|12 Months Ended|
Dec. 31, 2019
|Revenue from Contract with Customer [Abstract]|
|Revenue Recognition||Revenue Recognition
Revenue from contracts with customers
Under the Company’s oil sales contracts it sells oil production at the point of delivery and collects an agreed upon index price, net of pricing differentials. The Company recognizes revenue when control transfers to the purchaser at the point of delivery at the net price received.
Natural gas sales
Under the Company’s natural gas sales processing contracts, it delivers natural gas to a midstream processing entity. The midstream processing entity gathers and processes the natural gas and remits proceeds to the Company for the resulting sale of natural gas. The revenue received from the sale of NGLs associated with certain contracts is included in natural gas sales. Under these processing agreements, when control of the natural gas changes at the point of delivery, the treatment of gathering and treating fees are recorded net of revenues. For other contracts that were assumed in the Carrizo Acquisition, defined below, where the Company maintains control throughout processing, the Company records NGL revenue separately on its consolidated statement of operations and presents the gathering a treating fees as an expense recorded in lease operating expense.
For the majority of the Company’s natural gas sales processing contracts, gathering and treating fees have historically been recorded as an expense in lease operating expense in the statement of operations. The Company modified the presentation of revenues and expenses to include these fees net of revenues effective January 1, 2018 upon adopting ASC 606 - Revenue from Contracts with Customers. For the years ended December 31, 2019 and 2018, $10.5 million and $7.6 million of gathering and treating fees were recognized and recorded as a reduction to natural gas revenues in the consolidated statement of operations, respectively. For the year ended December 31, 2017, $3.4 million of gathering and treating fees were recognized and recorded as part of lease operating expense in the consolidated statement of operations.
Accounts receivable from revenues from contracts with customers
Net accounts receivable include amounts billed and currently due from revenues from contracts with customers of our oil and natural gas production, which had a balance at December 31, 2019 and 2018 of $165.3 million and $87.1 million, respectively, and are presented in “Accounts receivable, net” in the consolidated balance sheets. The increase from December 31, 2018 is primarily due to the Carrizo Acquisition.
Transaction price allocated to remaining performance obligations
For the Company’s product sales that have a contract term greater than one year, it has utilized the practical expedient in Accounting Standards Codification 606-10-50-14, which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these sales contracts, each unit of product generally represents a separate performance obligation; therefore future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.
Prior period performance obligations
The Company records revenue in the month production is delivered to the purchaser. However, settlement statements for sales may not be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. The Company has existing internal controls for its revenue estimation process and related accruals, and any identified differences between its revenue estimates and actual revenue received historically have not been significant.
The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef