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Segment Information | 9 Months Ended
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Sep. 30, 2023
Segment Reporting [Abstract] |
Segment Information | Note 12 — Segment Information The Company’s operations are managed through two operating segments: (i) Upstream Segment and (ii) CCS Segment. The Upstream Segment is the Company’s only reportable segment. The Company’s chief operating decision-maker (“CODM”) is the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. A reportable segment is an operating segment that meets materiality thresholds. The 10% tests, as prescribed by the segment reporting accounting guidance, are based on the reported measures of revenue, profit, and assets that are used by the CODM to assess performance and allocate resources. The CCS Segment currently does not meet any of the reportable segment quantitative thresholds. The profit or loss metric used to evaluate segment performance is Adjusted EBITDA, which is defined by the Company as net income (loss) plus interest expense; income tax expense (benefit); depreciation, depletion, and amortization; accretion expense; non-cash write-down of oil and natural gas properties; transaction and other (income) expenses; decommissioning obligations; the net change in the fair value of derivatives (mark to market effect, net of cash settlements and premiums related to these derivatives); (gain) loss on debt extinguishment; non-cash write-down of other well equipment inventory; and non-cash equity-based compensation expense. Corporate general and administrative expense include certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs that are not directly attributable to each of operating segment. A portion of these expenses are allocated based on the percentage of employees dedicated to each operating segment. The remaining expenses are included in the reconciliation of reportable segment Adjusted EBITDA to consolidated pre-tax net income (loss) as an unallocated corporate general and administrative expense. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company’s CODM does not review assets by segment as part of the financial information provided and therefore, no asset information is provided in the table below. The following table presents selected segment information for the periods indicated (in thousands):
| Upstream |  | All Other(1) |  | Total |
Revenues from External Customers: |  |  |  |  |  |
Three Months Ended September 30, 2023 | $ | 383,135 |  | $ | — |  | $ | 383,135 |
Three Months Ended September 30, 2022 |  | 377,128 |  |  | — |  |  | 377,128 |
Nine Months Ended September 30, 2023 |  | 1,072,927 |  |  | — |  |  | 1,072,927 |
Nine Months Ended September 30, 2022 |  | 1,309,779 |  |  | — |  |  | 1,309,779 |
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method: |  |  |  |  |  |
Three Months Ended September 30, 2023 | $ | 118 |  | $ | (2,612 | ) | $ | (2,494 | )
Three Months Ended September 30, 2022 |  | 75 |  |  | (497 | ) |  | (422 | )
Nine Months Ended September 30, 2023 |  | 373 |  |  | (6,023 | ) |  | (5,650 | )
Nine Months Ended September 30, 2022 |  | 5 |  |  | (694 | ) |  | (689 | )
Adjusted EBITDA: |  |  |  |  |  |
Three Months Ended September 30, 2023 | $ | 255,228 |  | $ | (5,045 | ) | $ | 250,183 |
Three Months Ended September 30, 2022 |  | 199,675 |  |  | (715 | ) |  | 198,960 |
Nine Months Ended September 30, 2023 |  | 719,326 |  |  | (13,562 | ) |  | 705,764 |
Nine Months Ended September 30, 2022 |  | 669,103 |  |  | (8,659 | ) |  | 660,444 |
Segment Expenditures: |  |  |  |  |  |
Nine Months Ended September 30, 2023 | $ | 559,873 |  | $ | 37,183 |  | $ | 597,056 |
Nine Months Ended September 30, 2022 |  | 297,486 |  |  | 2,027 |  |  | 299,513 |
(1) The CCS Segment is included in the “All Other” category. The CCS Segment is an emerging business in the start-up phase of operations and the business that does not currently generate any revenues. The CCS Segment’s business activities are conducted through both wholly owned subsidiaries and equity method investments with industry partners. Equity method investments is a business strategy that enables us to achieve favorable economies of scale relative to the level of investment and business risk assumed. Reconciliations The following table presents the reconciliation of Adjusted EBITDA to the Company’s consolidated totals (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2023 |  | 2022 |  | 2023 |  | 2022 |
Adjusted EBITDA: |  |  |  |  |  |  |  |
Total for reportable segments | $ | 255,228 |  | $ | 199,675 |  | $ | 719,326 |  | $ | 669,103 |
All other |  | (5,045 | ) |  | (715 | ) |  | (13,562 | ) |  | (8,659 | )
Unallocated corporate general and administrative expense |  | (1,366 | ) |  | (1,400 | ) |  | (4,161 | ) |  | (3,894 | )
Interest expense |  | (45,637 | ) |  | (29,265 | ) |  | (128,850 | ) |  | (91,531 | )
Depreciation, depletion and amortization |  | (163,359 | ) |  | (92,323 | ) |  | (480,476 | ) |  | (295,174 | )
Accretion expense |  | (21,256 | ) |  | (13,179 | ) |  | (63,430 | ) |  | (42,400 | )
Transaction and other income (expenses)(1) |  | 64,321 |  |  | (3,219 | ) |  | 38,799 |  |  | 38,856 |
Decommissioning obligations(2) |  | (7,972 | ) |  | (20 | ) |  | (9,454 | ) |  | (10,553 | )
Derivative fair value gain (loss)(3) |  | (98,802 | ) |  | 114,180 |  |  | (13,668 | ) |  | (231,133 | )
Net cash (received) paid on settled derivative instruments (3) |  | 6,313 |  |  | 81,162 |  |  | 10,474 |  |  | 368,483 |
Non-cash equity-based compensation expense |  | (393 | ) |  | (4,310 | ) |  | (9,080 | ) |  | (11,677 | )
Income (loss) before income taxes | $ | (17,968 | ) | $ | 250,586 |  | $ | 45,918 |  | $ | 381,421 |
(1) For the three and nine months ended September 30, 2023, transaction expenses includes $1.5 million and $39.4 million, respectively, in costs related to the EnVen Acquisition, inclusive of $0.9 million and $24.9 million, respectively, in severance expense. For the three and nine months ended September 30, 2022, transaction expenses includes $4.3 million and $5.0 million, respectively, in costs related to the EnVen Acquisition. See further discussion in Note 2 — Acquisitions and Divestitures and Note 7 — Employee Benefits Plans and Share-Based Compensation. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three and nine months ended September 30, 2023, the amount includes a $66.2 million gain on the Mexico Divestiture. See further discussion in Note 2 — Acquisitions and Divestitures. The amount includes a gain on the funding of the capital carry of our investment in Bayou Bend by Chevron of $8.6 million for the nine months ended September 30, 2023 and a $1.4 million for the three and nine months ended September 30, 2022. Additionally, it includes a $13.9 million gain on the partial sale of its investment in Bayou Bend to Chevron for the nine months ended September 30, 2022. See further discussion in Note 10 — Related Party Transactions. For the nine months ended September 30, 2022, the amount includes $27.5 million gain as a result of the settlement agreement to resolve previously pending litigation that was filed in October 2017 that is further discussed in Note 11 — Commitments and Contingencies. (2) Estimated decommissioning obligations were a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Note 11 — Commitments and Contingencies for additional information on decommissioning obligations. (3) The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled. The following table presents the reconciliation of Segment Expenditures to the Company’s consolidated totals (in thousands):
| Nine Months Ended September 30, |
| 2023 |  | 2022 |
Segment Expenditures: |  |  |  |
Total reportable segments | $ | 559,873 |  | $ | 297,486 |
All other |  | 37,183 |  |  | 2,027 |
Change in capital expenditures included in accounts payable and accrued liabilities |  | 15,085 |  |  | (32,430 | )
Plugging & abandonment |  | (71,097 | ) |  | (60,304 | )
Decommissioning obligations settled |  | (40,415 | ) |  | — |
Investment in CCS intangibles and equity method investees |  | (37,168 | ) |  | (2,027 | )
Deferred payments |  | (841 | ) |  | — |
Non-cash well equipment inventory transfers |  | (24,476 | ) |  | 3,403 |
Other |  | 362 |  |  | 1,437 |
Exploration, development and other capital expenditures | $ | 438,506 |  | $ | 209,592 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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