||
Vesting Period (in years)
|
5 years
|
|
|
3 - 5 years
|
|
||
Fair Value (in thousands)
|
$
|
399
|
|
|
$
|
2,128
|
|
|
Six Months Ended June 30, 2016
|
|
Expected term
|
6.3 years
|
|
Expected volatility
|
55
|
%
|
Risk free rate
|
1.50 - 1.75%
|
|
Expected dividend yield
|
—
|
%
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value (thousands)
|
|||||
Outstanding, December 31, 2016
|
6,001,500
|
|
|
$
|
9.27
|
|
|
8.0 years
|
|
$
|
6,515
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(30,000
|
)
|
|
3.79
|
|
|
|
|
140
|
|
||
Expired
|
(35,000
|
)
|
|
12.09
|
|
|
|
|
|
|||
Forfeited
|
(80,000
|
)
|
|
11.68
|
|
|
|
|
|
|||
Outstanding, June 30, 2017
|
5,856,500
|
|
|
$
|
9.24
|
|
|
7.5 years
|
|
$
|
2,308
|
|
Outstanding, Exercisable at June 30, 2017
|
2,898,361
|
|
|
$
|
8.78
|
|
|
6.7 years
|
|
$
|
1,964
|
|
|
|
Outstanding Options
|
|
Exercisable Options
|
||||||||||||
Range of Exercise Prices
|
|
Options
|
|
Weighted-Average Remaining Contractual Life
|
|
Weighted-Average Exercise Price per Share
|
|
Options
|
|
Weighted-Average Exercise Price per Share
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Under $5.00
|
|
600,000
|
|
|
4.1 years
|
|
$
|
3.49
|
|
|
559,000
|
|
|
$
|
3.47
|
|
$5.00 - $6.99
|
|
1,012,000
|
|
|
7.4 years
|
|
6.38
|
|
|
485,000
|
|
|
6.44
|
|
||
$7.00 - $10.99
|
|
1,592,500
|
|
|
8.0 years
|
|
9.34
|
|
|
499,661
|
|
|
9.41
|
|
||
$11.00 - $13.46
|
|
2,652,000
|
|
|
7.9 years
|
|
11.58
|
|
|
1,354,700
|
|
|
11.57
|
|
||
Total
|
|
5,856,500
|
|
|
7.5 years
|
|
$
|
9.24
|
|
|
2,898,361
|
|
|
$
|
8.78
|
|
Unrecognized compensation cost (in thousands)
|
$
|
12,523
|
|
Remaining vesting phase
|
2.8 years
|
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Not vested, December 31, 2016
|
890,336
|
|
|
$
|
9.55
|
|
Granted
|
552,950
|
|
|
8.57
|
|
|
Vested
|
(261,071
|
)
|
|
9.28
|
|
|
Forfeited
|
(20,101
|
)
|
|
10.09
|
|
|
Not vested, June 30, 2017
|
1,162,114
|
|
|
$
|
9.12
|
|
Unrecognized compensation cost (in thousands)
|
$
|
8,859
|
|
Remaining vesting phase
|
2.6 years
|
|
|
Six Months Ended June 30,
|
||||
|
2017
|
|
2016
|
||
Weighted-average expected term
|
2.9 years
|
|
|
2.7 years
|
|
Weighted-average expected volatility
|
59
|
%
|
|
58
|
%
|
Weighted-average risk-free rate
|
1.34
|
%
|
|
0.87
|
%
|
|
Number of Units
1
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Not vested, December 31, 2016
|
478,510
|
|
|
$
|
8.09
|
|
Granted
|
473,374
|
|
|
10.79
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Not vested, June 30, 2017
|
951,884
|
|
|
$
|
9.44
|
|
13
.
|
Income Taxes
|
14
.
|
Other Commitments and Contingencies
|
Year ending December 31,
|
|
Oil
|
|
|
(MBbls)
|
||
Remainder of 2017
|
|
2,145
|
|
2018
|
|
4,255
|
|
2019
|
|
4,255
|
|
2020
|
|
3,700
|
|
2021
|
|
1,672
|
|
Thereafter
|
|
—
|
|
Total
|
|
16,027
|
|
Year ending December 31,
|
|
Rent
|
|
Remainder of 2017
|
|
354
|
|
2018
|
|
840
|
|
2019
|
|
859
|
|
2020
|
|
878
|
|
2021
|
|
875
|
|
Thereafter
|
|
477
|
|
Total
|
|
4,283
|
|
15
.
|
Supplemental Schedule of Information to the Condensed Consolidated Statements of Cash Flows
|
|
Six Months Ended June 30,
|
||||||
Supplemental cash flow information:
|
2017
|
|
2016
|
||||
Interest paid
|
$
|
3,864
|
|
|
$
|
159
|
|
Income taxes paid
|
—
|
|
|
101
|
|
||
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
||||
Accrued well costs as of period end
|
$
|
87,699
|
|
|
$
|
18,349
|
|
Asset retirement obligations incurred with development activities
|
1,527
|
|
|
366
|
|
||
Asset retirement obligations assumed with acquisitions
|
1,098
|
|
|
1,692
|
|
||
Obligations discharged with asset retirements and divestitures
|
(4,500
|
)
|
|
—
|
|
ITEM
2
.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
Year Ended August 31,
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Average NYMEX prices
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Oil (per Bbl)
|
$
|
43.20
|
|
|
$
|
48.73
|
|
|
$
|
60.65
|
|
|
$
|
100.39
|
|
|
$
|
94.58
|
|
|
$
|
94.88
|
|
Natural gas (per Mcf)
|
$
|
2.52
|
|
|
$
|
2.58
|
|
|
$
|
3.12
|
|
|
$
|
4.38
|
|
|
$
|
3.55
|
|
|
$
|
2.82
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Oil (NYMEX WTI)
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Price
|
$
|
48.24
|
|
|
$
|
45.59
|
|
|
$
|
50.08
|
|
|
$
|
39.39
|
|
Realized Price
|
41.15
|
|
|
35.06
|
|
|
41.75
|
|
|
29.37
|
|
||||
Differential
|
$
|
(7.09
|
)
|
|
$
|
(10.53
|
)
|
|
$
|
(8.33
|
)
|
|
$
|
(10.02
|
)
|
|
|
|
|
|
|
|
|
||||||||
Gas (NYMEX Henry Hub)
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Price
|
$
|
3.08
|
|
|
$
|
2.15
|
|
|
$
|
3.04
|
|
|
$
|
2.07
|
|
Realized Price
|
2.29
|
|
|
2.04
|
|
|
2.42
|
|
|
1.93
|
|
||||
Differential
|
$
|
(0.79
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
||||||||
NGL Realized Price
|
$
|
13.18
|
|
|
$
|
—
|
|
|
$
|
14.12
|
|
|
$
|
—
|
|
Vertical Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
166
|
|
|
145
|
|
|
128
|
|
|
31
|
|
|
294
|
|
|
176
|
|
Horizontal Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
161
|
|
|
153
|
|
|
178
|
|
|
31
|
|
|
339
|
|
|
184
|
|
•
|
Concentrate on our existing core area in and around the D-J Basin, where we have significant operating experience.
All of our current wells and our planned acreage development is located either in or adjacent to the Wattenberg Field. Focusing our operations in this area leverages our management, technical, and operational experience in the basin.
|
•
|
Develop and exploit existing oil and gas properties.
Our principal growth strategy has been to develop and exploit our properties to add reserves. In the Wattenberg Field, we target three benches of the Niobrara formation as well as the Codell formation for horizontal drilling and production. We believe horizontal drilling is the most efficient way to recover the potential hydrocarbons and consider the Wattenberg Field to be relatively low-risk because information gained from the large number of existing wells can be applied to potential future wells. There is enough similarity between wells in the Wattenberg Field that the exploitation process is generally repeatable.
|
•
|
Improve hydrocarbon recovery through increased well density.
We utilize what we believe to be industry best practices in our effort to determine the optimal recovery area for each well. Early horizontal well development in the Wattenberg Field generally assumed optimal recoveries would be obtained utilizing between 12 and 16 wells per 640-acre section. As horizontal well development has matured, well density assumptions have generally increased beyond 16 wells per section depending on the specific area of the field being drilled.
|
•
|
Complete selective acquisitions.
We seek to acquire developed and undeveloped oil and gas properties, primarily in the Wattenberg Field. We generally seek acquisitions that will provide us with opportunities for reserve additions and increased cash flow through production enhancement and additional development and exploratory prospect generation.
|
•
|
Retain control over the operation of a substantial portion of our production.
As operator of a majority of our wells and undeveloped acreage, we control the timing and selection of new wells to be drilled. This allows us to modify our capital spending as our financial resources and underlying lease terms allow and market conditions permit.
|
•
|
Maintain financial flexibility while focusing on operational cost control.
We strive to be a cost-efficient operator and to maintain a relatively low utilization of debt, which enhances our financial flexibility. Our high degree of operational control, as well as our focus on operating efficiencies and short return on investment cycle times, is central to our operating strategy.
|
•
|
Use the latest technology to maximize returns.
Our development objective for individual well optimization is to drill and complete wells with lateral lengths of 7,000' to 10,000'. Utilizing petrophysical and seismic data, a 3-D model is developed
|
|
Three Months Ended June 30,
|
|
Percentage
|
|||||||
|
2017
|
|
2016
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
1
|
1,262
|
|
|
508
|
|
|
148
|
%
|
||
Natural Gas (MMcf)
2
|
6,264
|
|
|
3,015
|
|
|
108
|
%
|
||
NGLs (MBbls)
3
|
662
|
|
|
—
|
|
|
nm
|
|
||
MBOE
4
|
2,969
|
|
|
1,010
|
|
|
194
|
%
|
||
BOED
5
|
32,624
|
|
|
11,098
|
|
|
194
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
51,939
|
|
|
$
|
17,793
|
|
|
192
|
%
|
Natural Gas
|
14,364
|
|
|
6,154
|
|
|
133
|
%
|
||
NGLs
3
|
8,733
|
|
|
—
|
|
|
nm
|
|
||
|
$
|
75,036
|
|
|
$
|
23,947
|
|
|
213
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
41.15
|
|
|
$
|
35.06
|
|
|
17
|
%
|
Natural Gas
|
$
|
2.29
|
|
|
$
|
2.04
|
|
|
12
|
%
|
NGLs
3
|
$
|
13.18
|
|
|
$
|
—
|
|
|
nm
|
|
BOE
|
$
|
25.28
|
|
|
$
|
23.71
|
|
|
7
|
%
|
|
Three Months Ended June 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Depletion of oil and gas properties
|
$
|
25,742
|
|
|
$
|
10,965
|
|
Depreciation and accretion
|
685
|
|
|
309
|
|
||
Total DD&A
|
$
|
26,427
|
|
|
$
|
11,274
|
|
|
|
|
|
||||
DD&A expense per BOE
|
$
|
8.90
|
|
|
$
|
11.16
|
|
|
Three Months Ended June 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
G&A costs incurred
|
$
|
10,136
|
|
|
$
|
9,859
|
|
Capitalized costs
|
(2,531
|
)
|
|
(2,339
|
)
|
||
Total G&A
|
$
|
7,605
|
|
|
$
|
7,520
|
|
|
|
|
|
||||
Non-Cash G&A
|
$
|
2,685
|
|
|
$
|
2,391
|
|
Cash G&A
|
4,920
|
|
|
5,129
|
|
||
Total G&A
|
$
|
7,605
|
|
|
$
|
7,520
|
|
|
|
|
|
||||
Non-Cash G&A per BOE
|
$
|
0.90
|
|
|
$
|
2.37
|
|
Cash G&A per BOE
|
1.66
|
|
|
5.08
|
|
||
G&A Expense per BOE
|
$
|
2.56
|
|
|
$
|
7.45
|
|
|
Six Months Ended June 30,
|
|
Percentage
|
|||||||
|
2017
|
|
2016
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
|
1,942
|
|
|
1,035
|
|
|
88
|
%
|
||
Natural Gas (MMcf)
|
9,710
|
|
|
6,136
|
|
|
58
|
%
|
||
NGLs (MBbls)
1
|
1,005
|
|
|
—
|
|
|
nm
|
|
||
MBOE
|
4,566
|
|
|
2,057
|
|
|
122
|
%
|
||
BOED
|
25,224
|
|
|
11,304
|
|
|
123
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
81,088
|
|
|
$
|
30,387
|
|
|
167
|
%
|
Natural Gas
|
23,543
|
|
|
11,833
|
|
|
99
|
%
|
||
NGLs
1
|
14,195
|
|
|
—
|
|
|
nm
|
|
||
|
$
|
118,826
|
|
|
$
|
42,220
|
|
|
181
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
41.75
|
|
|
$
|
29.37
|
|
|
42
|
%
|
Natural Gas
|
$
|
2.42
|
|
|
$
|
1.93
|
|
|
25
|
%
|
NGLs
1
|
$
|
14.12
|
|
|
$
|
—
|
|
|
nm
|
|
BOE
|
$
|
26.03
|
|
|
$
|
20.52
|
|
|
27
|
%
|
|
Six Months Ended June 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Depletion of oil and gas properties
|
$
|
38,445
|
|
|
$
|
22,708
|
|
Depreciation and accretion
|
1,211
|
|
|
658
|
|
||
Total DD&A
|
$
|
39,656
|
|
|
$
|
23,366
|
|
|
|
|
|
||||
DD&A expense per BOE
|
$
|
8.69
|
|
|
$
|
11.36
|
|
|
Six Months Ended June 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
G&A costs incurred
|
$
|
21,016
|
|
|
$
|
17,951
|
|
Capitalized costs
|
(5,211
|
)
|
|
(2,988
|
)
|
||
Total G&A
|
$
|
15,805
|
|
|
$
|
14,963
|
|
|
|
|
|
||||
Non-Cash G&A
|
$
|
5,360
|
|
|
$
|
4,910
|
|
Cash G&A
|
10,445
|
|
|
10,053
|
|
||
Total G&A
|
$
|
15,805
|
|
|
$
|
14,963
|
|
|
|
|
|
||||
Non-Cash G&A per BOE
|
$
|
1.17
|
|
|
$
|
2.39
|
|
Cash G&A per BOE
|
2.29
|
|
|
4.89
|
|
||
G&A Expense per BOE
|
$
|
3.46
|
|
|
$
|
7.28
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operations
|
$
|
74,458
|
|
|
$
|
12,235
|
|
Capital expenditures
|
(221,299
|
)
|
|
(546,112
|
)
|
||
Net cash provided by other investing activities
|
75,609
|
|
|
5,284
|
|
||
Net cash (used in) provided by equity financing activities
|
(451
|
)
|
|
543,092
|
|
||
Net cash provided by (used in) debt financing activities
|
89,745
|
|
|
(2,364
|
)
|
||
Net increase in cash and equivalents
|
$
|
18,062
|
|
|
$
|
12,135
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Acquisitions of oil and gas properties and leasehold
|
$
|
32,842
|
|
|
$
|
499,766
|
|
Capital expenditures for drilling and completion activities
|
223,496
|
|
|
32,944
|
|
||
Capitalized interest, capitalized G&A, and other
|
11,796
|
|
|
3,099
|
|
||
Accrual basis capital expenditures*
|
$
|
268,134
|
|
|
$
|
535,809
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
27,936
|
|
|
$
|
(153,848
|
)
|
|
$
|
47,816
|
|
|
$
|
(205,249
|
)
|
Depreciation, depletion, and accretion
|
26,427
|
|
|
11,274
|
|
|
39,656
|
|
|
23,366
|
|
||||
Full cost ceiling impairment
|
—
|
|
|
144,149
|
|
|
—
|
|
|
189,770
|
|
||||
Income tax expense
|
—
|
|
|
101
|
|
|
—
|
|
|
101
|
|
||||
Stock-based compensation
|
2,685
|
|
|
2,392
|
|
|
5,360
|
|
|
4,911
|
|
||||
Mark-to-market of commodity derivative contracts:
|
|
|
|
|
|
|
|
||||||||
Total (gain) loss on commodity derivatives contracts
|
(1,328
|
)
|
|
5,704
|
|
|
(4,707
|
)
|
|
4,024
|
|
||||
Cash settlements on commodity derivative contracts
|
153
|
|
|
1,592
|
|
|
234
|
|
|
4,651
|
|
||||
Interest income, net of interest expense
|
(20
|
)
|
|
(167
|
)
|
|
(31
|
)
|
|
(169
|
)
|
||||
Adjusted EBITDA
|
$
|
55,853
|
|
|
$
|
11,197
|
|
|
$
|
88,328
|
|
|
$
|
21,405
|
|
•
|
declines in oil and natural
gas
prices;
|
•
|
operating hazards that adversely affect our ability to conduct business;
|
•
|
uncertainties in the estimates of proved reserves;
|
•
|
the effect of seasonal weather conditions and wildlife and plant species restrictions on our operations;
|
•
|
our ability to fund, develop, produce, and acquire additional oil and natural gas reserves that are economically recoverable;
|
•
|
our ability to obtain adequate financing;
|
•
|
the effect of local and regional factors on oil and natural gas prices;
|
•
|
incurrence of ceiling test write-downs;
|
•
|
our inability to control operations on properties that we do not operate;
|
•
|
the availability and capacity of gathering systems, pipelines, and other midstream infrastructure for our production;
|
•
|
the strength and financial resources of our competitors;
|
•
|
our ability to successfully identify, execute, and effectively integrate acquisitions;
|
•
|
the effect of federal, state, and local laws and regulations;
|
•
|
the effects of, including costs to comply with, environmental legislation or regulatory initiatives, including those related to hydraulic fracturing;
|
•
|
our ability to market our production;
|
•
|
the effects of local moratoria or bans on our business;
|
•
|
the effect of environmental liabilities;
|
•
|
the effect of the adoption and implementation of statutory and regulatory requirements for derivative transactions;
|
•
|
changes in U.S. tax laws;
|
•
|
our ability to satisfy our contractual obligations and commitments;
|
•
|
the amount of our indebtedness and our ability to maintain compliance with debt covenants;
|
•
|
the effectiveness of our disclosure controls and our internal controls over financial reporting;
|
•
|
the geographic concentration of our principal properties;
|
•
|
our ability to protect critical data and technology systems;
|
•
|
the availability of water for use in our operations; and
|
•
|
the risks and uncertainties described and referenced in "Risk Factors."
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|||
April 1, 2017 - April 30, 2017
(1)
|
|
890
|
|
|
$
|
8.11
|
|
May 1, 2017 - May 31, 2017
(1)
|
|
16,945
|
|
|
$
|
7.07
|
|
June 1, 2017 - June 30, 2017
(1)
|
|
1,096
|
|
|
$
|
6.29
|
|
Total
|
|
18,931
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Exhibit
Number
|
|
Exhibit
|
3.1
|
|
Second Amended and Restated Articles of Incorporation of SRC Energy Inc. (the "Company") effective as of June 15, 2017 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 20, 2017).
|
3.2.1
|
|
Bylaws of the Company (including Amendment No. 1 thereto) (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K filed on April 22, 2016)
|
3.2.2
|
|
Amendment No. 2 to Bylaws of the Company, effective as of June 15, 2017 (incorporated by reference to Exhibit 3.2.2 to the Company’s Current Report on Form 8-K filed on June 20, 2017)
|
31.1
|
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
|
32.1
|
|
Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 USC 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
*
|
|
Filed herewith
|
**
|
|
Furnished herewith
|
|
SRC Energy Inc.
|
|
|
|
/s/ Lynn A. Peterson
|
|
Lynn A. Peterson, President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
/s/ James P. Henderson
|
|
James P. Henderson, Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
|
|
|
|
/s/ Jared C. Grenzenbach
|
|
Jared C. Grenzenbach, Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
1 Year SRC Energy Chart |
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