FRESH START ACCOUNTING (Tables)

12 Months Ended

Dec. 31, 2020

The following table summarizes our enterprise value upon emergence (in millions):


Fair value of total equity upon emergence	$	1,345
Fair value of long-term debt	725
Fair value of asset retirement obligations	593
Less: Unrestricted cash(a)	(163)
Total Enterprise Value	$	2,500

(a)Includes $118 million of cash used to temporarily collateralize letters of credit at our emergence date.

The following table reconciles our enterprise value to our reorganization value, or total asset value, upon emergence (in millions):


Enterprise value	$	2,500
Add: Unrestricted cash(a)	163
Add: Current liabilities(b)	396
Add: Other long-term liabilities(b)	231
Less: Other	(2)
Reorganization value	$	3,288

(a)Includes $118 million of cash used to temporarily collateralize letters of credit.

(b)Excludes asset retirement obligations of $50 million in current liabilities and $543 million in other long-term liabilities.

Schedule of fresh-start adjustments

The following consolidated balance sheet, with accompanying explanatory notes, illustrates the effects of the transactions contemplated by the Plan (Reorganization Adjustments) and fair value adjustments resulting from the adoption of fresh start accounting (Fresh Start Adjustments) as of October 31, 2020 (in millions):



	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
CURRENT ASSETS
Cash	$	106	$	97	(1)	$	—		$	203
Trade receivables	149		—			—			149
Inventories	61		—			—			61
Other current assets, net	104		(2)		(2)	—			102
Total current assets	420		95			—			515
PROPERTY, PLANT AND EQUIPMENT	22,918		—			(20,236)		(12)	2,682
Accumulated depreciation, depletion and amortization	(18,588)		—			18,588		(12)	—
Total property, plant and equipment, net	4,330		—			(1,648)			2,682
OTHER ASSETS	77		18		(3)	(4)		(13)	91
TOTAL ASSETS	$	4,827	$	113		$	(1,652)		$	3,288


	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
CURRENT LIABILITIES


Debtor-in-possession financing	733		(733)		(4)	—			—
Accounts payable	215		—			—			215
Accrued liabilities	233		(16)		(5)	14		(14)	231
Total current liabilities	1,181		(749)			14			446
LONG-TERM DEBT, NET	—		723		(6)	—			723
OTHER LONG-TERM LIABILITIES	725		—			49		(15)	774
LIABILITIES SUBJECT TO COMPROMISE	4,516		(4,516)		(7)	—			—
MEZZANINE EQUITY
Redeemable noncontrolling interests	691		(691)		(8)	—			—
EQUITY
Predecessor preferred stock	—		—			—			—
Predecessor common stock	—		—			—			—
Predecessor additional paid-in capital	5,149		(5,149)		(9)	—			—
Successor preferred stock	—					—			—
Successor common stock	—		1		(10)	—			1
Successor additional paid-in capital	—		1,253		(10)	—			1,253
Successor warrants	—		15		(10)	—			15
Accumulated deficit	(7,481)		9,226		(11)	(1,745)		(16)	—
Accumulated other comprehensive loss	(23)		—			23		(17)	—
Total equity attributable to common stock	(2,355)		5,346			(1,722)			1,269
Equity attributable to noncontrolling interests	69		—			7		(18)	76
Total equity	(2,286)		5,346			(1,715)			1,345
TOTAL LIABILITIES AND EQUITY	$	4,827	$	113		$	(1,652)		$	3,288

Reorganization Adjustments

(1)Net change in cash upon our emergence included the following transactions (in millions):


Proceeds from Revolving Credit Facility	$	225
Proceeds from Subscription Rights and Backstop Commitment, net	446
Proceeds from Second Lien Term Loan	200
Repayment of debtor-in-possession facilities	(733)
Payment of legal, professional and other fees	(15)
Debt issuance costs for the Revolving Credit Facility	(18)
Debt issuance costs for the Second Lien Term Loan	(2)
Acquisition of noncontrolling interest as part of the Settlement Agreement	(2)
Distribution to noncontrolling interest holder	(3)
Payment of accrued interest and bank fees	(1)
Net change	$	97

Our cash balance of $203 million at October 31, 2020 included $158 million of restricted cash, of which $118 million was used to temporarily collateralize letters of credit, $22 million was held for distributions to a JV partner and $18 million was reserved for legal and professional fees related to our Chapter 11 Cases.

(2)Represents the write-off of unamortized insurance premiums for our directors and officers policy, which was cancelled as a result of changing the composition of our Board of Directors.

(3)Represents the capitalization of debt issuance costs for our Revolving Credit Facility.

(4)Represents the payoff of $733 million of debtor-in-possession financing including $83 million of borrowings that were outstanding under our Senior DIP Facility and $650 million of borrowings that were outstanding under our Junior DIP Facility. Refer to Note 2 Chapter 11 Proceedings for more information on our debtor-in-possession credit agreements.

(5)Reflects the payment of $15 million for legal, professional and other fees related to our bankruptcy proceedings upon emergence and $1 million for accrued interest and bank fees.

(6)Our exit financing at emergence included the following:


	October 31, 2020
	($ in millions)
Revolving Credit Facility	$	225
Second Lien Term Loan	200
EHP Notes	300
Long-term debt (principal amount)	$	725
Debt issuance costs	(2)
Total long-term debt, net	$	723

For additional information on our Successor debt, refer to Note 8 Debt.

(7)Our liabilities subject to compromise at emergence included the following (in millions):


Long-term debt (principal amount):
2017 Credit Agreement	$	1,300
2016 Credit Agreement	1,000
Second Lien Notes	1,808
5.5% Senior Notes due 2021	100
6% Senior Notes due 2024	144
Accrued interest	164
Total liabilities subject to compromise	$	4,516

(8)Represents the acquisition of the noncontrolling interest in our Ares JV. In accordance with the Settlement Agreement, we exercised a conversion right upon our emergence from bankruptcy, allowing us to acquire all (but not less than all) of the equity interests in the Ares JV held by ECR in exchange for the EHP Notes, Ares Settlement Stock and approximately $2 million in cash.

(9)Represents the elimination of Predecessor additional paid-in capital.

(10) Represents the fair value of 83.3 million shares of Successor common stock and Warrants issued in accordance with the Plan as follows (in millions):


Par value	$	1
Additional paid-in capital	1,253
Warrants	15
Total	$	1,269

(11) Represents the decrease in accumulated deficit resulting from reorganization adjustments and the reclassification from Predecessor additional paid-in capital.

Fresh Start Adjustments

(12) Represents fair value adjustments to property, plant and equipment (PP&E), including the elimination of Predecessor accumulated depreciation, depletion and amortization.

The fair value of our PP&E at emergence consisted of the following:


Proved oil and natural gas properties	$	2,409
Facilities and other	273
Total PP&E	$	2,682

(13) Represents an adjustment to our right of use assets as if our lease agreements were new leases on our emergence date. See Note 9 Leases for more information on our leases.

(14) Represents a $20 million fair value adjustment to the current portion of asset retirement obligations partially offset by a $5 million decrease in our liability for self-insured medical. Also included are fair value adjustments for our postretirement benefits and a remeasurement of the current portion of our lease liability.

(15) Represents a $36 million fair value adjustment related to the long-term portion of asset retirement obligations and $8 million related to environmental and other abandonment obligations. The adjustment also includes $5 million related to remeasuring our long-term lease liability as if our contracts were new leases.

(16) Represents the elimination of Predecessor accumulated deficit.

(17) Represents the elimination of Predecessor accumulated other comprehensive loss.

(18) Represents a fair value adjustment of the noncontrolling interest in the BSP JV based on discounted expected future cash flows.