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Revenue Recognition | 12 Months Ended
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Dec. 31, 2020
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition Exploration and production revenues The Company’s E&P revenues are derived from contracts for crude oil, natural gas and NGL sales and other services, as described below. Generally, for the crude oil, natural gas, and NGL contracts: (i) each unit (barrel (“bbl”), mcf, gallon, etc.) of commodity product is a separate performance obligation, as the Company’s promise is to sell multiple distinct units of commodity product at a point in time; (ii) the transaction price principally consists of variable consideration, which amount is determinable each month end based on the Company’s right to invoice at month end for the value of commodity product sold to the customer that month; and (iii) the transaction price is allocated to each performance obligation based on the commodity product’s standalone selling price and recognized as revenue upon delivery of the commodity product, which is the point in time when the customer obtains control of the commodity product and the Company’s performance obligation is satisfied. The sales of crude oil, natural gas and NGLs as presented on the Company’s Consolidated Statements of Operations represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling crude oil, natural gas and NGLs on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis. To the extent actual volumes and prices of crude oil and natural gas sales are unavailable for a given reporting period because of timing or information not received from third parties, the expected sales volumes and prices for those properties are estimated and recorded. The Company’s contracts with customers typically require payments for crude oil, natural gas and NGL sales within 30 days following the calendar month of delivery. Crude oil revenues. The Company sells a substantial majority of its crude oil through bulk sales at delivery points on crude oil gathering systems to a variety of customers under short-term contracts that include a specified quantity of crude oil to be delivered and sold to the customer at a specified delivery point. The customer pays a market-based transaction price, which incorporates differentials that include, but are not limited to, transportation costs. Natural gas and NGL revenues. The Company’s natural gas sales consist of unprocessed gas sales and residue gas sales. Unprocessed gas is sold at delivery points at or near the wellhead under various contracts, in which the customer pays a transaction price based on its sale of the bifurcated NGLs and residue gas, less any associated fees. Revenue is recorded on a net basis, with processing fees deducted within revenue rather than as a separate expense line item, as title and control transfer at the delivery point. Residue gas from the Company’s gas processing plants located in Wild Basin is sold at the tailgate or transported and sold at other downstream sales points, and the customer pays a transaction price based on a market indexed per-unit rate for the quantities sold. NGLs from the Company’s gas processing plants located in Wild Basin are sold at the tailgate or trucked and sold at other downstream locations, and the customer pays a transaction price based on a market indexed per-unit rate for the quantities sold. Purchased crude oil and natural gas sales. The Company’s purchased crude oil and natural gas sales are derived from the sale of crude oil and natural gas purchased from a third party. The Company sells the purchased commodities to a variety of customers under short-term contracts that include specified quantities of crude oil and natural gas to be sold and delivered to the customer at a specified delivery point. The customer pays a market-based transaction price, which is based on the price index applicable for the location of the sale. Revenues and expenses from these sales and purchases are generally recorded on a gross basis, as the Company acts as a principal in these transactions by assuming control of the purchased crude oil or natural gas before it is transferred to the customer. In certain cases, the Company enters into sales and purchases with the same counterparty in contemplation of one another, and these transactions are recorded on a net basis in accordance with ASC 845. Other Services. The Company’s other services revenues are from services provided by OWS for the Company’s operated wells, including equipment rental revenues and, prior to the Well Services Exit, hydraulic fracturing revenues. Intercompany revenues for work performed for the Company’s working interests are eliminated in consolidation, and only the revenues related to non-affiliated working interest owners are included in consolidated revenues. •Equipment rental revenues. Equipment rental revenue is generated when OWS provides equipment rentals to the Company’s operated wells. Equipment rental revenues are calculated based on the equipment’s daily rental rate and the number of days that the equipment was rented by the customer. The Company’s performance obligation is satisfied when the entire rental period is completed. Equipment rental revenues are recognized over a period of time due to the customer simultaneously receiving and consuming the benefits of the rental equipment provided by the Company on a daily basis. Satisfaction of the Company’s performance obligation is measured at the completion of each day of the rental period, which directly corresponds with its right to consideration from the customer. Revenues associated with these contracts are recognized at the time of invoicing for the entire rental period under the right to invoice practical expedient. •Hydraulic fracturing revenues. Prior to the Company’s Well Services Exit, hydraulic fracturing revenues were generated when OWS provided hydraulic fracturing services and related materials to the Company’s operated wells. These services were composed of various components, such as personnel, equipment and hydraulic fracturing materials, but management determined that each component was not distinct, as it could not be used on its own or together with a resource readily available to the customer. The Company’s performance obligation was satisfied when the hydraulic fracturing of a well was completed. Revenue was recognized over a period of time upon the completion of each stage of hydraulic fracturing of a well. Revenues associated with contracts with customers for crude oil, natural gas and NGL sales and other services were as follows for the periods presented (in thousands):
| Successor |  |  | Predecessor
| Period from November 20, 2020 through December 31, 2020 |  |  | Period from January 1, 2020 through November 19, 2020 |  | Year Ended December 31,
|  |  |  | 2019 |  | 2018
Crude oil revenues | $ | 69,075 |  |  |  | $ | 522,812 |  |  | $ | 1,261,413 |  |  | $ | 1,425,409 |
Purchased crude oil sales | 6,771 |  |  |  | 160,420 |  |  | 401,554 |  |  | 540,633 |
Natural gas and NGL revenues | 17,367 |  |  |  | 80,773 |  |  | 147,358 |  |  | 164,615 |
Purchased natural gas sales | 366 |  |  |  | 5,047 |  |  | 7,207 |  |  | 6,078 |
Other services revenues | 215 |  |  |  | 6,836 |  |  | 41,974 |  |  | 61,075 |
Total E&P revenues | $ | 93,794 |  |  |  | $ | 775,888 |  |  | $ | 1,859,506 |  |  | $ | 2,197,810 |
Midstream revenues The Company’s midstream revenues are derived from its contracts with customers for midstream services and product sales under the following arrangements: Fee-based arrangements. Under fee-based arrangements, the Company receives a fee for midstream services provided to its customers, and revenues are recognized using the output method for measuring the satisfaction of performance obligations. Revenues earned under fee-based arrangements are generally directly related to the volume of crude oil, natural gas and produced and flowback water that flows through the Company’s systems, and the Company generally does not take ownership to the volumes it handles for its customers. Payments under fee-based arrangements are generally due 30 days after receipt of invoice. The Company generates revenues under fee-based arrangements as follows: •Crude oil, natural gas and NGL revenues. The Company is party to certain contracts for crude oil gathering, stabilization, blending, storage and transportation, as well as natural gas gathering, compression, processing and gas lift supply services. Under these contracts, the Company provides daily integrated midstream services on a stand ready basis over a period of time, which represents a single performance obligation since the customer simultaneously receives and consumes the benefits of these services on a daily basis. Satisfaction of the Company’s performance obligation is measured as each day of service is completed, which directly corresponds with its right to consideration from the customer. Revenues associated with these contracts are recognized based upon the transaction price at month-end under the right to invoice practical expedient. •Produced and flowback water revenues. The Company is party to certain contracts with customers for produced and flowback water gathering and disposal services, under which it provides daily integrated midstream services on a stand ready basis over a period of time, which represents a single performance obligation since the customer simultaneously receives and consumes the benefits of these services on a daily basis. Satisfaction of the Company’s performance obligation is measured as each day of service is completed, which directly corresponds with its right to consideration from the customer. Revenues associated with these contracts are recognized based upon the transaction price at month-end under the right to invoice practical expedient. Purchase arrangements. Under purchase arrangements, revenues and expenses are recognized on a gross basis since the Company takes control of the product prior to sale and is the principal in the transaction. Revenues are recognized using the output method for measuring the satisfaction of performance obligations based upon the volume of crude oil, natural gas, NGLs or freshwater delivered to customers. Payments under purchase arrangements are generally due 30 days after receipt of invoice. The Company generates revenues under purchase arrangements as follows: •Purchased crude oil sales. The Company purchases and sells crude oil at various delivery points on crude oil gathering systems to a variety of customers under short-term contracts that include a specified quantity of crude oil to be sold and delivered to the customer at a specified delivery point. The Company purchases and sells the crude oil to different counterparties at market-based prices. Market-based pricing is based on the price index applicable for the location of the sale. •Crude oil, natural gas and NGL revenues. The Company is party to certain purchase arrangements with third parties pursuant to which the Company purchases natural gas from third parties at a connection point and obtains control prior to performing services and is the principal in the transaction. The Company gathers, compresses and/or processes the natural gas and then redelivers the residue gas and NGLs to different counterparties at market-based prices. •Freshwater revenues. Under these contracts, the Company supplies and distributes freshwater to its customers for hydraulic fracturing and production optimization. These contracts contain multiple distinct performance obligations since each freshwater barrel can be sold separately and is not dependent nor highly interrelated with other barrels. The Company’s midstream revenues exclude intercompany revenues for goods and services provided by the midstream business segment for the Company’s ownership interests, which are eliminated in consolidation. Revenues associated with contracts with customers for midstream services were as follows for the periods presented (in thousands):
| Successor |  |  | Predecessor
| Period from November 20, 2020 through December 31, 2020 |  |  | Period from January 1, 2020 through November 19, 2020 |  | Year Ended December 31,
|  |  |  | 2019 |  | 2018
Midstream service revenues |  |  |  |  |  |  |  |
Crude oil, natural gas and NGL revenues | $ | 8,912 |  |  |  | $ | 82,466 |  |  | $ | 95,399 |  |  | $ | 73,028 |
Produced and flowback water revenues | 3,512 |  |  |  | 31,932 |  |  | 40,534 |  |  | 37,791 |
Total midstream service revenues | $ | 12,424 |  |  |  | $ | 114,398 |  |  | $ | 135,933 |  |  | $ | 110,819 |
Midstream product revenues |  |  |  |  |  |  |  |
Purchased crude oil sales | $ | 90 |  |  |  | $ | 20,900 |  |  | $ | 30 |  |  | $ | 3,633 |
Crude oil, natural gas and NGL revenues | 13,150 |  |  |  | 48,883 |  |  | 70,746 |  |  | 1,464 |
Freshwater revenues | 457 |  |  |  | 3,350 |  |  | 5,529 |  |  | 8,221 |
Total midstream product revenues | $ | 13,697 |  |  |  | $ | 73,133 |  |  | $ | 76,305 |  |  | $ | 13,318 |
Total midstream revenues | $ | 26,121 |  |  |  | $ | 187,531 |  |  | $ | 212,238 |  |  | $ | 124,137 |
Contract balances Contract balances are the result of timing differences between revenue recognition, billings and cash collections. Contract assets relate to revenue recognized for accrued deficiency fees associated with minimum volume commitments where the Company believes it is probable there will be a shortfall payment and that a significant reversal of revenue recognized will not occur once the related performance period is completed and the customer is billed. Revenue recognized for accrued deficiency fees associated with minimum volume commitments is included in midstream revenues on the Company’s Consolidated Statements of Operations. Contract liabilities relate to aid in construction payments received from customers, which are recognized as revenue over the expected period of future benefit. The Company does not recognize contract assets or contract liabilities under its customer contracts for which invoicing occurs once the Company’s performance obligations have been satisfied and payment is unconditional. Contract balances are classified as current or long-term based on the timing of when the Company expects to receive cash for contract assets or recognize revenue for contract liabilities. Contract assets are included in other current assets on the Company’s Consolidated Balance Sheets, and contract liabilities are included in other current liabilities and other liabilities on the Company’s Consolidated Balance Sheets. The Company’s contract asset balances were not material as of December 31, 2020 or 2019. The following table reflects the changes in the Company’s contract liabilities for the periods presented (in thousands):
| Successor |  |  | Predecessor
| December 31, 2020 |  |  | December 31, 2019
Beginning of the period | $ | 2,105 |  |  |  | $ | — |
Cash received | 2,267 |  |  |  | 2,174 |
Revenues recognized | (406) |  |  |  | (69) |
End of the period | $ | 3,966 |  |  |  | $ | 2,105 |
Performance obligations The Company records revenue when the performance obligations under the terms of its contracts with customers are satisfied. For sales of commodities, the Company records revenue in the month the production or purchased product is delivered to the purchaser. However, settlement statements and payments are typically not received for 20 to 60 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company uses knowledge of its properties, its properties’ historical performance, spot market prices and other factors as the basis for these estimates. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. For midstream services, the Company measures the satisfaction of its performance obligations using the output method based upon the volume of crude oil, natural gas or water that flows through its systems. In certain cases, the Company is required to estimate these volumes during a reporting period and record any differences between the estimated volumes and actual volumes in the following reporting period. Differences between estimated and actual revenues have historically not been significant. For the 2020 Successor and Predecessor periods and the years ended December 31, 2019 and 2018 (Predecessor), revenue recognized related to performance obligations satisfied in prior reporting periods was not material. Remaining performance obligations ASC 606 requires presentation of information about partially and wholly unsatisfied performance obligations under contracts that exist as of the end of the period. The following table presents estimated revenue allocated to remaining performance obligations for contracted revenues that are unsatisfied (or partially satisfied) as of December 31, 2020 (Successor):
| (In thousands)
2021 | $ | 16,921 |
2022 | 17,175 |
2023 | 10,896 |
2024 | 11,089 |
2025 | 2,768 |
Total | $ | 58,849 |
The partially and wholly unsatisfied performance obligations presented in the table above are generally limited to customer contracts which have fixed pricing and fixed volume terms and conditions, which generally include customer contracts with minimum volume commitment payment obligations. The Company has elected practical expedients, pursuant to ASC 606, to exclude from the presentation of remaining performance obligations: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a series of distinct services and (ii) contracts with an original expected duration of one year or less.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
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