Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Accounting, Policy [Policy Text Block] |
Interim Financial Statements. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim periods and the appropriate rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the condensed consolidated financial statements do not include all of the information and footnote disclosures required by GAAP for complete financial statements for annual periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
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| Use of Estimates, Policy [Policy Text Block] |
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
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| Subsequent Events, Policy [Policy Text Block] |
Recent Events. The pandemic spread of the disease caused by a new strain of coronavirus (“COVID-19”) and other world events have significantly impacted the price of crude oil and the demand for crude oil beginning in March of 2020. Additionally, average prices for natural gas liquids (“NGLs”) and natural gas decreased for the nine months ended September 30, 2020 compared to the prior year levels, all of which have impacted revenues for the three and nine months ended September 30, 2020. While average crude oil prices have partially recovered during June to September 2020 from recent historical lows in April 2020, the perceived risks and volatility have increased in 2020 to date compared to recent years. Average natural gas prices for the three months ended September 30, 2020 have remained at levels similar to second quarter of 2020 levels. The Company has taken measures to reduce operating costs and capital expenditures in response. Management's assessment is the Company has adequate liquidity to meet the criteria of a going concern as defined under GAAP. See Note 2, Long-Term Debt and Note 12, Subsequent Events, for additional information.
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| New Accounting Pronouncements, Policy [Policy Text Block] |
Accounting Standard Updates effective January 1, 2020
Credit Losses - In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”) and subsequently issued additional guidance on this topic. The new guidance eliminates the probable recognition threshold and broadens the information to consider past events, current conditions and forecasted information in estimating credit losses. The amendment did not have a material impact on our financial statements and did not affect the opening balance of Retained Deficit.
Derivatives and Hedging - In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”) and subsequently issued additional guidance on this topic. The amendments in ASU 2017-12 require an entity to present the earnings effect of the hedging instrument in the same income statement line in which the earnings effect of the hedged item is reported. This presentation enables users of financial statements to better understand the results and costs of an entity’s hedging program. Also, relative to current GAAP, this approach simplifies the financial statement reporting for qualifying hedging relationships. As we do not designate our commodity derivative instruments as qualifying hedging instruments, this amendment did not impact the presentation of the changes in fair values of our commodity derivative instruments on our financial statements.
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| Revenue from Contract with Customer [Policy Text Block] |
Revenue Recognition. We recognize revenue from the sale of crude oil, NGLs, and natural gas when our performance obligations are satisfied. Our contracts with customers are primarily short-term (less than 12 months). Our responsibilities to deliver a unit of crude oil, NGL, and natural gas under these contracts represent separate, distinct performance obligations. These performance obligations are satisfied at the point in time control of each unit is transferred to the customer. Pricing is primarily determined utilizing a particular pricing or market index, plus or minus adjustments reflecting quality or location differentials.
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| Paycheck Protection Program, Policy [Policy Text Block] |
Paycheck Protection Program (“PPP”). On April 15, 2020, the Company received $8.4 million under the U.S. Small Business Administration (“SBA”) PPP. We have elected an accounting policy to analogize International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”) and account for the PPP as a government grant. Under IAS 20, a government grant is recognized when there is reasonable assurance that the Company has complied with the provisions of the grant.
The Company submitted an application to the SBA on August 20, 2020, requesting that the PPP funds received be applied to specific covered payroll and non-payroll costs. As of the date of this filing, we have not received any response from the SBA, including any communication regarding the SBA’s acceptance of our application. Management believes the Company has met all the requirements under the PPP and will not be required to repay any portion of the grant.
We have elected to follow the income approach under IAS 20 and recognize earnings as funds are applied to covered expenses and classify the application of funds as a reduction of the related expense in the Condensed Consolidated Statement of Operations. As a result, we have reduced expenses during the nine months ended September 30, 2020 and classified expense reductions consistent with our PPP fund application request. Within the Condensed Consolidated Statement of Operations, credits to Lease operating expenses of $2.3 million, General and administrative expenses of $4.2 million and reductions to Interest expense, net, of $1.9 million were recognized for the nine months ended September 30, 2020. Should the SBA reject the Company's application on the utilization of the funds, the Company may be required to repay all or a portion of the funds received under the PPP under an amortization schedule through April 2022 with an annual interest rate of 1%.
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| Financing Receivable, Allowance for Credit Losses, Policy for Uncollectible Amounts [Policy Text Block] |
Credit Risk and Allowance for Credit Losses. Our revenue has been concentrated in certain major oil and gas companies. For the nine months ended September 30, 2020, and the year ended December 31, 2019, approximately 56% and 63%, respectively, of our revenue was from major oil and gas companies and a substantial majority of our receivables were from sales with major oil and gas companies. We also have receivables related to joint interest arrangements primarily with mid-size oil and gas companies with a substantial majority of the net receivable balance concentrated in less than ten companies. A loss methodology is used to develop the allowance for credit losses on material receivables to estimate the net amount to be collected. The loss methodology uses historical data, current market conditions and forecasts of future economic conditions. Our maximum exposure at any time would be the receivable balance. The receivables, Joint interest and other, net, reported on the Condensed Consolidated Balance Sheets are reduced for the allowance for credit losses. The roll forward of the allowance for credit losses is as follows (in thousands):
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| Prepaid Expenses and Other Assets [Policy Text Block] |
Prepaid Expenses and Other Assets. The amounts recorded are expected to be realized within one year and the major categories are presented in the following table (in thousands):
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| Property, Plant and Equipment, Policy [Policy Text Block] |
Oil and Natural Gas Properties and Other, Net – At Cost. Oil and natural gas properties and equipment are recorded at cost using the full cost method. There were no amounts excluded from amortization as of the dates presented in the following table (in thousands):
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| Other Noncurrent Assets [Policy Text Block] |
Other Assets (long-term). The major categories are presented in the following table (in thousands):
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| Accrued Liabilities Policy [Policy Text Block] |
Accrued Liabilities. The major categories are presented in the following table (in thousands):
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| Other Noncurrent Liabilities [Policy Text Block] |
Other Liabilities (long-term). The major categories are presented in the following table (in thousands):
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| Escrow Policy [Policy Text Block] |
Black Elk Escrow
$13.9 million of cash was retained in an escrow account and recorded within Restricted Deposits for Asset Retirement Obligations on the Condensed Consolidated Balance Sheet as of September 30, 2020. The funds were received by W&T as a restricted deposit to be used exclusively for payment of certain asset retirement obligations related to properties sold by W&T to Black Elk Energy Offshore Operations, LLC (“Black Elk”) in connection with the liquidation of Black Elk under Chapter 11 of the U.S. Bankruptcy Code. $11.1 million was recorded in Other Liabilities as of September 30, 2020 (included in the above table) as our estimate of the additional asset retirement obligations to be funded from the restricted deposit account. |
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