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Fresh-Start Accounting (Tables) | 12 Months Ended
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Dec. 31, 2019
Reorganizations [Abstract] |
Schedule of Post-Petition Liabilities and Allowed Claims | The reorganization value of our assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims, as shown below:
| (in thousands)
Liabilities subject to compromise | $ | 1,000,336 |
Pre-petition debt not classified as subject to compromise | 891,259 |
Post-petition liabilities | 245,702 |
Total post-petition liabilities and allowed claims | 2,137,297 |
Reorganization value of assets immediately prior to implementation of the Plan | (1,722,585 | )
Excess post-petition liabilities and allowed claims | $ | 414,712 |
Reconciliation of Enterprise Value to Estimated Reorganization Value | The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date:
| (in thousands)
Enterprise value | $ | 1,278,527 |
Plus: Fair value of non-debt liabilities | 282,511 |
Reorganization value of the Successor’s assets | $ | 1,561,038 |
Summary of Adjustments in Fresh-Start Consolidated Balance Sheet | The adjustments included in the following fresh-start consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and executed on the Effective Date (reflected in the column “Reorganization Adjustments”) as well as fair value and other required accounting adjustments resulting from the adoption of fresh-start accounting (reflected in the column “Fresh-Start Adjustments”). The explanatory notes provide additional information with regard to the adjustments recorded, methods used to determine the fair values and significant assumptions.
| As of February 28, 2017
| Berry LLC (Predecessor) |  | Reorganization Adjustments(1) |  | Fresh-Start Adjustments |  | Berry Corp. (Successor)
| (in thousands)
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 27,407 |  |  | $ | 4,642 |  | (2) | $ | — |  |  | $ | 32,049 |
Accounts receivable | 76,027 |  |  | (15,700 | ) | (3) | (816 | ) | (14 | ) | 59,511 |
Derivative instruments | 243 |  |  | — |  |  | — |  |  | 243 |
Restricted cash | 128 |  |  | 52,732 |  | (4) | — |  |  | 52,860 |
Other current assets | 18,437 |  |  | (5,558 | ) | (5) | 3,873 |  | (15 | ) | 16,752 |
Total current assets | 122,242 |  |  | 36,116 |  |  | 3,057 |  |  | 161,415 |
Non-current assets: |  |  |  |  |  |  |
Oil and natural gas properties | 5,031,498 |  |  | — |  |  | (3,787,898 | ) | (16 | ) | 1,243,600 |
Less accumulated depletion and amortization | (2,814,999 | ) |  | — |  |  | 2,814,999 |  | (16 | ) | — |
Total oil and natural gas properties, net | 2,216,499 |  |  | — |  |  | (972,899 | ) |  | 1,243,600 |
Other property and equipment | 124,379 |  |  | — |  |  | (15,576 | ) | (17 | ) | 108,803 |
Less accumulated depreciation | (22,107 | ) |  | — |  |  | 22,107 |  | (17 | ) | — |
Total other property and equipment, net | 102,273 |  |  | — |  |  | 6,530 |  |  | 108,803 |
Derivative instruments | 57 |  |  | — |  |  | — |  |  | 57 |
Restricted cash | 197,939 |  |  | (197,814 | ) | (2) | — |  |  | 125 |
Other non-current assets | 16,076 |  |  | 151 |  | (6) | 30,811 |  | (18 | ) | 47,038 |
Total assets | $ | 2,655,086 |  |  | $ | (161,547 | ) |  | $ | (932,501 | ) |  | $ | 1,561,038 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |
Accounts payable and accrued expenses | $ | 60,323 |  |  | $ | 52,371 |  | (7) | $ | 3,818 |  | (19 | ) | $ | 116,512 |
Derivative instruments | 5,355 |  |  | — |  |  | — |  |  | 5,355 |
Current portion of long-term debt, net | 891,259 |  |  | (891,259 | ) | (8) | — |  |  | — |
Other accrued liabilities | 7,335 |  |  | (3,760 | ) | (9) | 1,295 |  | (20 | ) | 4,870 |
Total current liabilities | 964,272 |  |  | (842,648 | ) |  | 5,113 |  |  | 126,737 |
Non-current liabilities: |  |  |  |  |  |  |
Derivative instruments | 1,710 |  |  | — |  |  | — |  |  | 1,710 |
Long-term debt | — |  |  | 400,000 |  | (10 | ) | — |  |  | 400,000 |
Other non-current liabilities | 170,979 |  |  | — |  |  | (16,915 | ) | (21 | ) | 154,064 |
Liabilities subject to compromise | 1,000,336 |  |  | (1,000,336 | ) | (11 | ) | — |  |  | — |
Equity: |  |  |  |  |  |  |
Predecessor additional paid-in capital | 2,798,714 |  |  | (2,798,714 | ) | (12 | ) | — |  |  | — |
Predecessor accumulated deficit | (2,280,925 | ) |  | 375,159 |  | (13 | ) | 1,905,766 |  | (22 | ) | — |
Successor preferred stock | — |  |  | 335,000 |  | (12 | ) | — |  |  | 335,000 |
Successor common stock | — |  |  | 33 |  | (12 | ) | — |  |  | 33 |
Successor additional paid-in capital | — |  |  | 3,369,959 |  | (12 | ) | (2,826,465 | ) | (22 | ) | 543,494 |
Total equity | 517,789 |  |  | 1,281,437 |  |  | (920,699 | ) |  | 878,527 |
Total liabilities and equity | $ | 2,655,086 |  |  | $ | (161,547 | ) |  | $ | (932,501 | ) |  | $ | 1,561,038 |
__________ Reorganization Adjustments:
(1) | Represent amounts recorded as of the Effective Date for the implementation of the Plan, including, among other items, settlement of the Predecessor’s liabilities subject to compromise, repayment of certain of the Predecessor’s debt, cancellation of the Predecessor’s equity, issuances of the Successor’s common stock and preferred stock, proceeds received from the Berry Rights Offerings and issuance of the Successor’s debt.
(2) | Changes in cash and cash equivalents included the following:
| (in thousands)
Borrowings under the Emergence Credit Facility | $ | 400,000 |
Proceeds from issuance of preferred stock pursuant the Berry Rights Offerings | 335,000 |
Cash receipt from Linn Energy, LLC for ad valorem taxes | 23,366 |
Removal of restriction on cash balance (includes $128 previously recorded as short term) | 197,942 |
Payment to the holders of claims under the Pre-Emergence Credit Facility (including $29 in bank fees and $3,760 in interest) | (897,663) |
Payment of professional fees | (992) |
Payment of Emergence Credit Facility fee that was capitalized | (151) |
Funding of the general unsecured claims Cash Distribution Pool | (35,000) |
Funding of the professional fees escrow account | (17,860) |
Changes in cash and cash equivalents | $ | 4,642 |
(3) | Collection of overpayment to Linn Energy, LLC for ad valorem taxes.
(4) | Primarily reflects the transfer to restricted cash to fund the Predecessor’s professional fees escrow account and general unsecured claims Cash Distribution Pool.
(5) | Primarily reflects the write-off of the Predecessor’s deferred financing fees.
(6) | Reflects the capitalization of deferred financing fees related to the Emergence Credit Facility.
(7) | Net increase in accounts payable and accrued expenses reflects:
| (in thousands)
Recognition of payables for the general unsecured claims Cash Distribution Pool | $ | 35,000 |
Recognition of payables for the professional fees escrow account | 17,860 |
Recognition of payable for ad valorem tax liability | 7,666 |
Net change of other professional fees payable | (8,161) |
Other | 6 |
Net increase in accounts payable and accrued expenses | $ | 52,371 |
(8) | Reflects the repayment of the Pre-Emergence Credit Facility.
(9) | Reflects the payment of accrued interest on the Pre-Emergence Credit Facility.
(10) | Reflects borrowings under the Emergence Credit Facility.
(11) | Settlement of liabilities subject to compromise and the resulting net gains were determined as follows:
| (in thousands)
Accounts payable and accrued expenses | $ | 151,298 |
Accrued interest payable | 15,238 |
Debt | 833,800 |
Total liabilities subject to compromise | 1,000,336 |
Funding of the general unsecured claims Cash Distribution Pool | (35,000) |
Common stock to holders of Unsecured Notes and general unsecured creditors | (543,562) |
Gains on settlement of liabilities subject to compromise | $ | 421,774 |
(12) | Net increase in capital accounts reflects:
| (in thousands)
Common stock to holders of Unsecured Notes and general unsecured creditors | $ | 543,562 |
Payment of issuance costs | (35) |
Dividend related to beneficial conversion feature of preferred stock | 27,751 |
Cancellation of the Predecessor’s additional paid-in capital | 2,798,714 |
Par value of common stock | (33) |
Change in additional paid-in capital | 3,369,959 |
Proceeds from issuance of preferred stock | 335,000 |
Par value of common stock | 33 |
Predecessor’s additional paid-in capital | (2,798,714) |
Net increase in capital accounts | $ | 906,278 |
See Note 6 for additional information on the issuances and distributions of the Successor’s common and preferred stock.
(13) | Net decrease in accumulated deficit reflects:
| (in thousands)
Recognition of gains on settlement of liabilities subject to compromise | $ | 421,774 |
Recognition of professional fees | (13,667) |
Write-off of deferred financing fees | (5,197) |
Total reorganization items, net | 402,910 |
Dividend related to beneficial conversion feature of preferred stock | (27,751 | )
Net decrease in accumulated deficit | $ | 375,159 |
Fresh-Start Adjustments:
(14) | Reflects a change in accounting policy from the entitlements method to the sales method for natural gas production imbalances.
(15) | Primarily reflects an increase in the current portion of greenhouse gas allowances.
(16) | Reflects a decrease of oil and natural gas properties, based on the methodology discussed in Note 2, and the elimination of accumulated depletion and amortization. The following table summarizes the components of oil and natural gas properties as of the Effective Date:
| Berry Corp. (Successor) |  |  | Berry LLC (Predecessor)
| Fair Value |  |  | Historical Book Value
| (in thousands)
Proved properties | $ | 712,400 |  |  |  | $ | 4,266,843 |
Unproved properties | 531,200 |  |  |  | 764,655 |
Total proved and unproved properties | 1,243,600 |  |  |  | 5,031,498 |
Less accumulated depletion and amortization | — |  |  |  | (2,814,999 | )
Total proved and unproved properties, net | $ | 1,243,600 |  |  |  | $ | 2,216,499 |
(17) | Reflects a decrease of other property and equipment and the elimination of accumulated depreciation. The following table summarizes the components of other property and equipment as of the Effective Date:
| Berry Corp. (Successor) |  |  | Berry LLC (Predecessor)
| Fair Value |  |  | Historical Book Value
| (in thousands)
Natural gas plants and pipelines | $ | 91,427 |  |  |  | $ | 109,675 |
Land | 8,262 |  |  |  | 201 |
Furniture and office equipment | 5,040 |  |  |  | 3,879 |
Buildings and leasehold improvements | 2,740 |  |  |  | 5,884 |
Vehicles | 1,156 |  |  |  | 4,542 |
Drilling and other equipment | 178 |  |  |  | 198 |
Total other property and equipment | 108,803 |  |  |  | 124,379 |
Less accumulated depreciation | — |  |  |  | (22,107 | )
Total other property and equipment, net | $ | 108,803 |  |  |  | $ | 102,273 |
In estimating the fair value of other property and equipment, we used a combination of cost and market approaches. A cost approach was used to value our natural gas plants and pipelines, buildings, and furniture and office equipment based on current replacement costs of the assets less depreciation based on the estimated economic useful lives of the assets and age of the assets. A market approach was used to value our vehicles, drilling and other equipment, and land, using recent transactions of similar assets to determine the fair value from a market participant perspective.
(18) | Primarily reflects an increase in greenhouse gas allowances of approximately $30 million and a joint venture investment of approximately $1 million. Greenhouse gas allowances were valued using a market approach based on trading prices for carbon credits on February 28, 2017. Our joint venture investment was valued based on a market approach using a market EBITDA multiple.
(19) | Reflects increases for greenhouse gas emissions liabilities of approximately $4 million and a change in accounting policy from the entitlements method to the sales method for gas production imbalances of approximately $200,000, partially offset by a decrease for the current portion of intangibles liabilities of approximately $500,000.
(20) | Reflects an increase of the current portion of asset retirement obligations.
(21) | Primarily reflects a decrease for asset retirement obligations of approximately $30 million and for intangible liabilities of approximately$6 million, partially offset by an increase for greenhouse gas emissions liabilities of approximately $19 million. The fair value of asset retirement obligations was estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plugging and abandonment costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors; and (iv) a credit-adjusted risk-free interest rate. The intangible liabilities identified on the Effective Date were valued based on a combination of market and incomes approaches and will be amortized over the remaining life of the respective contract. Greenhouse gas emissions liabilities were valued using a market approach based on trading prices for greenhouse gas allowances on February 28, 2017.
(22) | Reflects the cumulative impact of the fresh-start accounting adjustments discussed above and the elimination of the Predecessor’s accumulated deficit.

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