Quarterly report pursuant to Section 13 or 15(d)

Change in Accounting Principle

v3.23.1
Change in Accounting Principle
 3 Months Ended
Mar. 31, 2023
Accounting Changes and Error Corrections [Abstract]  
Change in Accounting Principle Change in Accounting PrincipleIn the first quarter of 2023, the Company voluntarily changed its method of accounting for oil and natural gas exploration and development activities from the full cost method to the successful efforts method. Accordingly, financial information for prior periods has been recast to reflect retrospective application of the successful efforts method. In general, under successful efforts, exploration costs such as exploratory dry holes, exploratory geophysical and geological costs, delay rentals, unproved leasehold impairments and exploration overhead are expensed as incurred as opposed to being capitalized under the full cost method of accounting. The successful efforts method also provides for the assessment of potential proved oil and gas property impairments by comparing the net book value of proved oil and gas properties to associated estimated undiscounted future net cash flows. If the net book value exceeds the estimated undiscounted future net cash flows, an impairment is recorded to reduce the net book value to fair value. Under the full cost method of accounting, an impairment would be required if the net book value of oil and natural gas properties exceeds a full cost ceiling using an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months. In addition, gains or losses, if applicable, are recognized more frequently on the divestitures of oil and gas properties under the successful efforts method, as opposed to an adjustment to the net book value of the oil and gas properties under the full cost method.
The following tables present the effects of the change to the successful efforts method in the consolidated balance sheets:
As of March 31, 2023
Under
Full Cost		 Changes Under Successful Efforts
(In thousands)
Oil and natural gas properties:
Proved properties $10,647,471  ($1,107,849) $9,539,622 
Accumulated depreciation, depletion, amortization and impairments (6,464,299) 1,924,204  (4,540,095)
Unproved properties 1,744,649  (517,074) 1,227,575 
Total oil and gas properties, net 5,927,821  299,281  6,227,102 
Deferred income taxes 72,323  (26,654) 45,669 
Total assets $6,379,038  $272,627  $6,651,665 
Stockholders’ equity:
Accumulated deficit (649,018) 272,627  (376,391)
Total stockholders' equity 3,377,131  272,627  3,649,758 
Total liabilities and stockholders' equity $6,379,038  $272,627  $6,651,665 
As of December 31, 2022
Under
Full Cost		 Changes Under Successful Efforts
(In thousands)
Oil and natural gas properties:
Proved properties $10,367,478  ($1,099,343) $9,268,135 
Accumulated depreciation, depletion, amortization and impairments (6,343,875) 1,927,269  (4,416,606)
Unproved properties 1,711,306  (485,538) 1,225,768 
Total oil and gas properties, net 5,734,909  342,388  6,077,297 
Total assets $6,146,081  $342,388  $6,488,469 
Deferred income taxes (1)
4,279  2,029  6,308 
Stockholders’ equity:
Accumulated deficit (937,388) 340,359  (597,029)
Total stockholders' equity 3,085,422  340,359  3,425,781 
Total liabilities and stockholders' equity $6,146,081  $342,388  $6,488,469 
(1)    Included in “Other long-term liabilities” in the consolidated balance sheets.
The following tables present the effects of the change to the successful efforts method in the consolidated statements of operations:
Three Months Ended March 31, 2023
Under
Full Cost		 Changes Under Successful Efforts
(In thousands, except per share data)
Operating Expenses:
Exploration $—  $2,232  $2,232 
Depreciation, depletion and amortization 122,900  3,065  125,965 
General and administrative 17,140  10,658  27,798 
Income From Operations 200,145  (15,955) 184,190 
Other Expenses:
Interest expense 19,153  27,153  46,306 
Income Before Income Taxes 213,050  (43,107) 169,943 
Income tax benefit (expense) 75,320  (24,625) 50,695 
Net Income $288,370  ($67,732) $220,638 
Net Income Per Common Share:
Basic $4.68  $3.58 
Diluted $4.66  $3.57 
Three Months Ended March 31, 2022
Under
Full Cost		 Changes Under Successful Efforts
(In thousands, except per share data)
Operating Expenses:
Exploration $—  $1,885  $1,885 
Depreciation, depletion and amortization 102,979  10,664  113,643 
General and administrative 17,121  9,936  27,057 
Income From Operations 419,297  (22,485) 396,812 
Other Expenses:
Interest expense 21,558  25,538  47,096 
Income (Loss) Before Income Taxes 40,221  (48,023) (7,802)
Income tax benefit (expense) (484) 571  87 
Net Income (Loss) $39,737  ($47,452) ($7,715)
Net Income (Loss) Per Common Share:
Basic $0.65  ($0.13)
Diluted $0.64  ($0.13)
The following tables present the effects of the change to the successful efforts method in the consolidated statements of cash flows:
Three Months Ended March 31, 2023
Under
Full Cost		 Changes Under Successful Efforts
(In thousands)
Cash flows from operating activities:
Net income $288,370  ($67,732) $220,638 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 122,900  3,065  125,965 
Amortization of non-cash debt related items, net 1,088  1,543  2,631 
Deferred income tax benefit (76,602) 24,625  (51,977)
Non-cash expense related to share-based awards 757  1,124  1,881 
Net cash provided by operating activities 285,288  (37,375) 247,913 
Cash flows from investing activities:
Capital expenditures (240,043) 35,143  (204,900)
Acquisition of oil and gas properties (8,223) 2,232  (5,991)
Net cash used in investing activities (247,284) 37,375  (209,909)
Net change in cash and cash equivalents (25) —  (25)
Balance, beginning of period 3,395  —  3,395 
Balance, end of period $3,370  $—  $3,370 
Three Months Ended March 31, 2022
Under
Full Cost		 Changes Under Successful Efforts
(In thousands)
Cash flows from operating activities:
Net income (loss) $39,737  ($47,452) ($7,715)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 102,979  10,664  113,643 
Amortization of non-cash debt related items, net 1,716  2,033  3,749 
Non-cash expense related to share-based awards 4,166  1,877  6,043 
Changes in current assets and liabilities:
Accounts payable and accrued liabilities (12,987) (571) (13,558)
Net cash provided by operating activities 281,270  (33,449) 247,821 
Cash flows from investing activities:
Capital expenditures (201,478) 33,208  (168,270)
Acquisition of oil and gas properties (9,409) 241  (9,168)
Net cash used in investing activities (221,939) 33,449  (188,490)
Net change in cash and cash equivalents (5,732) —  (5,732)
Balance, beginning of period 9,882  —  9,882 
Balance, end of period $4,150  $—  $4,150 
The following tables present the effects of the change to the successful efforts method in the consolidated statements of stockholders’ equity:
As of March 31, 2023
Under
Full Cost		 Changes Under Successful Efforts
(In thousands)
Accumulated deficit ($649,018) $272,627  ($376,391)
Total stockholders’ equity $3,377,131  $272,627  $3,649,758 
As of December 31, 2022
Under
Full Cost		 Changes Under Successful Efforts
(In thousands)
Accumulated deficit ($937,388) $340,359  ($597,029)
Total stockholders’ equity $3,085,422  $340,359  $3,425,781