XML 20 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

4. REVENUE RECOGNITION

 

The Company’s revenues are derived from its interest in the sales of oil and natural gas production. Prior to the acquisition of New Horizon, which was completed on March 1, 2020, and the acquisition of FieldPoint Petroleum, which was completed on September 25, 2020 all sales of oil and natural gas were made under contracts that third-party operators of oil and natural gas wells have negotiated with customers. The Company receives payments from the sale of oil and natural gas production between one to three months after delivery. At the end of each period when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from customers are accrued in oil and natural gas sales receivable in the unaudited condensed consolidated balance sheets. Variances between the Company’s estimated revenue and actual payments are recorded in the month the payment is received; however, differences have been and are insignificant. Accordingly, the variable consideration is not constrained. As a non-operator of its oil and natural gas properties, the Company records its share of the revenues and expenses based upon the information provided by the operators within the revenue statements.

 

The Company does not disclose the values of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption in accordance with ASC 606. The exemption applies to variable consideration that is recognized as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to the remaining performance obligations is not required.

 

The Company’s oil and natural gas production is typically sold at delivery points to various purchasers under contract terms that are common in the oil and natural gas industry. Regardless of the contract type, the terms of these contracts compensate the well operators for the value of the oil and natural gas at specified prices, and then the well operators remit payment to the Company for its share in the value of the oil and natural gas sold.

 

Generally, the Company reports revenue as the gross amount received from the well operators before taking into account production taxes and transportation costs. Production taxes are reported separately, and transportation costs are included in lease operating expense in the accompanying condensed consolidated statements of operations. The revenues and costs in the condensed consolidated financial statements were reported gross for the three and nine months ended September 30, 2020, as the gross amounts were known.

 

The following table presents our disaggregated revenue by major source and geographic area for the three and nine months ended September 30, 2020 and 2019.

 

    Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
    2020     2019     2020     2019  
    (in thousands)  
Revenue:                                
North Dakota                                
Oil   $ 270     $ 564     $ 901     $ 1,723  
Natural gas and liquids (1)     34       16       66       109  
Total   $ 304     $ 580     $ 967     $ 1,832  
                                 
Texas                                
Oil   $ 92     $ 1,007     $ 517     $ 3,023  
Natural gas and liquids     5       46       29       211  
Total   $ 97     $ 1,053     $ 546     $ 3,234  
                                 
Total revenue   $ 401     $ 1,633     $ 1,513     $ 5,066  

 

Significant concentrations of credit risk

 

The Company has exposure to credit risk in the event of nonpayment by joint interest operators and purchasers of the Company’s oil and natural gas properties. During the nine-month periods ended September 30, 2020 and 2019, the joint interest operators that accounted for 10% or more of the Company’s total oil and natural gas revenue for at least one of the periods presented are as follows:

 

Operator   2020     2019  
             
CML Exploration LLC     32 %     54 %
Zavanna LLC     47 %     29 %