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Supplemental Oil and Gas Reserve Information - Unaudited | 12 Months Ended
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Dec. 31, 2014
Oil and Gas Exploration and Production Industries Disclosures [Abstract] |
Supplemental Oil and Gas Reserve Information - Unaudited | Supplemental Oil and Gas Reserve Information — Unaudited The reserve estimates at December 31, 2014, 2013 and 2012 presented in the table below are based on reports prepared by DeGolyer and MacNaughton, the Company’s independent reserve engineers, in accordance with the FASB’s authoritative guidance on oil and gas reserve estimation and disclosures. At December 31, 2014, 2013 and 2012, all of the Company’s oil and natural gas producing activities were conducted within the continental United States. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and natural gas properties. Accordingly, these estimates are expected to change as future information becomes available. Proved oil and natural gas reserves are the estimated quantities of oil and natural gas which geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions (i.e., prices and costs) existing at the time the estimate is made. Proved developed oil and natural gas reserves are proved reserves that can be expected to be recovered through existing wells and equipment in place and under operating methods being utilized at the time the estimates were made. Estimated Quantities of Proved Oil and Natural Gas Reserves — Unaudited The following table sets forth the Company’s estimated net proved, proved developed and proved undeveloped reserves at December 31, 2014, 2013 and 2012:
| Oil (MBbl) |  | Gas (MMcf) |  | MBoe
2012 |  |  |  |  |
Proved reserves |  |  |  |  |
Beginning balance | 69,064 |  |  | 57,900 |  |  | 78,715 |
Revisions of previous estimates | (567 | ) |  | (8,495 | ) |  | (1,983 | )
Extensions, discoveries and other additions | 66,245 |  |  | 45,759 |  |  | 73,871 |
Sales of reserves in place | — |  |  | — |  |  | — |
Purchases of reserves in place | 881 |  |  | 512 |  |  | 966 |
Production | (7,533 | ) |  | (4,146 | ) |  | (8,224 | )
Net proved reserves at December 31, 2012 | 128,090 |  |  | 91,530 |  |  | 143,345 |
Proved developed reserves, December 31, 2012 | 62,602 |  |  | 44,695 |  |  | 70,051 |
Proved undeveloped reserves, December 31, 2012 | 65,488 |  |  | 46,835 |  |  | 73,294 |
2013 |  |  |  |  |
Proved reserves |  |  |  |  |
Beginning balance | 128,090 |  |  | 91,530 |  |  | 143,345 |
Revisions of previous estimates | 3,390 |  |  | 10,412 |  |  | 5,125 |
Extensions, discoveries and other additions | 40,784 |  |  | 31,856 |  |  | 46,094 |
Sales of reserves in place | — |  |  | — |  |  | — |
Purchases of reserves in place | 37,459 |  |  | 49,631 |  |  | 45,731 |
Production | (11,133 | ) |  | (7,450 | ) |  | (12,375 | )
Net proved reserves at December 31, 2013 | 198,590 |  |  | 175,979 |  |  | 227,920 |
Proved developed reserves, December 31, 2013 | 106,774 |  |  | 92,170 |  |  | 122,136 |
Proved undeveloped reserves, December 31, 2013 | 91,816 |  |  | 83,809 |  |  | 105,784 |
2014 |  |  |  |  |
Proved reserves |  |  |  |  |
Beginning balance | 198,590 |  |  | 175,979 |  |  | 227,920 |
Revisions of previous estimates | (23,069 | ) |  | (12,290 | ) |  | (25,117 | )
Extensions, discoveries and other additions | 80,855 |  |  | 70,449 |  |  | 92,596 |
Sales of reserves in place | (7,640 | ) |  | (4,850 | ) |  | (8,448 | )
Purchases of reserves in place | 1,546 |  |  | 1,523 |  |  | 1,799 |
Production | (14,883 | ) |  | (10,691 | ) |  | (16,664 | )
Net proved reserves at December 31, 2014 | 235,399 |  |  | 220,120 |  |  | 272,086 |
Proved developed reserves, December 31, 2014 | 127,340 |  |  | 114,016 |  |  | 146,343 |
Proved undeveloped reserves, December 31, 2014 | 108,059 |  |  | 106,104 |  |  | 125,743 |
Purchases of Reserves in Place In 2014, the Company purchased 1,799 MBoe of estimated net proved reserves from acquisitions of additional working interests in its existing properties. In 2013, the Company purchased 45,731 MBoe of estimated net proved reserves from properties acquired in the 2013 Acquisitions. In 2012, the Company purchased 966 MBoe of estimated net proved reserves from properties acquired in Burke and Mountrail counties. Extensions, Discoveries and Other Additions In 2014, the Company had a total of 92,596 MBoe of additions due to extensions and discoveries. An estimated 34,404 MBoe of these extensions and discoveries were associated with new producing wells at December 31, 2014, with 100% of these reserves from wells producing in the Bakken or Three Forks formations. An additional 58,192 MBoe of proved undeveloped reserves were added across both of the Company’s Williston Basin project areas associated with the Company’s 2014 operated and non-operated drilling program and anticipated five-year drilling plan, with 100% of these proved undeveloped reserves in the Bakken or Three Forks formations. In 2013, the Company had a total of 46,094 MBoe of additions due to extensions and discoveries. An estimated 22,190 MBoe of these extensions and discoveries were associated with new producing wells at December 31, 2013, with 100% of these reserves from wells producing in the Bakken or Three Forks formations. An additional 23,904 MBoe of proved undeveloped reserves were added across all three of the Company’s Williston Basin project areas associated with the Company’s 2013 operated and non-operated drilling program, with 100% of these proved undeveloped reserves in the Bakken or Three Forks formations. In 2012, the Company had a total of 73,871 MBoe of additions due to extensions and discoveries. An estimated 16,548 MBoe of these extensions and discoveries were associated with new producing wells at December 31, 2012, with 100% of these reserves from wells producing in the Bakken or Three Forks formations. An additional 57,323 MBoe of proved undeveloped reserves were added across all three of the Company’s Williston Basin project areas associated with the Company’s 2012 operated and non-operated drilling program, with 100% of these proved undeveloped reserves in the Bakken or Three Forks formations. Sales of Reserves in Place In March 2014, the Company divested 8,448 MBoe of reserves associated with its non-operated properties sold in the Sanish Divestiture. In 2013 and 2012, the Company did not have any sales of reserves. Revisions of Previous Estimates In 2014, the Company had a net negative revision of 25,117 MBoe, or 11.0% of the beginning of the year estimated net proved reserves balance. This net negative revision was primarily due to the removal of proved undeveloped reserves not aligned with our anticipated five-year drilling plan, which was adjusted to allocate a greater focus on higher rates-of-return areas of the Bakken and Three Forks formations. This resulted in 80 (56.2 net) proved undeveloped locations with 21,411 MBoe of reserves being removed from the December 31, 2014 estimated net proved reserves balance. In 2013, the Company had a net positive revision of 5,125 MBoe, or 3.6% of the beginning of the year estimated net proved reserves balance. This net positive revision was the result of several immaterial changes, including well performances, working interests, operating costs and realized prices. In 2012, the Company had a net negative revision of 1,983 MBoe, or 2.5% of the beginning of the year estimated net proved reserves balance. The primary causes for this revision were negative well performances offset by working interest increases in the proved locations. Actual well results in portions of the Company’s acreage came in below the proved forecasts prepared in 2011. The proved forecasts for the 2012 reserve report have been adjusted to reflect these well performances. The working interest increases arose from acreage trades, non-participation by other interest owners and additional mineral leasing in the reserve locations. Operating costs and realized prices had an immaterial impact to the reserves balance. Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves — Unaudited The Standardized Measure represents the present value of estimated future net cash flows from estimated net proved oil and natural gas reserves, less future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows. Production costs do not include DD&A of capitalized acquisition, exploration and development costs. The Company’s estimated net proved reserves and related future net revenues and Standardized Measure were determined using index prices for oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the life of the properties. The unweighted arithmetic average first-day-of-the-month prices for the prior twelve months were $95.28/Bbl for oil and $4.35/MMBtu for natural gas for the year ended December 31, 2014, $96.96/Bbl for oil and $3.66/MMBtu for natural gas for the year ended December 31, 2013 and $94.68/Bbl for oil and $2.75/MMBtu for natural gas for the year ended December 31, 2012. These prices were adjusted by lease for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the wellhead. Future operating costs, production taxes and capital costs were based on current costs as of each year-end. The following table sets forth the Standardized Measure of discounted future net cash flows from projected production of the Company’s estimated net proved reserves at December 31, 2014, 2013 and 2012.
| At December 31,
| 2014 |  | 2013 |  | 2012
| (In thousands)
Future cash inflows | $ | 21,656,832 |  |  | $ | 19,063,500 |  |  | $ | 11,321,992 |
Future production costs | (7,094,426 | ) |  | (5,473,767 | ) |  | (2,809,960 | )
Future development costs | (2,563,062 | ) |  | (1,904,095 | ) |  | (1,434,648 | )
Future income tax expense | (3,188,389 | ) |  | (3,628,977 | ) |  | (2,123,973 | )
Future net cash flows | 8,810,955 |  |  | 8,056,661 |  |  | 4,953,411 |
10% annual discount for estimated timing of cash flows | (4,829,294 | ) |  | (4,329,102 | ) |  | (2,693,514 | )
Standardized measure of discounted future net cash flows | $ | 3,981,661 |  |  | $ | 3,727,559 |  |  | $ | 2,259,897 |
The following table sets forth the changes in the Standardized Measure of discounted future net cash flows applicable to estimated net proved reserves for the periods presented.
| 2014 |  | 2013 |  | 2012
| (In thousands)
January 1 | $ | 3,727,559 |  |  | $ | 2,259,897 |  |  | $ | 1,319,471 |
Net changes in prices and production costs | (588,212 | ) |  | 254,979 |  |  | (7,814 | )
Net changes in future development costs | (61,760 | ) |  | 57,566 |  |  | 28,124 |
Sales of oil and natural gas, net | (979,938 | ) |  | (857,540 | ) |  | (542,515 | )
Extensions | 1,751,007 |  |  | 1,111,202 |  |  | 1,358,479 |
Discoveries | — |  |  | — |  |  | — |
Purchases of reserves in place | 38,035 |  |  | 858,382 |  |  | 15,890 |
Sales of reserves in place | (251,002 | ) |  | — |  |  | — |
Revisions of previous quantity estimates | (604,651 | ) |  | 99,954 |  |  | (47,957 | )
Previously estimated development costs incurred | 249,926 |  |  | 373,912 |  |  | 480,925 |
Accretion of discount | 548,690 |  |  | 346,068 |  |  | 190,370 |
Net change in income taxes | 259,592 |  |  | (774,910 | ) |  | (400,196 | )
Changes in timing and other | (107,585 | ) |  | (1,951 | ) |  | (134,880 | )
December 31 | $ | 3,981,661 |  |  | $ | 3,727,559 |  |  | $ | 2,259,897 |

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- Definition The entire disclosure for oil and gas producing industries. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 235 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=8451039&loc=d3e61526-109447 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 235 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=8451039&loc=d3e61555-109447 + Details
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