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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)
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(I.R.S. Employer Identification No.)
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1675 Broadway, Suite 2600, Denver, CO
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80202
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(Address of principal executive offices)
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(Zip Code)
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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 September 30, 2018 and December 31, 2017
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Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017
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Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017
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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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September 30, 2018
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December 31, 2017
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||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
19,236
|
|
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$
|
48,772
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Accounts receivable:
|
|
|
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||||
Oil, natural gas, and NGL sales
|
110,912
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|
|
86,013
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Trade
|
29,559
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18,134
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Other current assets
|
11,996
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7,116
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Total current assets
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171,703
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160,035
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||||
Property and equipment:
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|
||||
Oil and gas properties, full cost method:
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|
|
|
||||
Proved properties, net of accumulated depletion
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1,364,116
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|
970,584
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Wells in progress
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244,206
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106,269
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Unproved properties and land, not subject to depletion
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748,695
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793,669
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Oil and gas properties, net
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2,357,017
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1,870,522
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Other property and equipment, net
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5,902
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6,054
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||
Total property and equipment, net
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2,362,919
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1,876,576
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Goodwill
|
40,711
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40,711
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Other assets
|
3,599
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|
|
2,242
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Total assets
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$
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2,578,932
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|
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$
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2,079,564
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||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
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|
||||
Current liabilities:
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|
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|
||||
Accounts payable and accrued expenses
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$
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171,951
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|
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$
|
74,672
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Revenue payable
|
82,670
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|
|
64,111
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|
||
Production taxes payable
|
77,115
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|
|
52,413
|
|
||
Asset retirement obligations
|
2,771
|
|
|
3,246
|
|
||
Commodity derivative liabilities
|
18,570
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|
7,865
|
|
||
Total current liabilities
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353,077
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202,307
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||
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|
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||||
Revolving credit facility
|
115,000
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|
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—
|
|
||
Notes payable, net of issuance costs
|
539,050
|
|
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538,186
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Commodity derivative liabilities
|
1,671
|
|
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—
|
|
||
Asset retirement obligations
|
48,951
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|
|
28,376
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|
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Deferred taxes
|
18,076
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|
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—
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Other liabilities
|
2,308
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|
2,261
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Total liabilities
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1,078,133
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|
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771,130
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||||
Commitments and contingencies (See Note 15)
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||||
Shareholders' equity:
|
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||||
Preferred stock - $0.01 par value, 10,000,000 shares authorized: no shares issued and outstanding
|
—
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—
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Common stock - $0.001 par value, 400,000,000 and 300,000,000 shares authorized: 242,572,199 and 241,365,522 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively
|
243
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|
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241
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||
Additional paid-in capital
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1,488,588
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1,474,273
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Retained earnings (deficit)
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11,968
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(166,080
|
)
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||
Total shareholders' equity
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1,500,799
|
|
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1,308,434
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||
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||||
Total liabilities and shareholders' equity
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$
|
2,578,932
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|
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$
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2,079,564
|
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2018
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2017
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2018
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2017
|
||||||||
Oil, natural gas, and NGL revenues
|
$
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160,978
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$
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103,593
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$
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455,298
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$
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222,419
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||||||||
Expenses:
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||||||||
Lease operating expenses
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10,360
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4,316
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29,868
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13,008
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|
||||
Transportation and gathering
|
1,994
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|
838
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5,729
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1,136
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|
||||
Production taxes
|
12,824
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10,083
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41,325
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21,013
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|
||||
Depreciation, depletion, and accretion
|
45,188
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33,740
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124,146
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|
73,396
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|
||||
Unused commitment charge
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—
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|
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—
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—
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|
669
|
|
||||
General and administrative
|
10,685
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8,484
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29,691
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24,289
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|
||||
Total expenses
|
81,051
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|
57,461
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230,759
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133,511
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||||
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|
||||||||
Operating income
|
79,927
|
|
|
46,132
|
|
|
224,539
|
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|
88,908
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|
||||
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|
||||||||
Other income (expense):
|
|
|
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|
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|
|
||||||||
Commodity derivatives gain (loss)
|
(8,529
|
)
|
|
(2,383
|
)
|
|
(28,604
|
)
|
|
2,324
|
|
||||
Interest expense, net of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest income
|
23
|
|
|
16
|
|
|
37
|
|
|
47
|
|
||||
Other income
|
125
|
|
|
83
|
|
|
152
|
|
|
385
|
|
||||
Total other income (expense)
|
(8,381
|
)
|
|
(2,284
|
)
|
|
(28,415
|
)
|
|
2,756
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
71,546
|
|
|
43,848
|
|
|
196,124
|
|
|
91,664
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
8,918
|
|
|
—
|
|
|
18,076
|
|
|
—
|
|
||||
Net income
|
$
|
62,628
|
|
|
$
|
43,848
|
|
|
$
|
178,048
|
|
|
$
|
91,664
|
|
|
|
|
|
|
|
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|
||||||||
Net income per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.26
|
|
|
$
|
0.22
|
|
|
$
|
0.74
|
|
|
$
|
0.46
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.22
|
|
|
$
|
0.73
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
242,536,781
|
|
|
200,881,447
|
|
|
242,184,348
|
|
|
200,807,436
|
|
||||
Diluted
|
243,560,046
|
|
|
201,460,915
|
|
|
243,207,058
|
|
|
201,326,129
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
178,048
|
|
|
$
|
91,664
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depletion, depreciation, and accretion
|
124,146
|
|
|
73,396
|
|
||
Settlement of asset retirement obligation
|
(5,234
|
)
|
|
(4,077
|
)
|
||
Provision for deferred taxes
|
18,076
|
|
|
—
|
|
||
Stock-based compensation expense
|
9,347
|
|
|
8,390
|
|
||
Mark-to-market of commodity derivative contracts:
|
|
|
|
||||
Total loss (gain) on commodity derivatives contracts
|
28,604
|
|
|
(2,324
|
)
|
||
Cash settlements on commodity derivative contracts
|
(13,263
|
)
|
|
778
|
|
||
Changes in operating assets and liabilities
|
3,830
|
|
|
(25,010
|
)
|
||
Net cash provided by operating activities
|
343,554
|
|
|
142,817
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Acquisition of oil and gas properties and leaseholds
|
(129,069
|
)
|
|
(62,562
|
)
|
||
Capital expenditures for drilling and completion activities
|
(331,702
|
)
|
|
(305,636
|
)
|
||
Other capital expenditures
|
(26,439
|
)
|
|
(11,198
|
)
|
||
Acquisition of land and other property and equipment
|
(2,914
|
)
|
|
(4,058
|
)
|
||
Proceeds from sales of oil and gas properties and other
|
1,233
|
|
|
77,017
|
|
||
Net cash used in investing activities
|
(488,891
|
)
|
|
(306,437
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from the employee exercise of stock options
|
4,302
|
|
|
114
|
|
||
Payment of employee payroll taxes in connection with shares withheld
|
(1,106
|
)
|
|
(631
|
)
|
||
Proceeds from the revolving credit facility
|
115,000
|
|
|
170,000
|
|
||
Principal repayments on the revolving credit facility
|
—
|
|
|
(20,000
|
)
|
||
Fees on debt and equity issuances and revolving credit facility amendments
|
(2,173
|
)
|
|
(1,372
|
)
|
||
Capital lease payments
|
(222
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
115,801
|
|
|
148,111
|
|
||
|
|
|
|
||||
Net decrease in cash, cash equivalents, and restricted cash
|
(29,536
|
)
|
|
(15,509
|
)
|
||
|
|
|
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
48,772
|
|
|
36,834
|
|
||
|
|
|
|
||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
19,236
|
|
|
$
|
21,325
|
|
1
.
|
Organization and Summary of Significant Accounting Policies
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
Major Customers
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Company A
|
|
23%
|
|
30%
|
|
13%
|
|
27%
|
Company B
|
|
21%
|
|
27%
|
|
19%
|
|
26%
|
Company C
|
|
14%
|
|
13%
|
|
28%
|
|
15%
|
Company D
|
|
14%
|
|
*
|
|
11%
|
|
*
|
Company E
|
|
14%
|
|
*
|
|
16%
|
|
*
|
|
|
As of
|
|
As of
|
Major Customers
|
|
September 30, 2018
|
|
December 31, 2017
|
Company A
|
|
23%
|
|
26%
|
Company B
|
|
16%
|
|
16%
|
Company C
|
|
14%
|
|
23%
|
Company D
|
|
14%
|
|
*
|
Company E
|
|
*
|
|
11%
|
2
.
|
Property and Equipment
|
|
As of
|
|
As of
|
||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Oil and gas properties, full cost method:
|
|
|
|
||||
Costs of proved properties:
|
|
|
|
||||
Producing and non-producing
|
$
|
2,148,278
|
|
|
$
|
1,629,789
|
|
Less, accumulated depletion and full cost ceiling impairments
|
(784,162
|
)
|
|
(659,205
|
)
|
||
Subtotal, proved properties, net
|
1,364,116
|
|
|
970,584
|
|
||
|
|
|
|
||||
Costs of wells in progress
|
244,206
|
|
|
106,269
|
|
||
|
|
|
|
||||
Costs of unproved properties and land, not subject to depletion:
|
|
|
|
||||
Lease acquisition and other costs
|
739,303
|
|
|
786,469
|
|
||
Land
|
9,392
|
|
|
7,200
|
|
||
Subtotal, unproved properties and land
|
748,695
|
|
|
793,669
|
|
||
|
|
|
|
||||
Costs of other property and equipment:
|
|
|
|
||||
Other property and equipment
|
9,462
|
|
|
8,134
|
|
||
Less, accumulated depreciation
|
(3,560
|
)
|
|
(2,080
|
)
|
||
Subtotal, other property and equipment, net
|
5,902
|
|
|
6,054
|
|
||
|
|
|
|
||||
Total property and equipment, net
|
$
|
2,362,919
|
|
|
$
|
1,876,576
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Capitalized overhead
|
$
|
3,129
|
|
|
$
|
2,518
|
|
|
$
|
9,522
|
|
|
$
|
7,729
|
|
4
.
|
Depletion, depreciation, and accretion ("DD&A")
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depletion of oil and gas properties
|
$
|
44,230
|
|
|
$
|
32,944
|
|
|
$
|
121,259
|
|
|
$
|
71,389
|
|
Depreciation and accretion
|
958
|
|
|
796
|
|
|
2,887
|
|
|
2,007
|
|
||||
Total DD&A Expense
|
$
|
45,188
|
|
|
$
|
33,740
|
|
|
$
|
124,146
|
|
|
$
|
73,396
|
|
5
.
|
Asset Retirement Obligations
|
|
Nine Months Ended September 30, 2018
|
||
Asset retirement obligations, December 31, 2017
|
$
|
31,622
|
|
Obligations incurred with development activities
|
1,488
|
|
|
Obligations assumed with acquisitions
|
26,150
|
|
|
Accretion expense
|
1,406
|
|
|
Obligations discharged with asset retirements and divestitures
|
(8,944
|
)
|
|
Asset retirement obligation, September 30, 2018
|
$
|
51,722
|
|
Less, current portion
|
(2,771
|
)
|
|
Long-term portion
|
$
|
48,951
|
|
6
.
|
Revolving Credit Facility
|
7
.
|
Notes Payable
|
8
.
|
Commodity Derivative Instruments
|
Settlement Period
|
|
Derivative
Instrument
|
|
Volumes
(Bbls per day)
|
|
Weighted-Average
Floor Price
|
|
Weighted-Average Ceiling Price
|
|||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|||||
Oct 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
10,000
|
|
|
$
|
43.63
|
|
|
$
|
61.29
|
|
Jan 1, 2019 - Dec 31, 2019
|
|
Collar
|
|
6,000
|
|
|
$
|
55.00
|
|
|
$
|
74.31
|
|
|
|
|
|
|
|
|
|
|
|||||
Settlement Period
|
|
Derivative
Instrument
|
|
Volumes
(MMBtu per day)
|
|
Weighted-Average
Floor Price |
|
Weighted-Average Ceiling Price
|
|||||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|||||
Oct 1, 2018 - Dec 31, 2018
|
|
Collar
|
|
15,000
|
|
|
$
|
2.25
|
|
|
$
|
2.82
|
|
|
|
|
|
|
|
|
|
|
|||||
Settlement Period
|
|
Derivative
Instrument
|
|
Volumes
(MMBtu per day)
|
|
Fixed Basis Difference
|
|
|
|||||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|||||
Jan 1, 2019 - Dec 31, 2019
|
|
Swap
|
|
10,000
|
|
|
$
|
(0.79
|
)
|
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Settlement Period
|
|
Derivative
Instrument
|
|
Volumes
(Bbls per day) |
|
Weighted-Average Fixed Price
|
|
|
|||||
Propane - Mont Belvieu
|
|
|
|
|
|
|
|
|
|||||
Oct 1, 2018 - Dec 31, 2018
|
|
Swap
|
|
1,000
|
|
|
$
|
33.60
|
|
|
|
||
Jan 1, 2019 - Dec 31, 2019
|
|
Swap
|
|
2,000
|
|
|
$
|
37.52
|
|
|
|
Settlement Period
|
|
Derivative
Instrument
|
|
Volumes
(MMBtu per day) |
|
Weighted-Average Fixed Basis Difference
|
|
|
|||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|||
Nov 1, 2018 - Dec 31, 2018
|
|
Swap
|
|
50,000
|
|
|
$
|
(0.21
|
)
|
|
|
Jan 1, 2019 - Dec 31, 2019
|
|
Swap
|
|
20,000
|
|
|
$
|
(0.74
|
)
|
|
|
|
|
|
|
As of September 30, 2018
|
||||||||||
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
|
|
$
|
1,740
|
|
|
$
|
(1,740
|
)
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Noncurrent assets
|
|
1,078
|
|
|
(1,078
|
)
|
|
—
|
|
|||
Commodity derivative contracts
|
|
Current liabilities
|
|
20,310
|
|
|
(1,740
|
)
|
|
18,570
|
|
|||
Commodity derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
2,749
|
|
|
$
|
(1,078
|
)
|
|
$
|
1,671
|
|
|
|
|
|
As of December 31, 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
|
|
$
|
1,960
|
|
|
$
|
(1,960
|
)
|
|
$
|
—
|
|
Commodity derivative contracts
|
|
Noncurrent assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Commodity derivative contracts
|
|
Current liabilities
|
|
9,825
|
|
|
(1,960
|
)
|
|
7,865
|
|
|||
Commodity derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Realized gain (loss) on commodity derivatives
|
$
|
(8,273
|
)
|
|
$
|
116
|
|
|
$
|
(16,228
|
)
|
|
$
|
(26
|
)
|
Unrealized gain (loss) on commodity derivatives
|
(256
|
)
|
|
(2,499
|
)
|
|
(12,376
|
)
|
|
2,350
|
|
||||
Total gain (loss)
|
$
|
(8,529
|
)
|
|
$
|
(2,383
|
)
|
|
$
|
(28,604
|
)
|
|
$
|
2,324
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Monthly settlement
|
$
|
(8,273
|
)
|
|
$
|
376
|
|
|
$
|
(16,228
|
)
|
|
$
|
927
|
|
Previously incurred premiums attributable to settled commodity contracts
|
—
|
|
|
(260
|
)
|
|
—
|
|
|
(953
|
)
|
||||
Total realized loss
|
$
|
(8,273
|
)
|
|
$
|
116
|
|
|
$
|
(16,228
|
)
|
|
$
|
(26
|
)
|
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 September 30, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
20,241
|
|
|
$
|
—
|
|
|
$
|
20,241
|
|
|
Fair Value Measurements at December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
7,865
|
|
|
$
|
—
|
|
|
$
|
7,865
|
|
10
.
|
Interest Expense
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revolving bank credit facility
|
$
|
376
|
|
|
$
|
1,016
|
|
|
$
|
461
|
|
|
$
|
1,286
|
|
Notes payable
|
8,593
|
|
|
1,800
|
|
|
25,781
|
|
|
5,400
|
|
||||
Amortization of issuance costs and other
|
905
|
|
|
1,090
|
|
|
2,905
|
|
|
2,267
|
|
||||
Less: interest capitalized
|
(9,874
|
)
|
|
(3,906
|
)
|
|
(29,147
|
)
|
|
(8,953
|
)
|
||||
Interest expense, net of amounts capitalized
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
11
.
|
Equity and Stock-Based Compensation
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options
|
$
|
1,072
|
|
|
$
|
1,277
|
|
|
$
|
3,470
|
|
|
$
|
3,825
|
|
Performance-vested stock units
|
1,187
|
|
|
807
|
|
|
3,216
|
|
|
2,130
|
|
||||
Restricted stock units and stock bonus shares
|
1,771
|
|
|
1,386
|
|
|
4,507
|
|
|
3,779
|
|
||||
Total stock-based compensation
|
$
|
4,030
|
|
|
$
|
3,470
|
|
|
$
|
11,193
|
|
|
$
|
9,734
|
|
Less: stock-based compensation capitalized
|
(625
|
)
|
|
(440
|
)
|
|
(1,846
|
)
|
|
(1,344
|
)
|
||||
Total stock-based compensation expensed
|
$
|
3,405
|
|
|
$
|
3,030
|
|
|
$
|
9,347
|
|
|
$
|
8,390
|
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value (thousands)
|
|||||
Outstanding, December 31, 2017
|
5,636,834
|
|
|
$
|
9.38
|
|
|
7.0 years
|
|
$
|
4,806
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(823,883
|
)
|
|
5.36
|
|
|
|
|
4,611
|
|
||
Expired
|
(23,400
|
)
|
|
11.27
|
|
|
|
|
|
|||
Forfeited
|
(104,917
|
)
|
|
9.57
|
|
|
|
|
|
|||
Outstanding, September 30, 2018
|
4,684,634
|
|
|
$
|
10.07
|
|
|
6.6 years
|
|
$
|
2,505
|
|
Outstanding, Exercisable at September 30, 2018
|
3,142,430
|
|
|
$
|
10.25
|
|
|
6.4 years
|
|
$
|
1,452
|
|
|
|
Outstanding Options
|
|
Exercisable Options
|
||||||||||||||
Range of Exercise Prices
|
|
Options
|
|
Weighted-Average Exercise Price per Share
|
|
Weighted-Average Remaining Contractual Life
|
|
Options
|
|
Weighted-Average Exercise Price per Share
|
|
Weighted-Average Remaining Contractual Life
|
||||||
Under $5.00
|
|
35,000
|
|
|
$
|
3.31
|
|
|
3.8 years
|
|
35,000
|
|
|
$
|
3.31
|
|
|
3.8 years
|
$5.00 - $6.99
|
|
723,800
|
|
|
6.30
|
|
|
6.7 years
|
|
389,200
|
|
|
6.27
|
|
|
5.9 years
|
||
$7.00 - $10.99
|
|
1,362,334
|
|
|
9.42
|
|
|
6.7 years
|
|
864,830
|
|
|
9.49
|
|
|
6.4 years
|
||
$11.00 - $13.46
|
|
2,563,500
|
|
|
11.58
|
|
|
6.7 years
|
|
1,853,400
|
|
|
11.57
|
|
|
6.6 years
|
||
Total
|
|
4,684,634
|
|
|
$
|
10.07
|
|
|
6.6 years
|
|
3,142,430
|
|
|
$
|
10.25
|
|
|
6.4 years
|
Unrecognized compensation cost (in thousands)
|
$
|
5,685
|
|
Remaining vesting phase
|
1.8 years
|
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Not vested, December 31, 2017
|
1,087,386
|
|
|
$
|
8.89
|
|
Granted
|
747,168
|
|
|
9.35
|
|
|
Vested
|
(439,945
|
)
|
|
8.77
|
|
|
Forfeited
|
(54,111
|
)
|
|
9.56
|
|
|
Not vested, September 30, 2018
|
1,340,498
|
|
|
$
|
9.16
|
|
Unrecognized compensation cost (in thousands)
|
$
|
9,075
|
|
Remaining vesting phase
|
2.0 years
|
|
|
Nine Months Ended September 30,
|
||||
|
2018
|
|
2017
|
||
Weighted-average expected term
|
2.8 years
|
|
|
2.9 years
|
|
Weighted-average expected volatility
|
52
|
%
|
|
59
|
%
|
Weighted-average risk-free rate
|
2.41
|
%
|
|
1.34
|
%
|
|
Number of Units
1
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Not vested, December 31, 2017
|
951,884
|
|
|
$
|
9.44
|
|
Granted
|
321,507
|
|
|
13.11
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Not vested, September 30, 2018
|
1,273,391
|
|
|
$
|
10.36
|
|
12
.
|
Weighted-Average Shares Outstanding
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Weighted-average shares outstanding — basic
|
242,536,781
|
|
|
200,881,447
|
|
|
242,184,348
|
|
|
200,807,436
|
|
Potentially dilutive common shares from:
|
|
|
|
|
|
|
|
||||
Stock options
|
230,067
|
|
|
415,524
|
|
|
332,953
|
|
|
412,902
|
|
TSR PSUs
1
|
411,738
|
|
|
—
|
|
|
336,882
|
|
|
—
|
|
Restricted stock units and stock bonus shares
|
381,460
|
|
|
163,944
|
|
|
352,875
|
|
|
105,791
|
|
Weighted-average shares outstanding — diluted
|
243,560,046
|
|
|
201,460,915
|
|
|
243,207,058
|
|
|
201,326,129
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Potentially dilutive common shares from:
|
|
|
|
|
|
|
|
||||
Stock options
1
|
3,456,300
|
|
|
4,726,500
|
|
|
3,438,167
|
|
|
4,756,500
|
|
TSR PSUs
1,2
|
160,754
|
|
|
951,884
|
|
|
160,754
|
|
|
951,884
|
|
Goal-Based PSUs
2,3
|
281,872
|
|
|
—
|
|
|
281,872
|
|
|
—
|
|
Restricted stock units and stock bonus shares
1
|
13,907
|
|
|
308,094
|
|
|
13,907
|
|
|
497,806
|
|
Total
|
3,912,833
|
|
|
5,986,478
|
|
|
3,894,700
|
|
|
6,206,190
|
|
13
.
|
Income Taxes
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
Revenues (in thousands):
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Oil
|
$
|
123,540
|
|
|
$
|
73,144
|
|
|
$
|
354,601
|
|
|
$
|
154,232
|
|
Natural Gas and NGLs
|
37,438
|
|
|
30,449
|
|
|
100,697
|
|
|
68,187
|
|
||||
|
$
|
160,978
|
|
|
$
|
103,593
|
|
|
$
|
455,298
|
|
|
$
|
222,419
|
|
•
|
We sell oil production at the wellhead and collect an agreed-upon index price, net of pricing differentials. In this scenario, we recognize revenue when control transfers to the purchaser at the wellhead at the net price received.
|
•
|
We deliver oil to the purchaser at a contractually agreed-upon delivery point at which the purchaser takes custody, title, and risk of loss of the product. Under this arrangement, we pay a third party to transport the product and receive a specified index price from the purchaser, net of pricing differentials. In this scenario, we recognize revenue when control transfers to the purchaser at the delivery point based on the price received from the purchaser. The third party costs are recorded as transportation and gathering in our condensed consolidated statements of operations.
|
15
.
|
Other Commitments and Contingencies
|
Year ending December 31,
|
|
Oil
|
|
|
(MBbls)
|
||
Remainder of 2018
|
|
1,072
|
|
2019
|
|
5,167
|
|
2020
|
|
4,003
|
|
2021
|
|
1,672
|
|
2022
|
|
—
|
|
Thereafter
|
|
—
|
|
Total
|
|
11,914
|
|
•
|
The first agreement includes a new
200
MMcf per day processing plant ("Mewbourn 3") as well as the expansion of a related gathering system. Starting in August 2018, Mewbourn 3 was complete and in service. Our share of the commitment requires
46.4
MMcf per day to be delivered after the plant in-service date for a period of
7
years.
|
•
|
The second agreement includes an additional
300
MMcf per day processing plant ("O'Connor 2"), including up to
100
MMcf per day of bypass, as well as the expansion of a related gathering system. Construction of the plant is underway and is expected to be placed into service in the second quarter of 2019. Our share of the commitment will require an additional
43.8
MMcf per day to be delivered after the plant in-service date for a period of
7
years.
|
Year ending December 31:
|
|
Vehicles Leases
|
|
Office Leases
|
||||
Remainder of 2018
|
|
$
|
41
|
|
|
$
|
222
|
|
2019
|
|
163
|
|
|
896
|
|
||
2020
|
|
163
|
|
|
916
|
|
||
2021
|
|
189
|
|
|
913
|
|
||
2022
|
|
136
|
|
|
500
|
|
||
Thereafter
|
|
—
|
|
|
—
|
|
||
Total minimum lease payments
|
|
$
|
692
|
|
|
$
|
3,447
|
|
Less: Amount representing estimated executory cost
|
|
(57
|
)
|
|
|
|||
Net minimum lease payments
|
|
635
|
|
|
|
|||
Less: Amount representing interest
|
|
(92
|
)
|
|
|
|||
Present value of net minimum lease payments
*
|
|
$
|
543
|
|
|
|
16
.
|
Supplemental Schedule of Information to the Condensed Consolidated Statements of Cash Flows
|
|
Nine Months Ended September 30,
|
||||||
Supplemental cash flow information:
|
2018
|
|
2017
|
||||
Interest paid
|
$
|
17,701
|
|
|
$
|
4,796
|
|
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
||||
Accrued well costs as of period end
|
$
|
143,015
|
|
|
$
|
122,387
|
|
Asset retirement obligations incurred with development activities
|
1,488
|
|
|
2,782
|
|
||
Asset retirement obligations assumed with acquisitions
|
26,150
|
|
|
23,521
|
|
||
Obligations discharged with asset retirements and divestitures
|
$
|
(8,944
|
)
|
|
$
|
(7,023
|
)
|
|
|
|
|
||||
Net changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
$
|
(31,170
|
)
|
|
$
|
(85,027
|
)
|
Accounts payable and accrued expenses
|
(842
|
)
|
|
1,413
|
|
||
Revenue payable
|
15,858
|
|
|
41,997
|
|
||
Production taxes payable
|
20,504
|
|
|
17,548
|
|
||
Other
|
(520
|
)
|
|
(941
|
)
|
||
Changes in operating assets and liabilities
|
$
|
3,830
|
|
|
$
|
(25,010
|
)
|
ITEM
2
.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
Year Ended August 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Average NYMEX prices
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Oil (per Bbl)
|
$
|
50.93
|
|
|
$
|
43.20
|
|
|
$
|
48.73
|
|
|
$
|
60.65
|
|
|
$
|
100.39
|
|
|
$
|
94.58
|
|
Natural gas (per Mcf)
|
$
|
3.00
|
|
|
$
|
2.52
|
|
|
$
|
2.58
|
|
|
$
|
3.12
|
|
|
$
|
4.38
|
|
|
$
|
3.55
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Oil (NYMEX-WTI)
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Price
|
$
|
69.76
|
|
|
$
|
48.18
|
|
|
$
|
66.89
|
|
|
$
|
49.44
|
|
Realized Price *
|
63.48
|
|
|
41.89
|
|
|
60.13
|
|
|
41.73
|
|
||||
Differential *
|
$
|
(6.28
|
)
|
|
$
|
(6.29
|
)
|
|
$
|
(6.76
|
)
|
|
$
|
(7.71
|
)
|
|
|
|
|
|
|
|
|
||||||||
Natural Gas (NYMEX-Henry Hub)
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Price
|
$
|
2.90
|
|
|
$
|
2.99
|
|
|
$
|
2.90
|
|
|
$
|
3.03
|
|
Realized Price
|
1.79
|
|
|
2.35
|
|
|
1.84
|
|
|
2.39
|
|
||||
Differential
|
$
|
(1.11
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(0.64
|
)
|
|
|
|
|
|
|
|
|
||||||||
NGL Realized Price
|
$
|
19.93
|
|
|
$
|
17.32
|
|
|
$
|
18.91
|
|
|
$
|
15.49
|
|
Vertical Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
628
|
|
|
602
|
|
|
146
|
|
|
44
|
|
|
774
|
|
|
646
|
|
Horizontal Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
364
|
|
|
338
|
|
|
310
|
|
|
59
|
|
|
674
|
|
|
397
|
|
•
|
Concentrate on our existing core area in the D-J Basin, where we have significant operating experience.
All of our current wells and our proved undeveloped acreage are located either in or adjacent to the Wattenberg Field, and we seek to acquire developed and undeveloped oil and gas properties in the same area. 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 and safest 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.
|
•
|
Use the latest technology to maximize returns and improve hydrocarbon recovery.
Our development objective for individual well optimization is to drill and complete wells with lateral lengths of mostly 7,000' to 10,000'. Utilizing petrophysical and seismic data, a 3-D model is developed for each leasehold section to assist in determining optimal wellbore placement, well spacing, and stimulation design. This process is augmented with formation-specific drilling and completion execution designs and coupled with localized production results to implement a continuous improvement philosophy in optimizing the value per acre of our leasehold throughout our development program.
|
•
|
Operate in a safe manner
and work in partnership with our surrounding stakeholders.
While our scale of operations has increased significantly, we continue to focus on maintaining a safe workplace for our employees and contractors. Further, as technology for resource development has advanced, we seek to utilize best industry practices to meet or exceed regulatory requirements while reducing our impacts on neighboring communities. Such practices include building our infrastructure out ahead of operations to minimize traffic, working with our service providers to minimize dust and lighting issues, and constructing sound walls to minimize noise. We value our positive relationship with local governing entities and the communities in which we operate and seek to continually achieve a status of operator of choice.
|
•
|
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.
|
•
|
Acquire and develop assets near established infrastructure
. We have made acquisitions of contiguous acreage and aligned our development plans where technically-capable, financially-stable midstream companies have existing assets and plans for additional investment. We work collaboratively with these companies to proactively identify expansion opportunities that complement our development plans while reducing truck traffic.
|
•
|
Control and reduce emissions from our production facilities
. We place high importance on achieving compliance with all applicable air quality rules and regulations
and r
educing
emissions continues to be a top environmental priority. To minimize these emissions, we employ best management practices such as using available direct pipeline take-away access and pneumatic actuated instrument devices and working with suppliers to deploy diesel engines that meet the U.S. Environmental Protection Agency Tier 4 standand. We also control emissions and minimize flaring of gas by recovering natural gas and actively pursuing sufficient take-away capacity for associated produced gas
and the
use of vapor recovery equipment
.
We continue to evolve the design of our production facilities to produce oil and natural gas with fewer air emissions
,
including those emissions for which there are public health standards (e.g. ozone and particulate matter)
.
|
|
Three Months Ended September 30,
|
|
Percentage
|
|||||||
|
2018
|
|
2017
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
1
|
1,915
|
|
|
1,726
|
|
|
11
|
%
|
||
Natural Gas (MMcf)
2
|
9,471
|
|
|
7,412
|
|
|
28
|
%
|
||
NGLs (MBbls)
1
|
1,030
|
|
|
753
|
|
|
37
|
%
|
||
MBOE
3
|
4,523
|
|
|
3,714
|
|
|
22
|
%
|
||
BOED
4
|
49,165
|
|
|
40,378
|
|
|
22
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
123,540
|
|
|
$
|
73,144
|
|
|
69
|
%
|
Natural Gas
|
16,908
|
|
|
17,402
|
|
|
(3
|
)%
|
||
NGLs
|
20,530
|
|
|
13,047
|
|
|
57
|
%
|
||
|
$
|
160,978
|
|
|
$
|
103,593
|
|
|
55
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
5
|
$
|
63.48
|
|
|
$
|
41.89
|
|
|
52
|
%
|
Natural Gas
|
1.79
|
|
|
2.35
|
|
|
(24
|
)%
|
||
NGLs
|
19.93
|
|
|
17.32
|
|
|
15
|
%
|
||
BOE
5
|
$
|
35.15
|
|
|
$
|
27.66
|
|
|
27
|
%
|
|
Three Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Production costs
|
$
|
10,181
|
|
|
$
|
4,223
|
|
Workover
|
179
|
|
|
93
|
|
||
Total LOE
|
$
|
10,360
|
|
|
$
|
4,316
|
|
|
|
|
|
||||
Per BOE:
|
|
|
|
||||
Production costs
|
$
|
2.25
|
|
|
$
|
1.14
|
|
Workover
|
0.04
|
|
|
0.03
|
|
||
Total LOE
|
$
|
2.29
|
|
|
$
|
1.17
|
|
|
Three Months Ended September 30,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Depletion of oil and gas properties
|
$
|
44,230
|
|
|
$
|
32,944
|
|
Depreciation and accretion
|
958
|
|
|
796
|
|
||
Total DD&A
|
$
|
45,188
|
|
|
$
|
33,740
|
|
|
|
|
|
||||
DD&A expense per BOE
|
$
|
9.99
|
|
|
$
|
9.08
|
|
|
Nine Months Ended September 30,
|
|
Percentage
|
|||||||
|
2018
|
|
2017
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
|
5,802
|
|
|
3,668
|
|
|
58
|
%
|
||
Natural Gas (MMcf)
|
26,177
|
|
|
17,122
|
|
|
53
|
%
|
||
NGLs (MBbls)
|
2,780
|
|
|
1,758
|
|
|
58
|
%
|
||
MBOE
|
12,945
|
|
|
8,280
|
|
|
56
|
%
|
||
BOED
|
47,416
|
|
|
30,331
|
|
|
56
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
354,601
|
|
|
$
|
154,232
|
|
|
130
|
%
|
Natural Gas
|
48,139
|
|
|
40,945
|
|
|
18
|
%
|
||
NGLs
|
52,558
|
|
|
27,242
|
|
|
93
|
%
|
||
|
$
|
455,298
|
|
|
$
|
222,419
|
|
|
105
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
60.13
|
|
|
$
|
41.73
|
|
|
44
|
%
|
Natural Gas
|
1.84
|
|
|
2.39
|
|
|
(23
|
)%
|
||
NGLs
|
18.91
|
|
|
15.49
|
|
|
22
|
%
|
||
BOE
|
$
|
34.73
|
|
|
$
|
26.72
|
|
|
30
|
%
|
|
Nine Months Ended September 30,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Depletion of oil and gas properties
|
$
|
121,259
|
|
|
$
|
71,389
|
|
Depreciation and accretion
|
2,887
|
|
|
2,007
|
|
||
Total DD&A
|
$
|
124,146
|
|
|
$
|
73,396
|
|
|
|
|
|
||||
DD&A expense per BOE
|
$
|
9.59
|
|
|
$
|
8.86
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net cash provided by operations
|
$
|
343,554
|
|
|
$
|
142,817
|
|
Capital expenditures
|
(490,124
|
)
|
|
(383,454
|
)
|
||
Net cash provided by other investing activities
|
1,233
|
|
|
77,017
|
|
||
Net cash provided by (used in) equity financing activities
|
3,039
|
|
|
(517
|
)
|
||
Net cash provided by debt financing activities
|
112,762
|
|
|
148,628
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
$
|
(29,536
|
)
|
|
$
|
(15,509
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Capital expenditures for drilling and completion activities
|
$
|
408,334
|
|
|
$
|
383,028
|
|
Acquisitions of oil and gas properties and leasehold*
|
162,081
|
|
|
89,677
|
|
||
Capitalized interest, capitalized G&A, and other
|
40,037
|
|
|
17,514
|
|
||
Accrual basis capital expenditures**
|
$
|
610,452
|
|
|
$
|
490,219
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
62,628
|
|
|
$
|
43,848
|
|
|
$
|
178,048
|
|
|
$
|
91,664
|
|
Depreciation, depletion, and accretion
|
45,188
|
|
|
33,740
|
|
|
124,146
|
|
|
73,396
|
|
||||
Stock-based compensation expense
|
3,405
|
|
|
3,030
|
|
|
9,347
|
|
|
8,390
|
|
||||
Mark-to-market of commodity derivative contracts:
|
|
|
|
|
|
|
|
||||||||
Total loss (gain) on commodity derivatives contracts
|
8,529
|
|
|
2,383
|
|
|
28,604
|
|
|
(2,324
|
)
|
||||
Cash settlements on commodity derivative contracts
|
(7,142
|
)
|
|
544
|
|
|
(13,263
|
)
|
|
778
|
|
||||
Interest income
|
(23
|
)
|
|
(16
|
)
|
|
(37
|
)
|
|
(47
|
)
|
||||
Income tax expense
|
8,918
|
|
|
—
|
|
|
18,076
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
121,503
|
|
|
$
|
83,529
|
|
|
$
|
344,921
|
|
|
$
|
171,857
|
|
•
|
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 and Proposition 112;
|
•
|
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
|
•
|
additional constraints on midstream capacity if midstream infrastructure and services are not expanded as currently expected,
|
•
|
increased operating costs,
|
•
|
greater difficulties in maintaining leases through production,
|
•
|
increased expenses related to legal, regulatory, or legislative actions that we may pursue in response to the implementation of the proposition, and
|
•
|
inability to meet commitments related to our future production.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|||
July 1, 2018 - July 31, 2018
(1)
|
|
—
|
|
|
$
|
—
|
|
August 1, 2018 - August 31, 2018
(1)
|
|
7,077
|
|
|
9.85
|
|
|
September 1, 2018 - September 30, 2018
(1)
|
|
2,899
|
|
|
$
|
9.31
|
|
Total
|
|
9,976
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Exhibit
Number
|
|
Exhibit
|
10.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
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 and Chief Financial Officer
(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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