falsedesktopNOG2020-09-30000110448520000206{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large Accelerated Filer ☐\tAccelerated Filer ☒\nNon-Accelerated Filer ☐\tSmaller Reporting Company ☐ Emerging Growth Company ☐\n", "q10k_tbl_1": "\t\tPage\nPART I - FINANCIAL INFORMATION\t\t\nItem 1.\tCondensed Financial Statements (unaudited)\t2\n\tCondensed Balance Sheets\t2\n\tCondensed Statements of Operations\t4\n\tCondensed Statements of Cash Flows\t5\n\tCondensed Statements of Stockholders' Equity\t7\n\tNotes to Condensed Financial Statements\t9\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t28\nItem 3.\tQuantitative and Qualitative Disclosures about Market Risk\t47\nItem 4.\tControls and Procedures\t49\nPART II - OTHER INFORMATION\t\t\nItem 1.\tLegal Proceedings\t51\nItem 1A.\tRisk Factors\t51\nItem 2.\tUnregistered Sales of Equity Securities and Use of Proceeds\t53\nItem 6.\tExhibits\t54\nSignatures\t\t\n", "q10k_tbl_2": "(In thousands except par value and share data)\tSeptember 30 2020\tDecember 31 2019\nAssets\t(Unaudited)\t\nCurrent Assets:\t\t\nCash and Cash Equivalents\t1803\t16068\nAccounts Receivable Net\t60067\t108274\nAdvances to Operators\t714\t893\nPrepaid Expenses and Other\t1697\t1964\nDerivative Instruments\t119468\t5628\nIncome Tax Receivable\t0\t210\nTotal Current Assets\t183749\t133037\nProperty and Equipment:\t\t\nOil and Natural Gas Properties Full Cost Method of Accounting\t\t\nProved\t4344346\t4178605\nUnproved\t10328\t11047\nOther Property and Equipment\t2215\t2157\nTotal Property and Equipment\t4356889\t4191809\nLess - Accumulated Depreciation Depletion and Impairment\t(3533887)\t(2443216)\nTotal Property and Equipment Net\t823002\t1748593\nDerivative Instruments\t6826\t8554\nDeferred Income Taxes\t0\t210\nAcquisition Deposit\t225\t0\nOther Noncurrent Assets Net\t11722\t15071\nTotal Assets\t1025524\t1905465\nLiabilities and Stockholders' Equity (Deficit)\t\t\nCurrent Liabilities:\t\t\nAccounts Payable\t20372\t69395\nAccrued Liabilities\t70203\t110374\nAccrued Interest\t8442\t11615\nDerivative Instruments\t5438\t11298\nCurrent Portion of Long-term Debt\t65000\t0\nOther Current Liabilities\t1000\t795\nTotal Current Liabilities\t170455\t203477\nLong-term Debt\t918327\t1118161\nDerivative Instruments\t2456\t8079\nAsset Retirement Obligations\t17891\t16759\nOther Noncurrent Liabilities\t126\t345\nTotal Liabilities\t1109255\t1346822\nCommitments and Contingencies (Note 8)\t\t\n", "q10k_tbl_3": "Stockholders' Equity (Deficit)\t\t\nPreferred Stock Par Value $.001; 5000000 Shares Authorized; 2218732 Series A Shares Outstanding at 9/30/2020 1500000 Series A Shares Outstanding at 12/31/2019\t2\t2\nCommon Stock Par Value $.001; 135000000* Shares Authorized; 45556326* Shares Outstanding at 9/30/2020 40608518* Shares Outstanding at 12/31/2019\t448\t406\nAdditional Paid-In Capital\t1554053\t1431438\nRetained Deficit\t(1638234)\t(873203)\nTotal Stockholders' Equity (Deficit)\t(83731)\t558643\nTotal Liabilities and Stockholders' Equity (Deficit)\t1025524\t1905465\n", "q10k_tbl_4": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands except share and per share data)\t2020\t2019\t2020\t2019\nRevenues\t\t\t\t\nOil and Gas Sales\t73680\t157989\t224541\t440519\nGain (Loss) on Commodity Derivatives Net\t(26361)\t75892\t277582\t(27139)\nOther Revenue\t3\t3\t12\t10\nTotal Revenues\t47322\t233883\t502135\t413389\nOperating Expenses\t\t\t\t\nProduction Expenses\t24159\t32347\t88132\t83146\nProduction Taxes\t6936\t15391\t20750\t41944\nGeneral and Administrative Expense\t4605\t4206\t14185\t15506\nDepletion Depreciation Amortization and Accretion\t30786\t55566\t129350\t146791\nImpairment of Other Current Assets\t0\t5275\t0\t7969\nImpairment Expense\t199489\t0\t962205\t0\nTotal Operating Expenses\t265975\t112784\t1214622\t295355\nIncome (Loss) From Operations\t(218653)\t121100\t(712487)\t118034\nOther Income (Expense)\t\t\t\t\nInterest Expense Net of Capitalization\t(14637)\t(21510)\t(45145)\t(58836)\nWrite-off of Debt Issuance Costs\t(1543)\t0\t(1543)\t0\nGain (Loss) on Unsettled Interest Rate Derivatives Net\t224\t0\t(1205)\t0\nGain (Loss) on Extinguishment of Debt Net\t1592\t0\t(3718)\t(425)\nDebt Exchange Derivative Gain/(Loss)\t0\t(23)\t0\t1390\nContingent Consideration Loss\t0\t(5262)\t0\t(28633)\nOther Income (Expense)\t13\t75\t14\t88\nTotal Other Income (Expense)\t(14351)\t(26719)\t(51597)\t(86416)\nIncome (Loss) Before Income Taxes\t(233004)\t94381\t(764084)\t31619\nIncome Tax Provision (Benefit)\t0\t0\t(166)\t0\nNet Income (Loss)\t(233004)\t94381\t(763918)\t31619\nCumulative Preferred Stock Dividend\t(3718)\t0\t(10986)\t0\nNet Income (Loss) Attributable to Common Shareholders\t(236722)\t94381\t(774904)\t31619\nNet Income (Loss) Per Common Share - Basic*\t(5.44)\t2.38\t(18.53)\t0.83\nNet Income (Loss) Per Common Share - Diluted*\t(5.44)\t2.38\t(18.53)\t0.83\nWeighted Average Common Shares Outstanding - Basic*\t43517074\t39604482\t41812553\t38204403\nWeighted Average Common Shares Outstanding - Diluted*\t43517074\t39653070\t41812553\t38274426\n", "q10k_tbl_5": "\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\nCash Flows from Operating Activities\t\t\nNet Income (Loss)\t(763918)\t31619\nAdjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:\t\t\nDepletion Depreciation Amortization and Accretion\t129350\t146791\nAmortization of Debt Issuance Costs\t3999\t3948\nWrite-off of Debt Issuance Costs\t1543\t0\nLoss on Extinguishment of Debt\t3718\t425\nAmortization of Bond Premium on Long-term Debt\t(802)\t(2165)\nDeferred Income Taxes\t210\t0\n(Gain) Loss of Derivative Instruments\t(123595)\t62806\nGain on Debt Exchange Derivative\t0\t(1390)\nLoss on Contingent Consideration\t0\t28633\nPIK Interest on Second Lien Notes\t0\t1742\nStock-Based Compensation Expense\t3182\t4280\nImpairment of Other Current Assets\t0\t7969\nImpairment Expense\t962205\t0\nOther\t(172)\t(41)\nChanges in Working Capital and Other Items:\t\t\nAccounts Receivable Net\t48491\t(6589)\nPrepaid and Other Expenses\t268\t1674\nAccounts Payable\t(1127)\t1058\nAccrued Interest\t(3199)\t2813\nAccrued Liabilities\t(1501)\t6916\nPayment of Contingent Consideration\t0\t(21164)\nNet Cash Provided by Operating Activities\t258652\t269323\nCash Flows from Investing Activities\t\t\nDrilling and Development Capital Expenditures\t(218193)\t(206306)\nAcquisition of Oil and Natural Gas Properties\t(31075)\t(210642)\nAcquisition Deposit\t(225)\t0\nPurchases of Other Property and Equipment\t(59)\t(1001)\nNet Cash Used for Investing Activities\t(249552)\t(417948)\nCash Flows from Financing Activities\t\t\nAdvances on Revolving Credit Facility\t56000\t313000\nRepayments on Revolving Credit Facility\t(65000)\t(126000)\nRepurchases of Second Lien Notes\t(13514)\t(10488)\nDebt Issuance Costs Paid\t(447)\t(328)\nDebt Exchange Derivative Settlements\t0\t(1044)\nContingent Consideration Settlements\t0\t(11278)\nRepurchases of Common Stock\t0\t(15108)\nRestricted Stock Surrenders - Tax Obligations\t(404)\t(584)\nNet Cash (Used for) Provided by Financing Activities\t(23365)\t148169\nNet Decrease in Cash and Cash Equivalents\t(14265)\t(456)\n", "q10k_tbl_6": "(In thousands except share data)\tCommon Stock*\t\tPreferred Stock\t\tAdditional Paid-In\tRetained Earnings\tTotal Stockholders' Equity\n\tShares\tAmount\tShares\tAmount\tCapital\t(Deficit)\t(Deficit)\nDecember 31 2019\t40608518\t406\t1500000\t2\t1431438\t(873203)\t558643\nIssuance of Common Stock\t5000\t0\t0\t0\t0\t0\t0\nShare Based Compensation\t0\t0\t0\t0\t1263\t0\t1263\nRestricted Stock Surrenders - Tax Obligations\t(33200)\t0\t0\t0\t(396)\t0\t(396)\nIssuance of Preferred Stock Net of Issuance Costs\t0\t0\t794702\t1\t81211\t0\t81212\nNet Income\t0\t0\t0\t0\t0\t368286\t368286\nMarch 31 2020\t40580318\t406\t2294702\t2\t1513516\t(504917)\t1009007\nIssuance of Common Stock\t219562\t2\t0\t0\t0\t0\t2\nRestricted Stock Forfeitures\t(271)\t0\t0\t0\t0\t0\t0\nShare Based Compensation\t0\t0\t0\t0\t1313\t0\t1313\nRestricted Stock Surrenders - Tax Obligations\t(944)\t0\t0\t0\t(8)\t0\t(8)\nIssuance under Debt Exchange Agreements\t2845326\t28\t0\t0\t29586\t0\t29615\nNet Loss\t0\t0\t0\t0\t0\t(899200)\t(899200)\nJune 30 2020\t43643991\t436\t2294702\t2\t1544407\t(1404117)\t140729\nIssuance of Common Stock\t66025\t0\t0\t0\t0\t0\t0\nShare Based Compensation\t0\t0\t0\t0\t990\t0\t990\nIssuance under Debt Exchange Agreements\t1319615\t6\t0\t0\t7548\t0\t7554\nIssuance under Series A Preferred Exchange Agreements\t526695\t6\t(75970)\t0\t1108\t(1113)\t0\nNet Loss\t0\t0\t0\t0\t0\t(233004)\t(233004)\nSeptember 30 2020\t45556326\t448\t2218732\t2\t1554053\t(1638234)\t(83731)\n", "q10k_tbl_7": "\tCommon Stock*\t\tPreferred Stock\t\tAdditional Paid-In\tRetained Earnings\tTotal Stockholders' Equity\n(In thousands except share data)\tShares\tAmount\tShares\tAmount\tCapital\t(Deficit)\t(Deficit)\nDecember 31 2018\t37833307\t378\t0\t0\t1226371\t(796884)\t429865\nIssuance of Common Stock\t316020\t3\t0\t0\t0\t0\t3\nRestricted Stock Forfeitures\t(480)\t0\t0\t0\t0\t0\t0\nStock-Based Compensation\t0\t0\t0\t0\t2832\t0\t2832\nRestricted Stock Surrenders - Tax Obligations\t(22053)\t0\t0\t0\t(558)\t0\t(558)\nRepurchases of Common Stock\t(563500)\t(6)\t0\t0\t(15102)\t0\t(15108)\nContingent Consideration Settlements\t116754\t1\t0\t0\t2886\t0\t2887\nNet Loss\t0\t0\t0\t0\t0\t(107162)\t(107162)\nMarch 31 2019\t37680048\t377\t0\t0\t1216429\t(904046)\t312760\nIssuance of Common Stock\t900\t0\t0\t0\t0\t0\t0\nRestricted Stock Forfeitures\t(40203)\t0\t0\t0\t0\t0\t0\nStock-Based Compensation\t0\t0\t0\t0\t1750\t0\t1750\nRestricted Stock Surrenders - Tax Obligations\t(944)\t0\t0\t0\t(26)\t0\t(26)\nEquity Offerings\t0\t0\t0\t0\t0\t0\t0\nIssuance under Debt Exchange Agreements\t524988\t5\t0\t0\t12186\t0\t12192\nContingent Consideration Settlements\t778811\t8\t0\t0\t18567\t0\t18575\nNet Income\t0\t0\t0\t0\t0\t44399\t44399\nJune 30 2019\t38943600\t389\t0\t0\t1248906\t(859647)\t389649\nIssuance of Common Stock\t0\t0\t0\t0\t0\t0\t0\nRestricted Stock Forfeitures\t(4560)\t0\t0\t0\t0\t0\t0\nStock-Based Compensation\t0\t0\t0\t0\t(8)\t0\t(8)\nRestricted Stock Surrenders - Tax Obligations\t0\t0\t0\t0\t0\t0\t0\nEquity Offerings\t0\t0\t0\t0\t0\t0\t0\nIssuance under Debt Exchange Agreements\t198553\t2\t0\t0\t3541\t0\t3543\nAcquisition of Oil and Natural Gas Properties\t560215\t6\t0\t0\t11703\t0\t11708\nNet Exercise of Stock Options\t0\t0\t0\t0\t0\t0\t0\nRepurchases of Common Stock\t0\t0\t0\t0\t0\t0\t0\nContingent Consideration Settlements\t736840\t7\t0\t0\t14833\t0\t14841\nNet Income\t0\t0\t0\t0\t0\t94381\t94381\nSeptember 30 2019\t40434648\t404\t0\t0\t1278976\t(765266)\t514114\n", "q10k_tbl_8": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands except share and per share data)\t2020\t2019\t2020\t2019\nNet Income (Loss)\t(233004)\t94381\t(763918)\t31619\nLess: Cumulative Dividends on Preferred Stock\t(3718)\t0\t(10986)\t0\nNet Income (Loss) Attributable to Common Stock\t(236722)\t94381\t(774904)\t31619\nWeighted Average Common Shares Outstanding:\t\t\t\t\nWeighted Average Common Shares Outstanding - Basic\t43517074\t39604482\t41812553\t38204403\nPlus: Dilutive Effect of Restricted Stock\t0\t48588\t0\t70023\nPlus: Dilutive Effect of Preferred Shares\t0\t0\t0\t0\nWeighted Average Common Shares Outstanding - Diluted\t43517074\t39653070\t41812553\t38274426\nNet Income (Loss) per Common Share:\t\t\t\t\nBasic\t(5.44)\t2.38\t(18.53)\t0.83\nDiluted\t(5.44)\t2.38\t(18.53)\t0.83\nShares Excluded from EPS Due to Anti-Dilutive Effect:\t\t\t\t\nRestricted Stock\t84319\t8821\t54885\t4033\nPreferred Stock\t10057601\t0\t9880344\t0\n", "q10k_tbl_9": "\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\nSupplemental Cash Items:\t\t\nCash Paid During the Period for Interest Net of Amount Capitalized\t42736\t52916\nCash Paid During the Period for Income Taxes\t0\t0\nNon-cash Operating Activities:\t\t\nContingent Consideration Settlements in Excess of Acquisition-Date Liabilities\t0\t18480\nNon-cash Investing Activities:\t\t\nOil and Natural Gas Properties Included in Accounts Payable and Accrued Liabilities\t76498\t178772\nCapitalized Asset Retirement Obligations\t457\t3703\nCompensation Capitalized on Oil and Gas Properties\t385\t296\nIssuance of Common Stock - Acquisitions of Oil and Natural Gas Properties\t0\t11708\nIssuance of Unsecured VEN Bakken Note\t0\t128660\nNon-cash Financing Activities:\t\t\nIssuance of 8.50% Second Lien Notes due 2023 - PIK Interest\t0\t3480\nIssuance of Common Stock for 2L Notes Repurchase\t37169\t0\nIssuance of Preferred Stock for 2L Notes Repurchase\t81212\t0\nIssuance of Common Stock for Preferred Stock Exchange\t1113\t0\nDebt Exchange Derivative Liability Settlements\t0\t15735\nContingent Consideration Settlements\t0\t17822\n", "q10k_tbl_10": "\t(In thousands)\nFair value of net assets:\t\nProved oil and natural gas properties\t324974\nAsset retirement cost\t2680\nTotal assets acquired\t327654\nAsset retirement obligations\t(2680)\nDerivative instruments\t(9694)\nNet assets acquired\t315280\nFair value of consideration paid for net assets:\t\nCash consideration\t174912\nIssuance of common stock\t11708\nUnsecured VEN Bakken Note\t128660\nTotal fair value of consideration transferred\t315280\n", "q10k_tbl_11": "(in thousands)\tSeptember 30 2020\tDecember 31 2019\nRevolving Credit Facility\t571000\t580000\nSecond Lien Notes due 2023\t287755\t417733\nUnsecured VEN Bakken Note\t130000\t130000\nTotal principal\t988755\t1127733\nUnamortized debt discounts and premiums\t2276\t4860\nUnamortized debt issuance costs(1)\t(7704)\t(14432)\nTotal debt\t983327\t1118161\nLess current portion of long-term debt\t(65000)\t0\nTotal long-term debt\t918327\t1118161\n", "q10k_tbl_12": "\tService-based Awards\t\tService and Performance-based Awards\t\tService and Market-based Awards\t\tService Performance and Market-based Awards\t\n\tNumber of Shares\tWeighted-average Grant Date Fair Value\tNumber of Shares\tWeighted-average Grant Date Fair Value\tNumber of Shares\tWeighted-average Grant Date Fair Value\tNumber of Shares\tWeighted-average Grant Date Fair Value\nOutstanding at December 31 2019\t41398\t24.10\t37500\t27.00\t118962\t18.00\t70800\t9.80\nShares granted\t290579\t9.41\t0\t0\t0\t0\t0\t0\nShares forfeited\t(271)\t24.50\t0\t0\t0\t0\t0\t0\nShares vested\t(177302)\t10.15\t(21250)\t27.00\t(6917)\t16.70\t(31600)\t9.80\nOutstanding at September 30 2020\t154404\t12.48\t16250\t27.00\t112045\t18.13\t39200\t9.80\n", "q10k_tbl_13": "\tFair Value Measurements at September 30 2020 Using\t\t\n(In thousands)\tQuoted Prices In Active Markets for Identical Assets (Liabilities) (Level 1)\tSignificant Other Observable Inputs (Level 2)\tSignificant Unobservable Inputs (Level 3)\nCommodity Derivatives - Current Asset\t0\t119468\t0\nCommodity Derivatives - Noncurrent Asset\t0\t6826\t0\nCommodity Derivatives - Current Liabilities\t0\t(4908)\t0\nCommodity Derivatives - Noncurrent Liabilities\t0\t(1781)\t0\nInterest Rate Derivatives - Current Liabilities\t0\t(530)\t0\nInterest Rate Derivatives - Noncurrent Liabilities\t0\t(675)\t0\nTotal\t0\t118401\t0\n", "q10k_tbl_14": "\tFair Value Measurements at December 31 2019 Using\t\t\n(In thousands)\tQuoted Prices In Active Markets for Identical Assets (Liabilities) (Level 1)\tSignificant Other Observable Inputs (Level 2)\tSignificant Unobservable Inputs (Level 3)\nCommodity Derivatives - Current Asset\t0\t5628\t0\nCommodity Derivatives - Current Liabilities\t0\t(11298)\t0\nCommodity Derivatives - Noncurrent Asset\t0\t8554\t0\nCommodity Derivatives - Noncurrent Liabilities\t0\t(8079)\t0\nTotal\t0\t(5195)\t0\n", "q10k_tbl_15": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\t2020\t2019\nGain on Settled Commodity Derivatives\t43837\t18386\t152782\t35666\nGain (Loss) on Unsettled Commodity Derivatives\t(70198)\t57506\t124800\t(62806)\nGain (Loss) on Commodity Derivatives Net\t(26361)\t75892\t277582\t(27139)\n", "q10k_tbl_16": "\t2020\t2021\t2022\t2023\nOil:\t\t\t\t\nWTI NYMEX - Swaps:\t\t\t\t\nVolume (Bbl)\t2372362\t7808624\t365000\t0\nWeighted-Average Price ($/Bbl)\t58.03\t54.67\t50.05\t0\nWTI NYMEX - Swaptions(1):\t\t\t\t\nVolume (Bbl)\t0\t318250\t3131125\t1095000\nWeighted-Average Price ($/Bbl)\t0\t57.84\t52.68\t46.59\nNatural Gas:\t\t\t\t\nHenry Hub NYMEX - Swaps:\t\t\t\t\nVolume (MMBtu)\t2760000\t13000000\t1825000\t0\nWeighted-Average Price ($/MMBtu)\t2.44\t2.50\t2.53\t0\nWaha Inside FERC to Henry Hub - Basis Swaps:\t\t\t\t\nVolume (MMBtu)\t0\t69000\t0\t0\nWeighted-Average Differential ($/MMBtu)\t0\t(0.28)\t0\t0\n", "q10k_tbl_17": "Type of Contract\tBalance Sheet Location\tSeptember 30 2020 Estimated Fair Value\tDecember 31 2019 Estimated Fair Value\nDerivative Assets:\t\t(In thousands)\t\nCommodity Price Swap Contracts\tCurrent Assets\t119468\t20164\nInterest Rate Swap Contracts\tCurrent Assets\t0\t0\nCommodity Price Swap Contracts\tNoncurrent Assets\t6826\t16069\nInterest Rate Swap Contracts\tNoncurrent Assets\t0\t0\nTotal Derivative Assets\t\t126294\t36233\nDerivative Liabilities:\t\t\t\nCommodity Price Swap Contracts\tCurrent Liabilities\t(4908)\t(25834)\nInterest Rate Swap Contracts\tCurrent Liabilities\t(530)\t0\nCommodity Price Swap Contracts\tNoncurrent Liabilities\t(1781)\t(5273)\nInterest Rate Swap Contracts\tNoncurrent Liabilities\t(675)\t0\nCommodity Price Swaptions Contracts\tNoncurrent Liabilities\t0\t(10321)\nTotal Derivative Liabilities\t\t(7894)\t(41428)\n", "q10k_tbl_18": "\tEstimated Fair Value at September 30 2020\t\t\n(In thousands)\tGross Amounts of Recognized Assets (Liabilities)\tGross Amounts Offset on the Balance Sheet\tNet Amounts of Assets (Liabilities) Presented in the Balance Sheet\nOffsetting of Derivative Assets:\t\t\t\nCurrent Assets\t122167\t(2699)\t119468\nNoncurrent Assets\t17166\t(10340)\t6826\nTotal Derivative Assets\t139333\t(13039)\t126294\nOffsetting of Derivative Liabilities:\t\t\t\nCurrent Liabilities\t(5438)\t0\t(5438)\nNoncurrent Liabilities\t(15495)\t13039\t(2456)\nTotal Derivative Liabilities\t(20933)\t13039\t(7894)\n", "q10k_tbl_19": "\tEstimated Fair Value at December 31 2019\t\t\n(In thousands)\tGross Amounts of Recognized Assets (Liabilities)\tGross Amounts Offset on the Balance Sheet\tNet Amounts of Assets (Liabilities) Presented in the Balance Sheet\nOffsetting of Derivative Assets:\t\t\t\nCurrent Assets\t20164\t(14536)\t5628\nNon-Current Assets\t16069\t(7515)\t8554\nTotal Derivative Assets\t36233\t(22051)\t14182\nOffsetting of Derivative Liabilities:\t\t\t\nCurrent Liabilities\t(25834)\t14536\t(11298)\nNon-Current Liabilities\t(15594)\t7515\t(8079)\nTotal Derivative Liabilities\t(41428)\t22051\t(19377)\n", "q10k_tbl_20": "\tThree Months Ended September 30\t\n\t2020\t2019\nAverage NYMEX Prices(1)\t\t\nNatural Gas (per Mcf)\t1.97\t2.38\nOil (per Bbl)\t40.90\t56.41\n", "q10k_tbl_21": "\tNine Months Ended September 30\t\n\t2020\t2019\nAverage NYMEX Prices(1)\t\t\nNatural Gas (per Mcf)\t1.86\t2.62\nOil (per Bbl)\t38.12\t57.08\n", "q10k_tbl_22": "\tThree Months Ended September 30\t\t\n\t2020\t2019\t% Change\nNet Production:\t\t\t\nOil (Bbl)\t2054847\t3002789\t(32)%\nNatural Gas and NGLs (Mcf)\t3706853\t4496860\t(18)%\nTotal (Boe)\t2672656\t3752266\t(29)%\nNet Sales (in thousands):\t\t\t\nOil Sales\t70595\t152836\t(54)%\nNatural Gas and NGL Sales\t3085\t5153\t(40)%\nGain on Settled Commodity Derivatives\t43838\t18386\t\nGain (Loss) on Unsettled Commodity Derivatives\t(70198)\t57506\t\nOther Revenue\t2\t3\t\nTotal Revenues\t47321\t233883\t\nAverage Sales Prices:\t\t\t\nOil (per Bbl)\t34.36\t50.90\t(33)%\nEffect of Gain on Settled Oil Derivatives on Average Price (per Bbl)\t21.11\t6.12\t\nOil Net of Settled Oil Derivatives (per Bbl)\t55.47\t57.02\t(3)%\nNatural Gas and NGLs (per Mcf)\t0.83\t1.15\t(28)%\nEffect of Gain on Settled Natural Gas Derivatives on Average Price (per Mcf)\t0.13\t0\t\nNatural Gas and NGLs Net of Settled Natural Gas Derivatives (per Mcf)\t0.96\t1.15\t(17)%\nRealized Price on a Boe Basis Excluding Settled Commodity Derivatives\t27.57\t42.10\t(35)%\nEffect of Gain on Settled Commodity Derivatives on Average Price (per Boe)\t16.40\t4.90\t\nRealized Price on a Boe Basis Including Settled Commodity Derivatives\t43.97\t47.00\t(6)%\nOperating Expenses (in thousands):\t\t\t\nProduction Expenses\t24159\t32347\t(25)%\nProduction Taxes\t6936\t15391\t(55)%\nGeneral and Administrative Expenses\t4605\t4206\t9%\nDepletion Depreciation Amortization and Accretion\t30786\t55566\t(45)%\nCosts and Expenses (per Boe):\t\t\t\nProduction Expenses\t9.04\t8.62\t5%\nProduction Taxes\t2.60\t4.10\t(37)%\nGeneral and Administrative Expenses\t1.72\t1.12\t54%\nDepletion Depreciation Amortization and Accretion\t11.52\t14.81\t(22)%\nNet Producing Wells at Period End\t468.8\t444.0\t6%\n", "q10k_tbl_23": "\tThree Months Ended September 30\t\t\t\n\t2020\t2019\t Change\t% Change\nDepletion\t11.38\t14.72\t(3.34)\t(23)%\nDepreciation Amortization and Accretion\t0.14\t0.09\t0.05\t56%\nTotal DD&A Expense\t11.52\t14.81\t(3.29)\t(22)%\n", "q10k_tbl_24": "\tNine Months Ended September 30\t\t\n\t2020\t2019\t% Change\nNet Production:\t\t\t\nOil (Bbl)\t6852520\t8106534\t(15)%\nNatural Gas and NGLs (Mcf)\t11797391\t11648580\t1%\nTotal (Boe)\t8818752\t10047964\t(12)%\nNet Sales (in thousands):\t\t\t\nOil Sales\t215712\t416259\t(48)%\nNatural Gas and NGL Sales\t8829\t24260\t(64)%\nGain on Settled Commodity Derivatives\t152782\t35666\t\nGain (Loss) on Unsettled Commodity Derivatives\t124800\t(62806)\t\nOther Revenue\t13\t10\t\nTotal Revenues\t502136\t413389\t21%\nAverage Sales Prices:\t\t\t\nOil (per Bbl)\t31.48\t51.35\t(39)%\nEffect of Gain on Settled Oil Derivatives on Average Price (per Bbl)\t22.11\t4.40\t\nOil Net of Settled Oil Derivatives (per Bbl)\t53.59\t55.75\t(4)%\nNatural Gas and NGLs (per Mcf)\t0.75\t2.08\t(64)%\nEffect of Gain on Settled Natural Gas Derivatives on Average Price (per Mcf)\t0.11\t0\t\nNatural Gas and NGLs Net of Settled Natural Gas Derivatives (per Mcf)\t0.86\t2.08\t(59)%\nRealized Price on a Boe Basis Excluding Settled Commodity Derivatives\t25.46\t43.84\t(42)%\nEffect of Gain on Settled Commodity Derivatives on Average Price (per Boe)\t17.33\t3.55\t\nRealized Price on a Boe Basis Including All Realized Derivative Settlements\t42.79\t47.39\t(10)%\nOperating Expenses (in thousands):\t\t\t\nProduction Expenses\t88132\t83146\t6%\nProduction Taxes\t20750\t41944\t(51)%\nGeneral and Administrative Expenses\t14185\t15506\t(9)%\nDepletion Depreciation Amortization and Accretion\t129350\t146791\t(12)%\nCosts and Expenses (per Boe):\t\t\t\nProduction Expenses\t9.99\t8.27\t21%\nProduction Taxes\t2.35\t4.17\t(44)%\nGeneral and Administrative Expenses\t1.61\t1.54\t5%\nDepletion Depreciation Amortization and Accretion\t14.67\t14.61\t-%\nNet Producing Wells at Period End\t468.8\t444.0\t6%\n", "q10k_tbl_25": "\tNine Months Ended September 30\t\t\t\n\t2020\t2019\t Change\t% Change\nDepletion\t14.54\t14.53\t0.01\t-%\nDepreciation Amortization and Accretion\t0.12\t0.08\t0.04\t50%\nTotal DD&A Expense\t14.66\t14.61\t0.05\t-%\n", "q10k_tbl_26": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands except share and per share data)\t2020\t2019\t2020\t2019\nNet Income (Loss)\t(233004)\t94381\t(763918)\t31619\nAdd:\t\t\t\t\nImpact of Selected Items:\t\t\t\t\n(Gain) Loss on Unsettled Commodity Derivatives\t70198\t(57506)\t(124800)\t62806\nImpairment of Other Current Assets\t0\t5275\t0\t7969\nWrite-off of Debt Issuance Costs\t1543\t0\t1543\t0\n(Gain) Loss on Extinguishment of Debt\t(1592)\t0\t3718\t425\nDebt Exchange Derivative (Gain) Loss\t0\t23\t0\t(1390)\nContingent Consideration Loss\t0\t5262\t0\t28633\nAcquisition Transaction Costs\t0\t1250\t0\t1763\n(Gain) Loss on Unsettled Interest Rate Derivatives\t(224)\t0\t1205\t0\nImpairment Expense\t199489\t0\t962205\t0\nSelected Items Before Income Taxes\t269414\t(45696)\t843871\t100204\nIncome Tax of Selected Items(1)\t(8920)\t(12380)\t(19588)\t(32401)\nSelected Items Net of Income Taxes\t260494\t(58077)\t824283\t67803\nAdjusted Net Income\t27490\t36304\t60365\t99422\nWeighted Average Shares Outstanding - Basic\t43517074\t39604482\t41812553\t38204403\nWeighted Average Shares Outstanding - Diluted\t53582333\t39653070\t51707412\t38274426\nNet Income (Loss) Per Common Share - Basic\t(5.35)\t2.38\t(18.27)\t0.83\nAdd:\t\t\t\t\nImpact of Selected Items Net of Income Taxes\t5.98\t(1.46)\t19.71\t1.77\nAdjusted Net Income Per Common Share - Basic\t0.63\t0.92\t1.44\t2.60\nNet Income (Loss) Per Common Share - Diluted\t(4.35)\t2.38\t(14.77)\t0.83\nAdd:\t\t\t\t\nImpact of Selected Items Net of Income Taxes\t4.86\t(1.46)\t15.94\t1.77\nAdjusted Net Income Per Common Share - Diluted\t0.51\t0.92\t1.17\t2.60\n", "q10k_tbl_27": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\t2020\t2019\nNet Income (Loss)\t(233004)\t94381\t(763918)\t31619\nAdd:\t\t\t\t\nInterest Expense\t14637\t21510\t45145\t58836\nIncome Tax Provision (Benefit)\t0\t0\t(166)\t0\nDepreciation Depletion Amortization and Accretion\t30786\t55566\t129350\t146791\nImpairment of Other Current Assets\t0\t5275\t0\t7969\nNon-Cash Stock-Based Compensation\t890\t(114)\t3183\t4280\nWrite-off of Debt Issuance Costs\t1543\t0\t1543\t0\n(Gain) Loss on Extinguishment of Debt\t(1592)\t0\t3718\t425\nDebt Exchange Derivative (Gain) Loss\t0\t23\t0\t(1390)\nContingent Consideration Loss\t0\t5262\t0\t28633\n(Gain) Loss on Unsettled Interest Rate Derivatives\t(224)\t0\t1205\t0\n(Gain) Loss on Unsettled Commodity Derivatives\t70198\t(57506)\t(124800)\t62806\nImpairment Expense\t199489\t0\t962205\t0\nAdjusted EBITDA\t82723\t124396\t257465\t339968\n", "q10k_tbl_28": "\tNine Months Ended September 30\t\n\t2020\t2019\n\t(in thousands unaudited)\t\nNet Cash Provided by Operating Activities\t258652\t269323\nNet Cash Used for Investing Activities\t(249552)\t(417948)\nNet Cash Provided by (Used for) Financing Activities\t(23365)\t148169\nNet Change in Cash\t(14265)\t(456)\n", "q10k_tbl_29": "\tNine Months Ended September 30\t\n\t2020\t2019\n\t(in millions unaudited)\t\nDrilling and Development Capital Expenditures\t217.2\t205.4\nAcquisition of Oil and Natural Gas Properties\t31.1\t210.6\nOther Capital Expenditures\t1.0\t0.9\nTotal\t249.3\t416.9\n", "q10k_tbl_30": "Contract Period\tOil (Barrels)\tWeighted Average Price ($)\nSwaps-Crude Oil\t\t\n2020:\t\t\nQ4\t2372362\t58.03\n2021(1):\t\t\nQ1\t2201250\t55.53\nQ2\t1997458\t55.88\nQ3\t1809410\t53.46\nQ4\t1800506\t53.47\n2022(2):\t\t\nQ1\t90000\t50.05\nQ2\t91000\t50.05\nQ3\t92000\t50.05\nQ4\t92000\t50.05\n", "q10k_tbl_31": "Contract Period\tGas (MMBTU)\tWeighted Average Price ($)\nSwaps-Natural Gas\t\t\n2020:\t\t\nQ4\t2760000\t2.44\n2021:\t\t\nQ1\t3375000\t2.47\nQ2\t3185000\t2.51\nQ3\t3220000\t2.51\nQ4\t3220000\t2.51\n2022:\t\t\nQ1\t450000\t2.53\nQ2\t455000\t2.53\nQ3\t460000\t2.53\nQ4\t460000\t2.53\n", "q10k_tbl_32": "Period\tTotal Number of Shares Purchased(1)\tAverage Price Paid Per Share\tTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs\tApproximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(2)\nMonth #1\t\t\t\t\nJuly 1 2020 to July 31 2020\t0\t0\t0\t 68.1 million\nMonth #2\t\t\t\t\nAugust 1 2020 to August 31 2020\t0\t0\t0\t68.1 million\nMonth #3\t\t\t\t\nSeptember 1 2020 to September 30 2020\t0\t0\t0\t68.1 million\nTotal\t0\t0\t0\t 68.1 million\n", "q10k_tbl_33": "Exhibit No.\tDescription\tReference\n3.1\tRestated Certificate of Incorporation of Northern Oil and Gas Inc. dated August 24 2018\tIncorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on August 27 2018\n3.2\tCertificate of Amendment to the Restated Certificate of Incorporation of Northern Oil and Gas Inc. dated September 18 2020\tIncorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on September 24 2020\n3.3\tBy-Laws of Northern Oil and Gas Inc.\tIncorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the SEC on May 15 2018\n3.4\tCertificate of Designations of 6.500% Series A Perpetual Cumulative Convertible Preferred Stock of Northern Oil and Gas Inc. dated November 22 2019\tIncorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on November 26 2019\n3.5\tCertificate of Amendment to the Certificate of Designations of 6.500% Series A Perpetual Cumulative Convertible Preferred Stock of Northern Oil and Gas Inc. dated January 2 2020\tIncorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on January 6 2020\n3.6\tCertificate of Amendment to the Certificate of Designations of 6.500% Series A Perpetual Cumulative Convertible Preferred Stock of Northern Oil and Gas Inc. dated January 17 2020\tIncorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on January 22 2020\n4.1\tIndenture dated May 15 2018 between Northern Oil and Gas Inc. and Wilmington Trust National Association as trustee (including Form of 8.50% Senior Secured Second Lien Notes due 2023)\tIncorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the SEC on May 18 2018\n4.2\tFirst Supplemental Indenture dated September 18 2018 between Northern Oil and Gas Inc. and Wilmington Trust National Association as trustee\tIncorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the SEC on September 18 2018\n4.3\tSecond Supplemental Indenture dated October 5 2018 between Northern Oil and Gas Inc. and Wilmington Trust National Association as trustee\tIncorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the SEC on October 9 2018\n4.4\tThird Supplemental Indenture dated November 22 2019 between Northern Oil and Gas Inc. and Wilmington Trust National Association as trustee\tIncorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the SEC on November 26 2019\n10.1\tFirst Amendment to the Second Amended and Restated Credit Agreement dated July 8 2020 by and among Northern Oil and Gas Inc. and Wells Fargo Bank National Association and the Lenders party thereto\tIncorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on July 13 2020\n31.1\tCertification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002\tFiled herewith\n31.2\tCertification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002\tFiled herewith\n32.1\tCertification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002\tFiled herewith\n101.INS\tInline XBRL Instance Document\tFiled herewith\n", "q10k_tbl_34": "101.SCH\tInline XBRL Taxonomy Extension Schema Document\tFiled herewith\n101.CAL\tInline XBRL Taxonomy Extension Calculation Linkbase Document\tFiled herewith\n101.DEF\tInline XBRL Taxonomy Extension Definition Linkbase Document\tFiled herewith\n101.LAB\tInline XBRL Taxonomy Extension Label Linkbase Document\tFiled herewith\n101.PRE\tInline XBRL Taxonomy Extension Presentation Linkbase Document\tFiled herewith\n104\tThe cover page from Northern Oil and Gas Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30 2020 formatted in Inline XBRL and contained in Exhibit 101\tFiled herewith\n"}{"bs": "q10k_tbl_2", "is": "q10k_tbl_4", "cf": "q10k_tbl_5"}None
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File No. 001-33999
NORTHERN OIL AND GAS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
95-3848122
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
601 Carlson Pkwy – Suite 990
Minnetonka, Minnesota55305
(Address of Principal Executive Offices)
(952) 476-9800
(Registrant’s Telephone Number)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001
NOG
NYSE American
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer ☐
Accelerated Filer☒
Non-Accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 2, 2020, there were 45,851,326 shares of our common stock, par value $0.001, outstanding.
Unless otherwise indicated in this report, natural gas volumes are stated at the legal pressure base of the state or geographic area in which the reserves are located at 60 degrees Fahrenheit. Crude oil and natural gas equivalents are determined using the ratio of six Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids.
The following definitions shall apply to the technical terms used in this report.
Terms used to describe quantities of crude oil and natural gas:
“Bbl.” One stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to crude oil, condensate or NGLs.
“Boe.” A barrel of oil equivalent and is a standard convention used to express crude oil, NGL and natural gas volumes on a comparable crude oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl of crude oil or NGL.
“Boepd.”Boe per day.
“Btu or British Thermal Unit.” The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
“MBbl.” One thousand barrels of crude oil, condensate or NGLs.
“MBoe.” One thousand Boe.
“Mcf.” One thousand cubic feet of natural gas.
“MMBbl.” One million barrels of crude oil, condensate or NGLs.
“MMBoe.” One million Boe.
“MMBtu.” One million British Thermal Units.
“MMcf.” One million cubic feet of natural gas.
“NGLs.” Natural gas liquids. Hydrocarbons found in natural gas that may be extracted as liquefied petroleum gas and natural gasoline.
Terms used to describe our interests in wells and acreage:
“Basin.” A large natural depression on the earth’s surface in which sediments generally brought by water accumulate.
“Completion.” The process of treating a drilled well followed by the installation of permanent equipment for the production of crude oil, NGLs, and/or natural gas.
“Conventional play.” An area that is believed to be capable of producing crude oil, NGLs, and natural gas occurring in discrete accumulations in structural and stratigraphic traps.
“Developed acreage.” Acreage consisting of leased acres spaced or assignable to productive wells. Acreage included in spacing units of infill wells is classified as developed acreage at the time production commences from the initial well in the spacing unit. As such, the addition of an infill well does not have any impact on a company’s amount of developed acreage.
“Development well.” A well drilled within the proved area of a crude oil, NGL, or natural gas reservoir to the depth of a stratigraphic horizon (rock layer or formation) known to be productive for the purpose of extracting proved crude oil, NGL, or natural gas reserves.
“Differential.” The difference between a benchmark price of crude oil and natural gas, such as the NYMEX crude oil spot price, and the wellhead price received.
“Dry hole.” A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.
“Exploratory well.” A well drilled to find and produce crude oil, NGLs, or natural gas in an unproved area, to find a new reservoir in a field previously found to be producing crude oil, NGLs, or natural gas in another reservoir, or to extend a known reservoir.
“Field.” An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
“Formation.” A layer of rock which has distinct characteristics that differs from nearby rock.
“Gross acres or Gross wells.” The total acres or wells, as the case may be, in which a working interest is owned.
“Held by operations.” A provision in an oil and gas lease that extends the stated term of the lease as long as drilling operations are ongoing on the property.
“Held by production.” A provision in an oil and gas lease that extends the stated term of the lease as long as the property produces a minimum quantity of crude oil, NGLs, and natural gas.
“Hydraulic fracturing.” The technique of improving a well’s production by pumping a mixture of fluids into the formation and rupturing the rock, creating an artificial channel. As part of this technique, sand or other material may also be injected into the formation to keep the channel open, so that fluids or natural gases may more easily flow through the formation.
“Infill well.” A subsequent well drilled in an established spacing unit of an already established productive well in the spacing unit. Acreage on which infill wells are drilled is considered developed commencing with the initial productive well established in the spacing unit. As such, the addition of an infill well does not have any impact on a company’s amount of developed acreage.
“Net acres.” The percentage ownership of gross acres. Net acres are deemed to exist when the sum of fractional ownership working interests in gross acres equals one (e.g., a 10% working interest in a lease covering 640 gross acres is equivalent to 64 net acres).
“Net well.” A well that is deemed to exist when the sum of fractional ownership working interests in gross wells equals one.
“NYMEX.” The New York Mercantile Exchange.
“OPEC.” The Organization of Petroleum Exporting Countries.
“Productive well.” A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes.
“Recompletion.” The process of treating a drilled well followed by the installation of permanent equipment for the production of crude oil, NGLs or natural gas or, in the case of a dry hole, the reporting of abandonment to the appropriate agency.
“Reservoir.” A porous and permeable underground formation containing a natural accumulation of producible crude oil, NGLs and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs.
“Spacing.” The distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres, e.g., 40-acre spacing, and is often established by regulatory agencies.
“Unconventional play.” An area believed to be capable of producing crude oil, NGLs, and/or natural gas occurring in cumulations that are regionally extensive but require recently developed technologies to achieve profitability. These areas tend to have low permeability and may be closely associated with source rock as this is the case with crude oil and natural gas shale, tight crude oil and natural gas sands and coal bed methane.
“Undeveloped acreage.” Leased acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantities of crude oil, NGLs, and natural gas, regardless of whether such acreage contains proved reserves. Undeveloped acreage includes net acres held by operations until a productive well is established in the spacing unit.
“Unit.” The joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests. Also, the area covered by a unitization agreement.
“Wellbore.” The hole drilled by the bit that is equipped for natural gas production on a completed well. Also called well or borehole.
“West Texas Intermediate or WTI.” A light, sweet blend of oil produced from the fields in West Texas.
“Working interest.” The right granted to the lessee of a property to explore for and to produce and own crude oil, NGLs, natural gas or other minerals. The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis.
“Workover.” Operations on a producing well to restore or increase production.
Terms used to assign a present value to or to classify our reserves:
“Possible reserves.” The additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than probable reserves.
“Pre-tax PV-10% or PV-10.” The estimated future net revenue, discounted at a rate of 10% per annum, before income taxes and with no price or cost escalation or de-escalation in accordance with guidelines promulgated by the SEC.
“Probable reserves.” The additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than proved reserves but which together with proved reserves, are as likely as not to be recovered.
“Proved developed producing reserves (PDPs).” Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional crude oil, NGLs, and natural gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery are included in “proved developed reserves” only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.
“Proved developed non-producing reserves (PDNPs).”Proved crude oil, NGLs, and natural gas reserves that are developed behind pipe, shut-in or that can be recovered through improved recovery only after the necessary equipment has been installed, or when the costs to do so are relatively minor. Shut-in reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate, but which have not started producing, (2) wells that were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe reserves are expected to be recovered from zones in existing wells that will require additional completion work or future recompletion prior to the start of production.
“Proved reserves.” The quantities of crude oil, NGLs and natural gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence the project, within a reasonable time.
“Proved undeveloped drilling location.” A site on which a development well can be drilled consistent with spacing rules for purposes of recovering proved undeveloped reserves.
“Proved undeveloped reserves” or“PUDs.” Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for development. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units are claimed only where it can be demonstrated with reasonable certainty that there is continuity of production from the existing productive formation. Estimates for proved undeveloped reserves will not be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir or an analogous reservoir.
(i) The area of the reservoir considered as proved includes: (A) the area identified by drilling and limited by fluid contacts, if any, and (B) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible crude oil, NGLs or natural gas on the basis of available geoscience and engineering data.
(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (“LKH”) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has defined a highest known oil (“HKO”) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) the project has been approved for development by all necessary parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the twelve-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based on future conditions.
“Standardized measure.” Discounted future net cash flows estimated by applying year-end prices to the estimated future production of year-end proved reserves. Future cash inflows are reduced by estimated future production and development costs based on period end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash inflows over our tax basis in the oil and natural gas properties. Future net cash inflows after income taxes are discounted using a 10% annual discount rate.