SandRidge Energy(SD) - 2021 Q3 - Quarterly Report

Disclosures Regarding Forward-Looking Statements This section details forward-looking statements, their inherent risks, and the Company's disclaimer regarding updates - The report includes forward-looking statements concerning capital expenditures, liquidity, debt, project timing, COVID-19 impact, litigation, business strategy, and regulatory compliance[7] - These statements are based on assumptions and analyses but are subject to significant business, economic, competitive, regulatory, and other risks, meaning actual results may differ materially[8] - The Company disclaims any obligation to update or revise these forward-looking statements unless legally required[8] Part I. Financial Information This part presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $96,738 | $22,130 | | Total current assets | $129,726 | $50,812 | | Total assets | $313,789 | $260,832 | | Total current liabilities | $67,606 | $68,877 | | Long-term debt | $— | $20,000 | | Total liabilities | $105,672 | $132,766 | | Total stockholders' equity | $208,117 | $128,066 | - Total assets increased by $52.957 million, or 20.3%, from December 31, 2020, to September 30, 2021, primarily driven by a significant increase in cash and cash equivalents[15] - Total liabilities decreased by $27.094 million, or 20.4%, mainly due to the repayment of long-term debt[15] Condensed Consolidated Statements of Operations This section details the Company's financial performance over specific periods, showing revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations | Metric (in thousands, except per share data) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $46,584 | $27,676 | $114,403 | $84,660 | | Total expenses | $20,125 | $75,727 | $36,833 | $360,856 | | Income (loss) from operations | $26,459 | $(48,051) | $77,570 | $(276,196) | | Net income (loss) | $28,599 | $(48,749) | $79,894 | $(277,198) | | Basic Net income (loss) per share | $0.78 | $(1.36) | $2.20 | $(7.78) | | Diluted Net income (loss) per share | $0.77 | $(1.36) | $2.15 | $(7.78) | - The Company reported a significant turnaround, moving from a net loss of $(48.7) million in Q3 2020 to a net income of $28.6 million in Q3 2021[16] - For the nine months ended September 30, 2021, net income was $79.9 million, a substantial improvement from a net loss of $(277.2) million in the prior year, driven by increased revenues and reduced expenses[16] Condensed Consolidated Statement of Changes in Stockholders' Equity This section outlines changes in the Company's stockholders' equity, reflecting movements in common stock, warrants, capital, and accumulated deficit Condensed Consolidated Statement of Changes in Stockholders' Equity | Metric (in thousands) | Balance at Dec 31, 2020 | Balance at Sep 30, 2021 | | :-------------------- | :---------------------- | :---------------------- | | Common Stock Amount | $36 | $37 | | Warrants Amount | $88,520 | $88,520 | | Additional Paid In Capital | $1,062,220 | $1,062,376 | | Accumulated Deficit | $(1,022,710) | $(942,816) | | Total Stockholders' Equity | $128,066 | $208,117 | - Total stockholders' equity increased by $80.051 million from December 31, 2020, to September 30, 2021, primarily due to net income[18] - The accumulated deficit decreased by $79.894 million, reflecting the Company's profitability during the nine-month period[18] Condensed Consolidated Statements of Cash Flows This section presents the Company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $66,315 | $27,356 | | Net cash provided by (used in) investing activities | $25,867 | $25,857 | | Net cash provided by (used in) financing activities | $(21,446) | $(46,540) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $70,736 | $6,673 | | Cash, cash equivalents and restricted cash, end of period | $99,002 | $12,641 | - Net cash provided by operating activities significantly increased by $38.959 million, or 142.4%, for the nine months ended September 30, 2021, compared to the same period in 2020[19] - The Company experienced a substantial net increase in cash, cash equivalents, and restricted cash of $70.736 million for the nine months ended September 30, 2021, compared to $6.673 million in the prior year[19] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies and specific financial items Note 1. Basis of Presentation This note describes the Company's business, the basis for preparing its unaudited financial statements, and the key estimates and assumptions used - SandRidge Energy, Inc. is an oil and natural gas acquisition, development, and production company focused on hydrocarbon resources in the United States[21] - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP, with certain information condensed or omitted, and include normal recurring adjustments[23] - Key estimates and assumptions are made in areas such as oil, natural gas, and NGL reserves, impairment tests, depreciation, depletion and amortization, asset retirement obligations, deferred tax assets, and derivative valuations[26] Note 2. Fair Value Measurements This note details the fair value measurements of the Company's financial instruments, particularly commodity derivative contracts, and their classification within the fair value hierarchy - The carrying values of most current assets and liabilities, and debt under the New Credit Facility, approximate fair value[30] - Commodity derivative contracts are classified as Level 2 fair value measurements, determined using discounted cash flow or option pricing models with observable inputs like futures prices, volatility, and discount rates[32] Liabilities | Liabilities | September 30, 2021 (in thousands) | | :-------------------------- | :-------------------------------- | | Commodity derivative contracts | $4,129 | Note 3. Derivatives This note explains the Company's use of commodity derivative contracts to manage price risk and how changes in their fair values are recognized in operations - The Company uses commodity derivative contracts (fixed price swaps) to manage commodity price risk for a portion of its forecasted oil and natural gas production[35] - Derivative contracts are not designated as accounting hedges, so changes in their fair values are recognized as gains or losses in the condensed consolidated statements of operations[36] Commodity Derivative Contracts | Contract Type | Notional | Units | Weighted Average Fixed Price per Unit | | :---------------------------------- | :------- | :------ | :------------------------------------ | | NGL Price Swaps: Oct 2021 - Feb 2022 | 2,605,000 | Gallons | $1.20 | | Natural Gas Price Swaps: Oct 2021 - Feb 2022 | 1,800,000 | MMBtu | $4.07 | Note 4. Property, Plant and Equipment This note provides a breakdown of the Company's property, plant, and equipment, including oil and natural gas properties, and changes over time Property, Plant and Equipment, Net | Metric (in thousands) | September 30, 2021 | December 31, 2020 | | :------------------------------------ | :----------------- | :---------------- | | Net oil and natural gas properties | $84,754 | $106,222 | | Other property, plant and equipment, net | $98,951 | $103,118 | | Total property, plant and equipment, net | $183,705 | $209,340 | - Net oil and natural gas properties decreased by $21.468 million, or 20.2%, from December 31, 2020, to September 30, 2021[42] - Total property, plant and equipment, net, saw a decrease of $25.635 million, or 12.2%, over the nine-month period[42] Note 5. Impairment This note details the Company's impairment charges, specifically related to the full cost ceiling limitation for oil and natural gas properties and other assets - No full cost ceiling limitation impairment charge was recorded for the three and nine-month periods ended September 30, 2021[45] - In the three-month period ended September 30, 2020, the Company recorded a $44.0 million impairment charge related to the full cost ceiling limitation[46] - For the nine-month period ended September 30, 2020, a total impairment charge of $253.8 million was recorded, including a $215.8 million full cost ceiling limitation impairment and a $38.0 million write-down of the office headquarters[46] Note 6. Acquisitions and Divestitures This note outlines the Company's recent acquisition of royalty interests and the divestiture of its North Park Basin oil and natural gas properties - On April 22, 2021, the Company acquired all overriding royalty interest assets of SandRidge Mississippian Trust I for a net purchase price of $3.6 million[48] - On February 5, 2021, the Company sold all its North Park Basin oil and natural gas properties and related assets for net proceeds of $39.7 million, recognizing a $19.7 million gain[50] - For the nine months ended September 30, 2021, North Park Basin represented 2.8% of total consolidated revenues and 1.3% of total production volumes prior to its sale[51] Note 7. Accounts Payable and Accrued Expenses This note provides a detailed breakdown of the Company's accounts payable and accrued expenses, highlighting changes in various components Accounts Payable and Accrued Expenses | Metric (in thousands) | September 30, 2021 | December 31, 2020 | | :-------------------------------- | :----------------- | :---------------- | | Accounts payable and other accrued expenses | $15,907 | $23,017 | | Production payable | $22,476 | $15,367 | | Payroll and benefits | $2,765 | $5,640 | | Taxes payable | $5,396 | $6,864 | | Total accounts payable and accrued expenses | $46,778 | $51,426 | - Total accounts payable and accrued expenses decreased by $4.648 million, or 9.0%, from December 31, 2020, to September 30, 2021[55] - Production payable increased by $7.109 million, while accounts payable and other accrued expenses, payroll and benefits, and taxes payable all decreased[55] Note 8. Long-Term Debt This note details the Company's long-term debt, including the full repayment and termination of its New Credit Facility, resulting in no outstanding debt - On September 2, 2021, the Company fully repaid its $20.0 million term loan and terminated all commitments and obligations under the New Credit Facility[57] - As of September 30, 2021, the Company had no outstanding long-term debt, a reduction from $20.0 million at December 31, 2020[15][56] - The weighted average interest rate for borrowings under the New Credit Facility was approximately 2.60% for the three months and 2.61% for the nine months ended September 30, 2021[58] Note 9. Commitments and Contingencies This note discusses the Company's legal proceedings and claims, including potential indemnification obligations and the associated risks of material loss - The Company is subject to various legal proceedings and claims, including ongoing Cases where it remains a nominal defendant despite claims being discharged[59][61] - The Company may be contractually obligated to indemnify two former officers and SandRidge Mississippian Trust I for losses arising from these Cases, with insurance coverage for indemnification costs exhausted as of October 2020[61] - The Company cannot determine the likelihood or estimate any reasonably possible loss related to these Cases, but potential losses, if incurred, could be material[62] Note 10. Income Taxes This note explains the Company's income tax position, including its full valuation allowance against deferred tax assets and federal NOL carryforwards - The Company maintains a full valuation allowance against its net deferred tax asset due to cumulative negative earnings, resulting in no federal or state income tax expense or benefit for the three and nine-month periods ended September 30, 2021[65] - As of September 30, 2021, the Company had approximately $1.6 billion of federal NOL carryforwards ($0.8 billion expiring 2025-2037, $0.8 billion with no expiration date) and over $33.5 million in federal tax credits[67] - An IRC Section 382 ownership change in 2016 limits the utilization of certain tax attributes, and future ownership changes could further impact the Company's ability to use NOLs[66] Note 11. Equity This note details the Company's equity structure, including common stock, warrants, share repurchase program, and the Tax Benefits Preservation Plan - As of September 30, 2021, the Company had 36.7 million shares of common stock outstanding, with 250.0 million shares authorized[70] - The Company has 4.9 million Series A and 2.1 million Series B warrants exercisable until October 4, 2022, at initial prices of $41.34 and $42.03 per share, respectively[71] - The Board approved a $25.0 million share repurchase program in August 2021, but no common stock was repurchased under this program during the third quarter ended September 30, 2021[72] - The Tax Benefits Preservation Plan, adopted in July 2020 and amended in March 2021, aims to protect the Company's NOLs by deterring any person or group from acquiring beneficial ownership of 4.9% or more of its securities[73][74] Note 12. Revenues This note provides a detailed breakdown of the Company's revenues by source, highlighting significant increases driven by commodity price recovery Revenues by Source | Revenue Source (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Oil | $15,198 | $17,071 | $45,412 | $57,279 | | NGL | $14,863 | $4,983 | $34,344 | $12,508 | | Natural gas | $16,523 | $5,493 | $34,647 | $14,347 | | Total revenues | $46,584 | $27,676 | $114,403 | $84,660 | - Total revenues increased by $18.908 million (68.3%) for Q3 2021 and $29.743 million (35.1%) for the nine months ended September 30, 2021, compared to the respective prior-year periods[80] - NGL and Natural Gas revenues saw substantial increases, while Oil revenues slightly decreased for Q3 2021 compared to Q3 2020[80] Note 13. Employee Termination Benefits This note details the Company's employee termination benefits, showing a significant decrease due to workforce reductions and asset sales - No employee termination benefits were recorded during the three-month period ended September 30, 2021[84] Employee Termination Benefits | Metric (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------- | :----------------------------- | :----------------------------- | | Cash | $32 | $6,607 | | Share-Based Compensation | $17 | $1,824 | | Total Employee Termination Benefits | $49 | $8,431 | - Employee termination benefits significantly decreased to $49 thousand for the nine months ended September 30, 2021, from $8.431 million in the same period of 2020, which was due to workforce reductions and the sale of North Park assets[84] Note 14. Earnings (Loss) per Share This note presents the Company's basic and diluted earnings per share, reflecting a significant improvement from prior-year losses Earnings (Loss) per Share | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic earnings (loss) per share | $0.78 | $(1.36) | $2.20 | $(7.78) | | Diluted earnings (loss) per share | $0.77 | $(1.36) | $2.15 | $(7.78) | | Weighted average common shares outstanding (Basic) | 36,577 | 35,783 | 36,318 | 35,649 | | Weighted average common shares outstanding (Diluted) | 36,996 | 35,783 | 37,200 | 35,649 | - Basic EPS improved significantly to $0.78 for Q3 2021 from a loss of $(1.36) in Q3 2020, and to $2.20 for the nine months ended September 30, 2021, from a loss of $(7.78) in the prior year[85] - Dilutive securities (restricted stock units, restricted stock awards, stock options) were included in diluted EPS calculations for 2021 periods as their effect was dilutive, unlike 2020 periods where they were anti-dilutive[86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance, condition, liquidity, and capital resources, highlighting key trends Introduction This introduction sets the context for understanding the Company's financial condition and results, emphasizing the unaudited nature of interim data - The discussion and analysis aim to help readers understand the Company's business, financial condition, results of operations, liquidity, and capital resources[87] - It should be read in conjunction with the unaudited condensed consolidated financial statements and the 2020 Form 10-K[87] - Interim financial information is unaudited and includes normal recurring adjustments, with results not necessarily indicative of the full fiscal year[87] Overview This overview describes SandRidge Energy, Inc.'s business focus on oil and natural gas, recent financial actions, and strategic outlook for maximizing free cash flow - SandRidge Energy, Inc. is an independent oil and natural gas company primarily focused on acquisition, development, and production in the U.S. Mid-Continent, having sold all North Park Basin assets on February 5, 2021[88] Production Composition | Production Composition | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--------------------- | :------ | :------ | :------ | :------ | | Oil | 12.7% | 22.2% | 14.4% | 24.5% | | Natural gas | 55.2% | 46.3% | 52.5% | 44.5% | | NGLs | 32.1% | 31.5% | 33.1% | 31.0% | - Recent events include the full repayment and termination of the $20.0 million term loan under the New Credit Facility on September 2, 2021, and the Board's approval of a $25.0 million share repurchase program in August 2021, with no repurchases made in Q3 2021[95] - The Company's outlook focuses on maximizing free cash flow through cost control, financial discipline, prudent capital allocation, and limiting capital projects to high-return opportunities, while also pursuing acquisitions and business combinations[93] Consolidated Results of Operations This section analyzes the Company's consolidated financial performance, detailing revenues, operating expenses, impairment charges, and other income/expenses Revenues This section analyzes the Company's revenue performance, highlighting increases driven by higher realized commodity prices despite declining production volumes Revenues by Source | Revenue Source (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Oil | $15,198 | $17,071 | $45,412 | $57,279 | | NGL | $14,863 | $4,983 | $34,344 | $12,508 | | Natural gas | $16,523 | $5,493 | $34,647 | $14,347 | | Total revenues | $46,584 | $27,676 | $114,403 | $84,660 | - Revenues from oil, natural gas, and NGL sales increased by $19.0 million (69.1%) for Q3 2021 and $30.3 million (36.0%) for the nine months ended September 30, 2021, compared to the prior year periods[100] - The increase in revenues was primarily driven by higher realized prices for oil, natural gas, and NGLs due to increased economic activity and recovery from the COVID-19 pandemic, partially offset by an overall decline in production volumes[101] Operating Expenses This section details the Company's operating expenses, including lease operating, production taxes, and depreciation, noting impacts from asset sales and cost-cutting Operating Expenses | Expense (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Lease operating expenses | $9,080 | $8,069 | $26,266 | $32,409 | | Production, ad valorem, and other taxes | $2,219 | $2,333 | $6,929 | $7,386 | | Depreciation and depletion—oil and natural gas | $2,092 | $7,525 | $6,790 | $45,728 | | Total operating expenses | $14,904 | $19,625 | $44,467 | $91,594 | - Lease operating expenses increased by $1.0 million for Q3 2021 YoY due to reactivating wells, but decreased by $6.1 million for 9M 2021 YoY due to personnel reductions, the NPB sale, and cost-cutting efforts[103] - Depreciation and depletion rates for oil and natural gas properties decreased significantly by $2.46/Boe for Q3 2021 YoY and $5.43/Boe for 9M 2021 YoY, primarily due to the sale of North Park Basin properties and full cost ceiling test impairments recorded in 2020[105] Impairment This section discusses the Company's impairment charges, noting no full cost ceiling limitation impairment in 2021 compared to significant charges in 2020 - No full cost ceiling limitation impairment was recorded during the three and nine-month periods ended September 30, 2021[106] - In Q3 2020, a $44.0 million impairment charge was recorded, and for 9M 2020, a total impairment of $253.8 million was recorded, including a $215.8 million full cost ceiling limitation and a $38.0 million write-down of the office headquarters[106] - Based on estimated year-end prices, the Company anticipates no full cost ceiling limitation impairment for year-end 2021, though future impairments could fluctuate[108][109] Other Operating Expenses This section reviews other operating expenses, including general and administrative, restructuring, employee termination benefits, and derivative gains/losses Other Operating Expenses | Expense (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | General and administrative | $2,229 | $2,493 | $6,841 | $12,290 | | Restructuring expenses | $(1,696) | $1,199 | $614 | $1,643 | | Employee termination benefits | $— | $3,184 | $49 | $8,431 | | (Gain) loss on derivative contracts | $4,129 | $5,299 | $4,129 | $(7,168) | | (Gain) loss on sale of assets | $761 | $(178) | $(18,952) | $(100) | | Total non-operating expenses | $5,221 | $12,059 | $(7,634) | $15,465 | - General and administrative expenses decreased by $0.3 million for Q3 2021 YoY and $5.4 million for 9M 2021 YoY, primarily due to personnel reductions, lower IT/software costs, reduced corporate headquarters overhead, and professional cost reductions[111] - Restructuring expenses decreased by $2.9 million for Q3 2021 YoY and $1.0 million for 9M 2021 YoY, mainly due to the removal of previously accrued 2016 Bankruptcy expenses[112][113] Other Income (Expense) This section analyzes other income and expenses, including interest expense and other net income, noting the impact of debt repayment Other Income (Expense) | Metric (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest expense, net | $(256) | $(569) | $(387) | $(1,653) | | Other income (expense), net | $2,396 | $(129) | $2,711 | $5 | | Total other income (expense) | $2,140 | $(698) | $2,324 | $(1,648) | - Total other income (expense) shifted from an expense of $(0.698) million in Q3 2020 to an income of $2.140 million in Q3 2021, and from an expense of $(1.648) million to an income of $2.324 million for the nine months ended September 30, 2021[117] - Interest expense, net, decreased due to the full repayment and termination of the New Credit Facility, with $0.2 million of deferred financing costs expensed as a result[117] Liquidity and Capital Resources This section assesses the Company's liquidity and capital resources, covering working capital, cash flows, indebtedness, and contractual obligations Working Capital and Sources and Uses of Cash This section examines the Company's working capital position and its sources and uses of cash, highlighting improvements from asset sales and operations - As of September 30, 2021, the Company had $99.0 million in cash and cash equivalents, including restricted cash, with the New Credit Facility terminated[119] - Working capital increased to $62.1 million at September 30, 2021, from a deficit of $18.1 million at December 31, 2020, primarily due to increased cash from the NPB sale and operations, and reduced accounts payable[123] - The Company expects ample liquidity for the next twelve months from cash on hand and cash flows from operations[119][122] Cash Flows This section analyzes the Company's cash flows from operating, investing, and financing activities, noting significant increases in operating cash flow Cash Flow Activity | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $66,315 | $27,356 | | Investing activities | $25,867 | $25,857 | | Financing activities | $(21,446) | $(46,540) | | Net increase (decrease) in cash | $70,736 | $6,673 | - Operating cash flows increased by $39.0 million for the nine months ended September 30, 2021, driven by improved commodity prices and cost reduction efforts[125] - Investing activities provided $25.9 million in cash for 9M 2021, primarily from $38.1 million in asset sales (NPB) offset by $8.6 million in capital expenditures and $3.6 million in acquisitions[126] - Cash used in financing activities decreased to $21.4 million for 9M 2021, mainly due to $20.0 million in debt repayments and other financing obligations[129] Indebtedness This section confirms the Company's debt-free status as of September 30, 2021, following the full repayment of its New Credit Facility - The Company has no outstanding long-term debt as of September 30, 2021, following the full repayment and termination of the New Credit Facility[131] Contractual Obligations and Off-Balance Sheet Arrangements This section outlines the Company's contractual obligations, including asset retirement obligations and surety bonds, and confirms no significant changes - Contractual obligations at September 30, 2021, include asset retirement obligations, short-term leases, and other individually insignificant obligations[132] - The Company has financial instruments representing potential commitments, such as surety bonds, incurred in the normal course of business, with underlying liabilities already reflected in the balance sheets[132] - There were no other significant changes in total contractual obligations and off-balance sheet arrangements from those reported in the 2020 Form 10-K[133] Critical Accounting Policies and Estimates This section states that there were no material changes to the Company's critical accounting policies and estimates during the first nine months of 2021 - There were no material changes in critical accounting policies, estimates, judgments, and assumptions during the first nine months of 2021[134] - For a description of critical accounting policies and estimates, refer to Item 7 of the 2020 Form 10-K[134] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the Company's exposure to market risks, primarily commodity price risk managed through derivatives, and addresses credit and interest rate risks - The most significant market risk relates to the volatile prices received for oil, natural gas, and NGLs, which the Company manages through commodity derivative contracts for a portion of its anticipated production[136] - As of September 30, 2021, open derivative contracts included NGL Price Swaps (2.6 million Gallons at $1.20/Gallon) and Natural Gas Price Swaps (1.8 million MMBtu at $4.07/MMBtu), covering October 2021 to February 2022[137] - The Company is exposed to credit risk from derivative counterparties (all investment grade with master netting agreements) and joint interest partners, with historical credit losses being immaterial[139][141] - The Company is not exposed to interest rate risk as of September 30, 2021[142] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting - The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2021, providing reasonable assurance for timely and accurate reporting[143] - There was no change in the Company's internal control over financial reporting during the quarter ended September 30, 2021, that materially affected or is reasonably likely to materially affect it[144] Part II. Other Information This part provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits Item 1. Legal Proceedings This section refers to Note 9 for details on the Company's legal proceedings, which involve ongoing cases with potential indemnification obligations - For information on legal proceedings, refer to Note 9—Commitments and Contingencies in Item 1 of this Quarterly Report[147] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously discussed in the Company's 2020 Form 10-K - There have been no material changes to the risk factors previously discussed in Item 1A—Risk Factors in the Company's 2020 Form 10-K[149] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section summarizes share repurchases for tax withholding on vested stock awards, noting no repurchases under the publicly announced program in Q3 2021 Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------------- | :----------------------------- | :--------------------------- | | July 1, 2021 - July 31, 2021 | 2,431 | $6.30 | | August 1, 2021 - August 31, 2021 | 33,032 | $8.20 | | September 1, 2021 - September 30, 2021 | — | $— | | Total | 35,463 | | - Shares purchased include common stock tendered by employees to satisfy tax withholding requirements upon vesting of stock awards[151] - No shares were repurchased under the publicly announced share repurchase program during the third quarter ended September 30, 2021[95][151] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[152] Item 4. Mine Safety Disclosures This section indicates that the disclosure requirements for mine safety are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[153] Item 5. Other Information This section states that no other information is reported under this item - No other information is reported under this item[154] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, plan amendments, and officer certifications - Exhibits include the Amended Joint Chapter 11 Plan of Reorganization, Amended and Restated Certificate of Incorporation and Bylaws, and the First Amendment to Tax Benefits Preservation Plan[156] - Officer certifications (Section 302 and 906) and various XBRL taxonomy documents are also filed as exhibits[156] Signature This section confirms the official signing of the report by the Senior Vice President, Chief Financial Officer, and Chief Accounting Officer - The report was signed by Salah Gamoudi, Senior Vice President, Chief Financial Officer, and Chief Accounting Officer, on November 10, 2021[160]