Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

The Notes (see Note 7) are guaranteed on a senior unsecured basis by the Guarantors, which are 100% owned by the Company. These guarantees are full and unconditional and joint and several among the Guarantors. Certain of the Company’s immaterial wholly owned subsidiaries do not guarantee the Notes (“Non-Guarantor Subsidiaries”).

The following financial information reflects consolidating financial information of the Company (“Issuer”) and its Guarantors on a combined basis, prepared on the equity basis of accounting. The Non-Guarantor Subsidiaries are immaterial and, therefore, not presented separately. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantors operated as independent entities. The Company has not presented separate financial and narrative information for each of the Guarantors because it believes such financial and narrative information would not provide any additional information that would be material in evaluating the sufficiency of the Guarantors.

Condensed Consolidating Balance Sheet

(In thousands, except share data)



	September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	32,955		$	92,485		$	—		$	125,440
Restricted cash	986,210			—			—			986,210
Accounts receivable – oil and gas revenues	—			155,068			—			155,068
Accounts receivable – joint interest partners	—			120,058			—			120,058
Accounts receivable – from affiliates	770			8,432			(9,202		)	—
Inventory	—			18,358			—			18,358
Prepaid expenses	477			6,963			—			7,440
Advances to joint interest partners	—			1,170			—			1,170
Derivative instruments	—			374			—			374
Deferred income taxes	—			8,683			—			8,683
Other current assets	2			471			—			473
Total current assets	1,020,414			412,062			(9,202		)	1,423,274
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			3,044,515			—			3,044,515
Other property and equipment	—			157,926			—			157,926
Less: accumulated depreciation, depletion, amortization and impairment	—			(589,173		)	—			(589,173		)
Total property, plant and equipment, net	—			2,613,268			—			2,613,268
Investments in and advances to subsidiaries	2,082,828			—			(2,082,828		)	—
Derivative instruments	—			3,405			—			3,405
Deferred income taxes	69,795			—			(69,795		)	—
Deferred costs and other assets	34,128			9,308			—			43,436
Total assets	$	3,207,165		$	3,038,043		$	(2,161,825	)	$	4,083,383
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	39,468		$	—		$	39,468
Accounts payable – from affiliates	8,432			770			(9,202		)	—
Advances from joint interest partners	—			13,211			—			13,211
Revenues and production taxes payable	—			133,083			—			133,083
Accrued liabilities	46			198,447			—			198,493
Accrued interest payable	22,809			64			—			22,873
Derivative instruments	—			17,060			—			17,060
Total current liabilities	31,287			402,103			(9,202		)	424,188
Long-term debt	2,200,000			160,000			—			2,360,000
Asset retirement obligations	—			26,999			—			26,999
Derivative instruments	—			852			—			852
Deferred income taxes	—			362,951			(69,795		)	293,156
Other liabilities	—			2,310			—			2,310
Total liabilities	2,231,287			955,215			(78,997		)	3,107,505
Stockholders’ equity
Capital contributions from affiliates	—			1,643,729			(1,643,729		)	—
Common stock, $0.01 par value; 300,000,000 shares authorized; 93,854,867 issued and 93,690,494 outstanding	926			—			—			926
Treasury stock, at cost; 164,373 shares	(5,220		)	—			—			(5,220		)
Additional paid-in-capital	666,770			8,743			(8,743		)	666,770
Retained earnings	313,402			430,356			(430,356		)	313,402
Total stockholders’ equity	975,878			2,082,828			(2,082,828		)	975,878
Total liabilities and stockholders’ equity	$	3,207,165		$	3,038,043		$	(2,161,825	)	$	4,083,383

Condensed Consolidating Balance Sheet

(In thousands, except share data)



	December 31, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	133,797		$	79,650		$	—		$	213,447
Short-term investments	25,891			—			—			25,891
Accounts receivable – oil and gas revenues	—			110,341			—			110,341
Accounts receivable – joint interest partners	—			99,194			—			99,194
Accounts receivable – from affiliates	310			5,845			(6,155		)	—
Inventory	—			20,707			—			20,707
Prepaid expenses	313			1,457			—			1,770
Advances to joint interest partners	—			1,985			—			1,985
Derivative instruments	—			19,016			—			19,016
Other current assets	235			100			—			335
Total current assets	160,546			338,295			(6,155		)	492,686
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			2,348,128			—			2,348,128
Other property and equipment	—			49,732			—			49,732
Less: accumulated depreciation, depletion, amortization and impairment	—			(391,260		)	—			(391,260		)
Total property, plant and equipment, net	—			2,006,600			—			2,006,600
Investments in and advances to subsidiaries	1,807,010			—			(1,807,010		)	—
Derivative instruments	—			4,981			—			4,981
Deferred income taxes	42,746			—			(42,746		)	—
Deferred costs and other assets	20,748			3,779			—			24,527
Total assets	$	2,031,050		$	2,353,655		$	(1,855,911	)	$	2,528,794
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	9		$	12,482		$	—		$	12,491
Accounts payable – from affiliates	5,845			310			(6,155		)	—
Advances from joint interest partners	—			21,176			—			21,176
Revenues and production taxes payable	—			71,553			—			71,553
Accrued liabilities	100			189,763			—			189,863
Accrued interest payable	30,091			5			—			30,096
Derivative instruments	—			1,048			—			1,048
Deferred income taxes	—			4,558			—			4,558
Total current liabilities	36,045			300,895			(6,155		)	330,785
Long-term debt	1,200,000			—			—			1,200,000
Asset retirement obligations	—			22,956			—			22,956
Derivative instruments	—			380			—			380
Deferred income taxes	—			220,417			(42,746		)	177,671
Other liabilities	—			1,997			—			1,997
Total liabilities	1,236,045			546,645			(48,901		)	1,733,789
Stockholders’ equity
Capital contributions from affiliates	—			1,586,780			(1,586,780		)	—
Common stock, $0.01 par value; 300,000,000 shares authorized; 93,432,712 issued and 93,303,298 outstanding	925			—			—			925
Treasury stock, at cost; 129,414 shares	(3,796		)	—			—			(3,796		)
Additional paid-in-capital	657,943			8,743			(8,743		)	657,943
Retained earnings	139,933			211,487			(211,487		)	139,933
Total stockholders’ equity	795,005			1,807,010			(1,807,010		)	795,005
Total liabilities and stockholders’ equity	$	2,031,050		$	2,353,655		$	(1,855,911	)	$	2,528,794

Condensed Consolidating Statement of Operations

(In thousands)



	Three Months Ended September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	286,952		$	—		$	286,952
Well services and midstream revenues	—			18,546			—			18,546
Total revenues	—			305,498			—			305,498
Expenses
Lease operating expenses	—			21,831			—			21,831
Well services and midstream operating expenses	—			10,319			—			10,319
Marketing, transportation and gathering expenses	—			5,688			—			5,688
Production taxes	—			26,823			—			26,823
Depreciation, depletion and amortization	—			72,728			—			72,728
Exploration expenses	—			463			—			463
Impairment of oil and gas properties	—			56			—			56
General and administrative expenses	3,746			12,982			—			16,728
Total expenses	3,746			150,890			—			154,636
Operating income (loss)	(3,746		)	154,608			—			150,862
Other income (expense)
Equity in earnings in subsidiaries	70,118			—			(70,118		)	—
Net loss on derivative instruments	—			(39,817		)	—			(39,817		)
Interest expense, net of capitalized interest	(21,277		)	(1,577		)	—			(22,854		)
Other income	15			8			—			23
Total other income (expense)	48,856			(41,386		)	(70,118		)	(62,648		)
Income before income taxes	45,110			113,222			(70,118		)	88,214
Income tax benefit (expense)	9,389			(43,104		)	—			(33,715		)
Net income	$	54,499		$	70,118		$	(70,118	)	$	54,499

Condensed Consolidating Statement of Operations

(In thousands)



	Three Months Ended September 30, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	178,748		$	—		$	178,748
Well services revenues	—			5,963			—			5,963
Total revenues	—			184,711			—			184,711
Expenses
Lease operating expenses	—			16,134			—			16,134
Well services operating expenses	—			5,420			—			5,420
Marketing, transportation and gathering expenses	—			2,744			—			2,744
Production taxes	—			16,433			—			16,433
Depreciation, depletion and amortization	—			57,684			—			57,684
Exploration expenses	—			336			—			336
Impairment of oil and gas properties	—			36			—			36
General and administrative expenses	2,988			10,898			—			13,886
Total expenses	2,988			109,685			—			112,673
Operating income (loss)	(2,988		)	75,026			—			72,038
Other income (expense)
Equity in earnings in subsidiaries	32,735			—			(32,735		)	—
Net loss on derivative instruments	—			(22,441		)	—			(22,441		)
Interest expense, net of capitalized interest	(20,307		)	(672		)	—			(20,979		)
Other income	238			909			—			1,147
Total other income (expense)	12,666			(22,204		)	(32,735		)	(42,273		)
Income before income taxes	9,678			52,822			(32,735		)	29,765
Income tax benefit (expense)	8,636			(20,087		)	—			(11,451		)
Net income	$	18,314		$	32,735		$	(32,735	)	$	18,314

Condensed Consolidating Statement of Operations

(In thousands)



	Nine Months Ended September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	770,445		$	—		$	770,445
Well services and midstream revenues	—			37,939			—			37,939
Total revenues	—			808,384			—			808,384
Expenses
Lease operating expenses	—			59,586			—			59,586
Well services and midstream operating expenses	—			19,877			—			19,877
Marketing, transportation and gathering expenses	—			19,856			—			19,856
Production taxes	—			70,309			—			70,309
Depreciation, depletion and amortization	—			205,779			—			205,779
Exploration expenses	—			2,712			—			2,712
Impairment of oil and gas properties	—			762			—			762
General and administrative expenses	10,146			37,092			—			47,238
Total expenses	10,146			415,973			—			426,119
Operating income (loss)	(10,146		)	392,411			—			382,265
Other income (expense)
Equity in earnings in subsidiaries	218,869			—			(218,869		)	—
Net loss on derivative instruments	—			(41,838		)	—			(41,838		)
Interest expense, net of capitalized interest	(61,955		)	(3,474		)	—			(65,429		)
Other income	(348		)	1,445			—			1,097
Total other income (expense)	156,566			(43,867		)	(218,869		)	(106,170		)
Income before income taxes	146,420			348,544			(218,869		)	276,095
Income tax benefit (expense)	27,049			(129,675		)	—			(102,626		)
Net income	$	173,469		$	218,869		$	(218,869	)	$	173,469

Condensed Consolidating Statement of Operations

(In thousands)



	Nine Months Ended September 30, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	461,857		$	—		$	461,857
Well services and midstream revenues	—			10,484			—			10,484
Total revenues	—			472,341			—			472,341
Expenses
Lease operating expenses	—			37,979			—			37,979
Well services and midstream operating expenses	—			7,104			—			7,104
Marketing, transportation and gathering expenses	—			7,283			—			7,283
Production taxes	—			43,419			—			43,419
Depreciation, depletion and amortization	—			140,783			—			140,783
Exploration expenses	—			3,171			—			3,171
Impairment of oil and gas properties	—			2,607			—			2,607
General and administrative expenses	8,078			31,544			—			39,622
Total expenses	8,078			273,890			—			281,968
Operating income (loss)	(8,078		)	198,451			—			190,373
Other income (expense)
Equity in earnings in subsidiaries	145,021			—			(145,021		)	—
Net gain on derivative instruments	—			33,568			—			33,568
Interest expense, net of capitalized interest	(47,136		)	(1,816		)	—			(48,952		)
Other income	533			1,988			—			2,521
Total other income (expense)	98,418			33,740			(145,021		)	(12,863		)
Income before income taxes	90,340			232,191			(145,021		)	177,510
Income tax benefit (expense)	20,458			(87,170		)	—			(66,712		)
Net income	$	110,798		$	145,021		$	(145,021	)	$	110,798

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Nine Months Ended September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	173,469		$	218,869		$	(218,869	)	$	173,469
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(218,869		)	—			218,869			—
Depreciation, depletion and amortization	—			205,779			—			205,779
Impairment of oil and gas properties	—			762			—			762
Deferred income taxes	(27,049		)	129,293			—			102,244
Derivative instruments	—			41,838			—			41,838
Stock-based compensation expenses	8,196			215			—			8,411
Debt discount amortization and other	2,850			(157		)	—			2,693
Working capital and other changes:
Change in accounts receivable	(460		)	(69,614		)	2,587			(67,487		)
Change in inventory	—			(8,820		)	—			(8,820		)
Change in prepaid expenses	(164		)	(5,011		)	—			(5,175		)
Change in other current assets	233			(371		)	—			(138		)
Change in other assets	—			(63		)	—			(63		)
Change in accounts payable and accrued liabilities	(4,758		)	89,591			(2,587		)	82,246
Change in other current liabilities	—			—			—			—
Change in other liabilities	—			922			—			922
Net cash provided by (used in) operating activities	(66,552		)	603,233			—			536,681
Cash flows from investing activities:
Capital expenditures	—			(654,175		)	—			(654,175		)
Acquisitions of oil and gas properties	—			(133,061		)	—			(133,061		)
Increase in restricted cash	(986,210		)	—			—			(986,210		)
Derivative settlements	—			(5,135		)	—			(5,135		)
Redemptions of short-term investments	25,000			—			—			25,000
Advances from joint interest partners	—			(7,965		)	—			(7,965		)
Net cash used in investing activities	(961,210		)	(800,336		)	—			(1,761,546		)
Cash flows from financing activities:
Proceeds from credit facility	—			160,000			—			160,000
Proceeds from issuance of senior notes	1,000,000			—			—			1,000,000
Purchases of treasury stock	(1,424		)	—			—			(1,424		)
Debt issuance costs	(15,340		)	(6,378		)	—			(21,718		)
Investment in / capital contributions from affiliates	(56,316		)	56,316			—			—
Net cash provided by financing activities	926,920			209,938			—			1,136,858
Increase (decrease) in cash and cash equivalents	(100,842		)	12,835			—			(88,007		)
Cash and cash equivalents at beginning of period	133,797			79,650			—			213,447
Cash and cash equivalents at end of period	$	32,955		$	92,485		$	—		$	125,440

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Nine Months Ended September 30, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	110,798		$	145,021		$	(145,021	)	$	110,798
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries	(145,021		)	—			145,021			—
Depreciation, depletion and amortization	—			140,783			—			140,783
Impairment of oil and gas properties	—			2,607			—			2,607
Deferred income taxes	(20,458		)	87,106			—			66,648
Derivative instruments	—			(33,568		)	—			(33,568		)
Stock-based compensation expenses	6,397			230			—			6,627
Debt discount amortization and other	1,616			422			—			2,038
Working capital and other changes:
Change in accounts receivable	(203		)	(70,899		)	1,939			(69,163		)
Change in inventory	—			(26,790		)	—			(26,790		)
Change in prepaid expenses	(192		)	(1,817		)	—			(2,009		)
Change in other current assets	(60		)	473			—			413
Change in other assets	(24		)	(95		)	—			(119		)
Change in accounts payable and accrued liabilities	8,620			72,398			(1,939		)	79,079
Change in other current liabilities	—			4,784			—			4,784
Net cash provided by operating activities	(38,527		)	320,655			—			282,128
Cash flows from investing activities:
Capital expenditures	—			(777,516		)	—			(777,516		)
Derivative settlements	—			2,784			—			2,784
Purchases of short-term investments	(126,213		)	—			—			(126,213		)
Redemptions of short-term investments	19,994			—			—			19,994
Advances from joint interest partners	—			17,508			—			17,508
Net cash used in investing activities	(106,219		)	(757,224		)	—			(863,443		)
Cash flows from financing activities:
Proceeds from issuance of senior notes	400,000			—						400,000
Purchases of treasury stock	(1,299		)	—			—			(1,299		)
Debt issuance costs	(7,255		)	(700		)	—			(7,955		)
Investment in / capital contributions from affiliates	(459,012		)	459,012			—			—
Net cash provided by (used in) financing activities	(67,566		)	458,312			—			390,746
Increase (decrease) in cash and cash equivalents	(212,312		)	21,743			—			(190,569		)
Cash and cash equivalents at beginning of period	443,482			27,390			—			470,872
Cash and cash equivalents at end of period	$	231,170		$	49,133		$	—		$	280,303