Inventory

6 Months Ended

Jun. 30, 2021

The Company’s inventory includes equipment and materials and crude oil inventory. Equipment and materials consist primarily of well equipment, tanks and tubular goods to be used in the Company’s E&P activities and spare parts and equipment for the Company’s midstream assets. Crude oil inventory includes crude oil in tanks and linefill that is expected to be withdrawn within one year. Linefill represents the minimum volume of product in a pipeline system that enables the system to operate and is generally not available to be withdrawn from the pipeline system until the expiration of the transportation contract. Crude oil and NGL linefill in third-party pipelines that is not expected to be withdrawn within one year is included in long-term inventory on the Company’s Condensed Consolidated Balance Sheets.

Inventory, including long-term inventory, is stated at the lower of cost and net realizable value with cost determined on an average cost method. The Company assesses the carrying value of inventory and uses estimates and judgment when making any adjustments necessary to reduce the carrying value to net realizable value. Among the uncertainties that impact the Company’s estimates are the applicable quality and location differentials to include in the Company’s net realizable value analysis as well as the liquidation timing of the inventory. Changes in assumptions made as to the timing of a sale can materially impact net

realizable value. No material write-downs of inventory or long-term inventory were recorded during the three or six months ended June 30, 2021.

The Company’s total inventory consists of the following:


	Successor
	June 30, 2021		December 31, 2020

	(In thousands)
Inventory
Equipment and materials	$	21,827	$	25,103
Crude oil inventory	11,006		8,826
Total inventory	32,833		33,929
Long-term inventory
Linefill in third party pipelines	8,683		14,522
Total long-term inventory	8,683		14,522
Total	$	41,516	$	48,451