|3 Months Ended|
Mar. 31, 2020
|Subsequent Events [Abstract]|
In April 2020, the Company early terminated its remaining oil fixed price swaps which represented approximately 6,000 Bbls of oil per day for the remainder of 2020. The early termination resulted in a cash settlement of approximately $40.5 million. Subsequent to this early termination, the Company entered into oil fixed price swap contracts for the second half of 2020 covering 2,000 Bbls per day of oil at a weighted average swap price of $35.60 per Bbl.
In April and May 2020, the Company entered into natural gas fixed price swap contracts for the third quarter of 2020 covering approximately 20,000 MMBtu of natural gas per day at an average swap price of $2.50 per MMBtu and for the fourth quarter of 2020 covering approximately 170,000 MMBtu of natural gas per day at an average swap price of $2.64 per MMBtu.
In April 2020, the Company entered into costless collars for 2021 covering approximately 250,000 MMBtu of natural gas per day at a weighted average floor price of $2.46 per MMBtu and a weighted average ceiling price of $2.81 per MMBtu. The two-way price collars set a floor and ceiling price for the hedged production. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, the Company will cash-settle the difference with the counterparty.
In April 2020, the Company used borrowings under its revolving credit facility to repurchase in the open market approximately $47.6 million aggregate principal amount of its 2023 Notes, 2024 Notes, 2025 Notes, and 2026 Notes for $12.6 million.
Borrowing Base Redetermination
On May 1, 2020, the Company entered into a fifteenth amendment to the Amended and Restated Credit Agreement. As part of the amendment, the Company's borrowing base and elected commitment were reduced from $1.2 billion and $1.0 billion, respectively, to $700.0 million. Additionally, the amendment added a requirement to maintain a ratio of Net Secured Debt to EBITDAX not exceeding 2.00 to 1.00, deferred the requirement to maintain a ratio of Net Funded Debt to EBITDAX of 4.00 to 1.00 until September 31, 2021, and added a limitation on the repurchase of unsecured notes, among other amendments. The Company remained in compliance with its financial covenants under the revolving credit facility following the amendment.
The Tax Benefits Preservation Plan
On April 30, 2020, the board of directors of the Company adopted a tax benefits preservation plan in order to protect against a possible limitation on the Company’s ability to use its tax net operating losses and certain other tax benefits to reduce potential future U.S. federal income tax obligations. As noted in Note 14, if the Company experiences an ownership change, as defined in Section 382, its ability to fully utilize the NOLs and certain other tax benefits would be substantially limited and the timing of the usage of the NOLs and such other benefits could be substantially delayed, which could significantly impair the value of those assets. The Tax Benefits Preservation Plan is intended to prevent against such an ownership change by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef