What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-06 · 300 added, 183 removed, 382 unchanged (56% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2021 and December 31, 2020

As of September 30, 2021 and December 31, 2020

(in millions, except share data)

June 30, December 31,

September 30, December 31,

CURRENT ASSETS

9 unchanged sentences

Total property, plant and equipment, net 2,587 2,655

OTHER ASSETS 90 90

OTHER NONCURRENT ASSETS 98 90

TOTAL ASSETS $ 3,342 $ 3,074

2 unchanged sentences

Liabilities associated with assets held for sale 124 —

Fair value of derivative contracts 275 50

Accrued liabilities 299 211

Total current liabilities 957 473

NONCURRENT LIABILITIES

Long-term debt, net 589 597

Fair value of derivative contracts 153 6

Asset retirement obligations 428 547

Other long-term liabilities 163 269

STOCKHOLDERS' EQUITY

Preferred stock ( 20,000,000 shares authorized at $ 0.01 par value) no shares outstanding at June 30, 2021 and December 31, 2020

Common stock ( 200,000,000 shares authorized at $ 0.01 par value) issued shares ( 83,319,660 at June 30, 2021 and December 31, 2020)

Treasury stock ( 1,440,203 shares held at cost at June 30, 2021 and no shares held at December 31, 2020)

Preferred stock ( 20,000,000 shares authorized at $ 0.01 par value) no shares outstanding at September 30, 2021 and December 31, 2020

Common stock ( 200,000,000 shares authorized at $ 0.01 par value) ( 83,367,076 and 83,319,660 shares issued;

80,775,277 and 83,319,660 shares outstanding at September 30, 2021 and December 31, 2020)

Treasury stock ( 2,591,799 shares held at cost at September 30, 2021 and no shares held at December 31, 2020)

Additional paid-in capital 1,286 1,268

Accumulated deficit ( 225 ) ( 123 )

Accumulated other comprehensive loss ( 8 ) ( 8 )

Accumulated other comprehensive gain (loss) 74 ( 8 )

Total equity attributable to common stock 1,052 1,138

5 unchanged sentences

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2021 and 2020

For the three and nine months ended September 30, 2021 and 2020

(dollars in millions, except per share data)

1 unchanged sentence

Three months ended

June 30, Three months ended

June 30, Six months ended

September 30, Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Oil, natural gas and natural gas liquids (NGL) sales $ 478 $ 245 $ 910 $ 675

Net derivative (loss) gain from commodity contracts ( 265 ) ( 4 ) ( 478 ) 75

Trading revenue 48 14 146 59

Oil, natural gas and NGL sales $ 549 $ 312 $ 1,459 $ 987

Net (loss) gain from commodity derivatives ( 125 ) — ( 603 ) 75

Sales of purchased natural gas 95 50 241 109

Electricity sales 65 43 131 75

Other revenue 4 4 27 12

Total revenues 304 276 667 849

Total operating revenues 588 409 1,255 1,258

OPERATING EXPENSES

Operating costs 190 141 523 460

4 unchanged sentences

Exploration expense 2 2 6 9

Trading costs 30 8 91 32

Electricity cost of sales 17 14 41 30

Purchased natural gas expense 53 35 144 67

Electricity generation expenses 29 17 70 47

Transportation costs 11 10 37 31

Other expenses, net 23 37 53 53

Total costs 394 391 830 2,613

OPERATING LOSS ( 90 ) ( 115 ) ( 163 ) ( 1,764 )

NON-OPERATING (LOSS) INCOME

Reorganization items ( 2 ) — ( 4 ) —

Accretion expense 13 10 39 30

Other operating expenses, net 4 12 31 45

Total operating expenses 468 422 1,298 3,035

Gain on asset divestitures ( 2 ) — ( 4 ) —

OPERATING INCOME (LOSS) 122 ( 13 ) ( 39 ) ( 1,777 )

NON-OPERATING (EXPENSES) INCOME

Reorganization items, net ( 1 ) 66 ( 5 ) 66

Interest and debt expense, net ( 14 ) ( 28 ) ( 40 ) ( 200 )

Net (loss) gain on early extinguishment of debt — — ( 2 ) 5

Other non-operating expenses ( 2 ) ( 47 ) ( 1 ) ( 61 )

LOSS BEFORE INCOME TAXES ( 107 ) ( 247 ) ( 196 ) ( 1,992 )

Income tax — — — —

NET LOSS ( 107 ) ( 247 ) ( 196 ) ( 1,992 )

Other non-operating expenses, net — ( 32 ) ( 3 ) ( 93 )

INCOME (LOSS) BEFORE INCOME TAXES 107 ( 7 ) ( 89 ) ( 1,999 )

Income taxes — — — —

NET INCOME (LOSS) 107 ( 7 ) ( 89 ) ( 1,999 )

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

2 unchanged sentences

Net income attributable to noncontrolling interests ( 4 ) ( 22 ) ( 13 ) ( 97 )

NET LOSS ATTRIBUTABLE TO COMMON STOCK $ ( 111 ) $ ( 271 ) $ ( 205 ) $ ( 2,067 )

Net loss attributable to common stock per share

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $ 103 $ ( 29 ) $ ( 102 ) $ ( 2,096 )

Net income (loss) attributable to common stock per share

Basic $ 1.26 $ 2.20 $ ( 1.23 ) $ ( 39.64 )

Diluted $ 1.25 $ 2.20 $ ( 1.23 ) $ ( 39.64 )

Weighted average common shares outstanding

Basic 81.6 49.5 82.6 49.4

Diluted 82.4 49.5 82.6 49.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the three and six months ended June 30, 2021 and 2020

For the three and nine months ended September 30, 2021 and 2020

(dollars in millions)

1 unchanged sentence

Three months ended

June 30, Three months ended

June 30, Six months ended

September 30, Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Net loss $ ( 107 ) $ ( 247 ) $ ( 196 ) $ ( 1,992 )

Net income (loss) $ 107 $ ( 7 ) $ ( 89 ) $ ( 1,999 )

Net income attributable to noncontrolling interests ( 4 ) ( 22 ) ( 13 ) ( 97 )

Comprehensive loss attributable to common stock $ ( 111 ) $ ( 271 ) $ ( 205 ) $ ( 2,067 )

Other comprehensive income:

Actuarial gain associated with pension and postretirement plans (a)

Net prior service cost credit (a)

Comprehensive income (loss) attributable to common stock $ 185 $ ( 29 ) $ ( 20 ) $ ( 2,096 )

(a) No associated tax has been recorded for the components of other comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Equity

For the three and six months ended June 30, 2021

For the three and nine months ended September 30, 2021

(dollars in millions)

Three months ended June 30, 2021 (Successor)

Three months ended September 30, 2021 (Successor)

Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other

Comprehensive

Loss Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total

Balance, March 31, 2021 $ 1 $ — $ 1,270 $ ( 217 ) $ ( 8 ) $ 1,046 $ 35 $ 1,081

Net (loss) income (a)

— — — ( 111 ) — ( 111 ) 4 ( 107 )

(Loss) Income Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total

Balance, June 30, 2021 $ 1 $ ( 45 ) $ 1,273 $ ( 328 ) $ ( 8 ) $ 893 $ 22 $ 915

Net income — — — 103 — 103 4 107

Distributions to noncontrolling interest holders — — — — — — ( 19 ) ( 19 )

Redemption of noncontrolling interest — — 7 — — 7 ( 7 ) —

Share-based compensation — — 4 — — 4 — 4

Repurchases of common stock — ( 39 ) — — — ( 39 ) — ( 39 )

Balance, June 30, 2021 $ 1 $ ( 45 ) $ 1,273 $ ( 328 ) $ ( 8 ) $ 893 $ 22 $ 915

Six months ended June 30, 2021 (Successor)

Issuance of common stock — — 2 — — 2 — 2

Other comprehensive income — — — — 82 82 — 82

Balance, September 30, 2021 $ 1 $ ( 84 ) $ 1,286 $ ( 225 ) $ 74 $ 1,052 $ — $ 1,052

Nine months ended September 30, 2021 (Successor)

Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other

Comprehensive

Loss Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total

(Loss) Income Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total

Balance, December 31, 2020 $ 1 $ — $ 1,268 $ ( 123 ) $ ( 8 ) 1,138 $ 44 $ 1,182

Net (loss) income (a)

— — — ( 205 ) — ( 205 ) 9 ( 196 )

Net (loss) income — — — ( 102 ) — ( 102 ) 13 ( 89 )

Distributions to noncontrolling interest holders — — — — — — ( 50 ) ( 50 )

Redemption of noncontrolling interest — — 7 — — 7 ( 7 ) —

Share-based compensation — — 10 — — 10 — 10

Repurchases of common stock — ( 84 ) — — — ( 84 ) — ( 84 )

Balance, June 30, 2021 $ 1 $ ( 45 ) $ 1,273 $ ( 328 ) $ ( 8 ) $ 893 $ 22 $ 915

(a) For the three and six months ended June 30, 2021, we allocated $ 4 million and $ 9 million of net income to noncontrolling interest holders, respectively, with the remaining $ 111 million and $ 205 million of net loss attributed to holders of our common stock, both of which were included in stockholders' equity on our condensed consolidated balance sheet.

Issuance of common stock — — 2 — — 2 — 2

Other — — ( 1 ) — — ( 1 ) — ( 1 )

Other comprehensive income — — — — 82 82 — 82

Balance, September 30, 2021 $ 1 $ ( 84 ) $ 1,286 $ ( 225 ) $ 74 $ 1,052 $ — $ 1,052

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Equity

For the three and six months ended June 30, 2020

For the three and nine months ended September 30, 2020

(dollars in millions)

Three months ended June 30, 2020 (Predecessor)

Three months ended September 30, 2020 (Predecessor)

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other

2 unchanged sentences

Equity Redeemable Noncontrolling Interests (b)

Balance, March 31, 2020 $ — $ 5,006 $ ( 7,166 ) $ ( 23 ) ( 2,183 ) $ 88 $ ( 2,095 ) $ 816

Balance, June 30, 2020 $ — $ 5,008 $ ( 7,437 ) $ ( 23 ) ( 2,452 ) $ 76 $ ( 2,376 ) $ 828

Net (loss) income (a)

1 unchanged sentence

Distributions to noncontrolling interest holders — — — — — ( 5 ) ( 5 ) ( 22 )

Share-based compensation, net — 2 — — 2 — 2 —

Balance, June 30, 2020 $ — $ 5,008 $ ( 7,437 ) $ ( 23 ) $ ( 2,452 ) $ 76 $ ( 2,376 ) $ 828

Six months ended June 30, 2020 (Predecessor)

Share-based compensation — 2 — — 2 — 2 —

Modification of noncontrolling interest — 138 — — 138 — 138 ( 138 )

Shares cancelled for taxes and other — — — — — — — ( 1 )

Balance, September 30, 2020 $ — $ 5,148 $ ( 7,466 ) $ ( 23 ) $ ( 2,341 ) $ 68 $ ( 2,273 ) $ 692

Nine months ended September 30, 2020 (Predecessor)

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other

7 unchanged sentences

Distributions to noncontrolling interest holders — — — — — ( 37 ) ( 37 ) ( 58 )

Share-based compensation, net — 4 — — 4 — 4 —

Balance, June 30, 2020 $ — $ 5,008 $ ( 7,437 ) $ ( 23 ) $ ( 2,452 ) $ 76 $ ( 2,376 ) $ 828

(a) For the three months ended June 30, 2020, we allocated $ 24 million of net income to noncontrolling interest holders, of which a $ 6 million net loss was included in stockholders' equity and $ 30 million was included in mezzanine equity on our condensed consolidated balance sheet.

The remaining net loss of $ 271 million for the three months ended June 30, 2020 was attributed to holders of our common stock and included in stockholders' equity on our condensed consolidated balance sheet.

For the six months ended June 30, 2020, we allocated $ 75 million of net income to noncontrolling interest holders, of which $ 15 million was included in stockholders' equity and $ 60 million was included in mezzanine equity on our condensed consolidated balance sheet.

The remaining net loss of $ 2,067 million for the six months ended June 30, 2020 was attributed to holders of our common stock and included in stockholders' equity on our condensed consolidated balance sheet.

Share-based compensation — 6 — — 6 — 6 —

Modification of noncontrolling interest — 138 — — 138 — 138 ( 138 )

Balance, September 30, 2020 $ — $ 5,148 $ ( 7,466 ) $ ( 23 ) $ ( 2,341 ) $ 68 $ ( 2,273 ) $ 692

(a) For the three months ended September 30, 2020, we allocated $ 22 million of net income to noncontrolling interest holders, of which a $ 3 million net loss was included in stockholders' equity and $ 25 million was included in mezzanine equity on our condensed consolidated balance sheet.

The remaining net loss of $ 29 million for the three months ended September 30, 2020 was attributed to holders of our common stock and included in stockholders' equity on our condensed consolidated balance sheet.

For the nine months ended September 30, 2020, we allocated $ 97 million of net income to noncontrolling interest holders, of which $ 12 million was included in stockholders' equity and $ 85 million was included in mezzanine equity on our condensed consolidated balance sheet.

The remaining net loss of $ 2,096 million for the nine months ended September 30, 2020 was attributed to holders of our common stock and included in stockholders' equity on our condensed consolidated balance sheet.

(b) Redeemable noncontrolling interests are reported in mezzanine equity on our condensed consolidated balance sheets in Predecessor periods.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our Annual Report on Form 10-K for the year ended December 31, 2020 for more information about our noncontrolling interests in the Ares and Elk Hills Carbon joint ventures.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report for more information about our noncontrolling interests in the Ares and Elk Hills Carbon joint ventures.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three and six months ended June 30, 2021 and 2020

For the three and nine months ended September 30, 2021 and 2020

(dollars in millions)

Successor Predecessor Successor Predecessor

Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30,

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

CASH FLOW FROM OPERATING ACTIVITIES

Net loss $ ( 107 ) $ ( 247 ) $ ( 196 ) $ ( 1,992 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss) $ 107 $ ( 7 ) $ ( 89 ) $ ( 1,999 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization 54 89 160 296

Asset impairments 25 — 28 1,736

Net derivative loss (gain) from commodity contracts 265 4 478 ( 75 )

Net (payments) proceeds from settled commodity derivatives ( 82 ) 5 ( 121 ) 103

Net loss (gain) from commodity derivatives 125 — 603 ( 75 )

Net settlement (payments) proceeds from commodity derivatives ( 99 ) 2 ( 220 ) 105

Net loss (gain) on early extinguishment of debt — — 2 ( 5 )

Amortization of deferred gain — ( 6 ) — ( 39 )

Gain on asset divestiture — — ( 2 ) —

Gain on asset divestitures ( 2 ) — ( 4 ) —

Reorganization items, net (non-cash) — ( 125 ) — ( 125 )

Reorganization items, net (debtor-in-possession financing costs) — 25 — 25

Other non-cash charges to income, net 17 47 46 69

Changes in operating assets and liabilities, net ( 45 ) 23 ( 70 ) 153

Net cash provided by (used in) operating activities 127 ( 135 ) 274 93

Net cash provided by operating activities 182 48 456 141

CASH FLOW FROM INVESTING ACTIVITIES

2 unchanged sentences

Proceeds from asset divestitures 11 — 13 41

Acquisitions ( 53 ) — ( 53 ) —

Other — — ( 1 ) ( 7 )

5 unchanged sentences

Repayments of 2014 Revolving Credit Facility — ( 733 ) — ( 1,315 )

Proceeds from debtor-in-possession facilities — 782 — 782

Repayments of debtor-in-possession facilities — ( 49 ) — ( 49 )

Debtor-in-possession financing costs — ( 25 ) — ( 25 )

Proceeds from Senior Notes — — 600 —

5 unchanged sentences

Repurchases of common stock ( 39 ) — ( 84 ) —

Proceeds from warrants exercised 2 — 2 —

Contribution from noncontrolling interest holders — — — 1

Distributions paid to noncontrolling interest holders ( 19 ) ( 27 ) ( 50 ) ( 95 )

Shares cancelled for taxes — — — ( 1 )

Net cash (used in) provided by financing activities ( 63 ) 199 ( 88 ) 43

Increase in cash 21 49 123 109

Shares cancelled for taxes and other — ( 1 ) — ( 1 )

Net cash used in financing activities ( 56 ) ( 51 ) ( 144 ) ( 8 )

Increase (decrease) in cash 38 ( 4 ) 161 105

Cash—beginning of period 151 126 28 17

3 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

NOTE 1 BASIS OF PRESENTATION

11 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Annual Report).

Certain prior period amounts have been reclassified to conform to the current period presentation.

NOTE 2 ACCOUNTING AND DISCLOSURE CHANGES

Recently Adopted Accounting and Disclosure Changes

On July 15, 2020, we filed voluntary petitions for relief under Chapter 11 of Title 11 of the Bankruptcy Code.

11 unchanged sentences

Other current assets — Other current assets includes the following:

June 30, December 31,

September 30, December 31,

(in millions)

1 unchanged sentence

Receivables for premiums on derivative contracts 7 —

Fair value of derivative contracts 8 —

Prepaid expenses 13 20

Prepaid greenhouse gas allowances 25 —

Other current assets $ 94 $ 63

Other assets - Other assets includes the following:

June 30, December 31,

Other noncurrent assets - Other noncurrent assets includes the following:

September 30, December 31,

(in millions)

3 unchanged sentences

Prepaid power plant maintenance 19 14

Fair value of derivative contracts 2 —

Long-term deposits and other 12 10

Other assets $ 90 $ 90

Other noncurrent assets $ 98 $ 90

Accrued liabilities — Accrued liabilities includes the following:

June 30, December 31,

September 30, December 31,

(in millions)

4 unchanged sentences

Lease liability 8 7

Fair value of derivative contracts 265 50

Deferred premiums on derivative contracts 56 18

2 unchanged sentences

Other long-term liabilities — Other long-term liabilities includes the following:

June 30, December 31,

September 30, December 31,

(in millions)

Asset retirement obligations $ 448 $ 547

Deferred compensation and postretirement $ 97 $ 184

Lease liability 38 35

Fair value of derivative contracts 156 6

Deferred premiums on derivative contracts 14 31

Other long-term liabilities $ 163 $ 269

Oil, natural gas and NGL sales — Disaggregated revenue for sales of oil, natural gas and NGLs to customers includes the following:

Oil, natural gas and NGL sales — Disaggregated revenue for sales of oil, natural gas and natural gas liquids (NGLs) to customers includes the following:

Successor Predecessor Successor Predecessor

Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30,

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Oil, natural gas and NGL sales $ 549 $ 312 $ 1,459 $ 987

Other expenses, net — Other expenses, net includes the following:

Other operating expenses, net — Other operating expenses, net includes the following:

Successor Predecessor Successor Predecessor

Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30,

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

(in millions)

Accretion expense $ 13 $ 10 $ 26 $ 20

Severance and termination costs $ — $ — $ 15 $ —

Deficiency payment on a pipeline delivery contract — — — 20

Idle well fees — — 6 4

Power plant interruption — — — 7

Ad valorem fees — 4 — 4

Other, net 4 8 10 10

Other expenses, net $ 4 $ 12 $ 31 $ 45

Reorganization items, net represent the one-time costs related to our reorganization and consists of the following:

Successor Predecessor Successor Predecessor

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

(in millions)

Unamortized deferred gain and issuance costs, net (a)

$ — $ 125 $ — $ 125

Legal, professional and other, net ( 1 ) ( 34 ) ( 5 ) ( 34 )

Debtor-in-possession financing costs — ( 25 ) — ( 25 )

Total reorganization items, net $ ( 1 ) $ 66 $ ( 5 ) $ 66

(a) Reflects a non-cash adjustment to the carrying amount of our pre-emergence long-term debt to state such amounts at face value upon filing our bankruptcy petition on July 15,2020.

Supplemental Cash Flow Information

We did no t make U.S.

federal and state income tax payments during the three and six months ended June 30, 2021 and 2020.

Interest paid, net of capitalized amounts, totaled $ 2 million and $ 6 million for the three months ended June 30, 2021 and 2020, respectively.

Interest paid, net of capitalized amounts, totaled $ 4 million and $ 51 million for the six months ended June 30, 2021 and 2020, respectively.

Cash paid for reorganization items during the three and six months ended June 30, 2021 was $ 2 million and $ 4 million, respectively, for legal, professional and other fees.

federal and state income tax payments during the three and nine months ended September 30, 2021 and 2020.

Interest paid, net of capitalized amounts, totaled $ 23 million and $ 21 million for the three months ended September 30, 2021 and 2020, respectively.

Interest paid, net of capitalized amounts, totaled $ 27 million and $ 72 million for the nine months ended September 30, 2021 and 2020, respectively.

Cash paid for reorganization items during the three and nine months ended September 30, 2021 was $ 1 million and $ 5 million respectively, for legal, professional and other fees, net.

Cash paid for reorganization items during the three and nine months ended September 30, 2020 was $ 7 million for legal, professional and other fees, net.

Non-cash investing activities included $ 2 million of purchase price adjustments related to the acquisition of the working interests held by Macquarie Infrastructure and Real Assets Inc.

(MIRA) for the three and nine months ended September 30, 2021.

Non-cash financing activities in the three and nine months ended September 30, 2020 included a $ 138 million downward adjustment to mezzanine equity related to a Settlement Agreement with one of our joint venture partners.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report for more on the Settlement Agreement.

Fair Value of Financial Instruments

6 unchanged sentences

Inventories, by category, are as follows:

June 30, December 31,

September 30, December 31,

(in millions)

2 unchanged sentences

Inventories $ 60 $ 61

As of June 30, 2021 and December 31, 2020, our long-term debt consisted of the following:

June 30, December 31,

As of September 30, 2021 and December 31, 2020, our long-term debt consisted of the following:

September 30, December 31,

2021 2020 Interest Rate Maturity

16 unchanged sentences

The letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.

The borrowing base is redetermined around April and October of each year and was most recently set at $ 1.2 billion in May 2021.

The borrowing base is redetermined semi-annually and was reaffirmed at $ 1.2 billion in November 2021.

The borrowing base takes into account the estimated value of our proved reserves, total indebtedness and other relevant factors consistent with customary reserves-based lending criteria.

The amount we are able to borrow under our Revolving Credit Facility is limited to the amount of the commitment described above.

On May 7, 2021, we amended the Revolving Credit Facility to:

• increase our borrowing base from $ 1.167 billion to $ 1.2 billion;

• evidence the reduction in the aggregate commitment of lenders from $ 540 million to $ 492 million;

• increase our capacity to make certain restricted payments, including paying dividends and repurchasing our common stock;

• reduce the minimum amount of hedges that we are required to maintain for a rolling 24 month period on reasonably anticipated forecasted crude oil production from 50 % to 33 % so long as our total net leverage ratio is less than 2.00 :1.00;

• increase our maximum hedging limitation to 85 % (and permit purchased puts and floors up to 100 %) of reasonably anticipated total forecasted production of crude oil, natural gas and NGLs for a 48 -month period.

As of June 30, 2021, our availability under the Revolving Credit facility was as follows:

As of September 30, 2021, our availability under our Revolving Credit Facility was as follows:

September 30,

(in millions)

2 unchanged sentences

Availability $ 359

On January 20, 2021, we completed an offering of $ 600 million in aggregate principal amount of our 7.125 % senior unsecured notes due 2026 (Senior Notes).

On January 20, 2021, we issued $ 600 million in aggregate principal amount of our 7.125 % senior unsecured notes due 2026 (Senior Notes).

The net proceeds of $ 587 million, after $ 13 million of debt issuance costs, were used to repay in full our Second Lien Term Loan and EHP Notes, with the remainder used to repay substantially all of the then outstanding borrowings under our Revolving Credit Facility.

1 unchanged sentence

We recognized a $ 2 million loss on extinguishment of debt, including unamortized debt issuance costs, associated with these repayments.

At June 30, 2021, we were in compliance with all financial and other debt covenants under our Revolving Credit Facility and Senior Notes.

At September 30, 2021, we were in compliance with all financial and other debt covenants under our Revolving Credit Facility and Senior Notes.

Predecessor Note Repurchases

In the first quarter of 2020, we repurchased $ 7 million in face value of our Second Lien Notes for $ 3 million in cash resulting in a pre-tax gain of $ 5 million, including the effect of unamortized deferred gain and issuance costs.

Other than repaying in full our EHP Notes in January 2021, we did not repurchase or repay any notes in the second quarter of 2020 or the six months ended June 30, 2021.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 8 Debt in our 2020 Annual Report for a description of our Second Lien Notes.

We estimate that the fair value of our variable rate debt approximates its carrying value because the interest rate approximates current market rates.

As shown in the table below, we estimated the fair value of our fixed rate Senior Notes based on observable inputs (Level 1) and the fair value of our EHP Notes with no observable inputs (Level 3).

June 30, December 31,

As shown in the table below, we estimate the fair value of our fixed rate Senior Notes based on observable inputs (Level 1) and the fair value of our EHP Notes with no observable inputs (Level 3).

September 30, December 31,

(in millions)

5 unchanged sentences

NOTE 6 ASSETS HELD FOR SALE

In the second quarter of 2021, we entered into agreements to sell our Ventura basin operations.

We expect to receive cash consideration of up to $ 102 million plus additional earn-out consideration that is linked to future commodity prices.

The consideration includes $ 82 million of cash to be paid at closing and up to $ 20 million of potential additional consideration if the buyer does not perform certain abandonment obligations with respect to the divested properties.

During the second quarter of 2021, we entered into agreements to sell our Ventura basin operations.

We expect to receive cash consideration of up to $ 102 million, before purchase price adjustments, plus additional earn-out consideration that is linked to future commodity prices.

The consideration, exclusive of the earn-out, includes $ 82 million of cash to be paid at closing (subject to purchase price adjustments) and up to $ 20 million of potential additional consideration if the buyer does not perform certain abandonment obligations with respect to the divested properties.

The additional consideration is secured by production payments of $ 20 million over a five-year period.

1 unchanged sentence

The closing of the transaction is subject to customary closing conditions, including satisfaction of land and environmental due diligence and third-party consents.

The sale of our Ventura basin operations met the criteria for assets held for sale and is classified as such on our condensed consolidated balance sheet as of June 30, 2021.

The sale of our Ventura basin operations met the criteria for assets held for sale and is classified as such on our condensed consolidated balance sheet as of September 30, 2021.

The amount reported as assets held for sale primarily consists of property, plant and equipment along with associated asset retirement obligations.

These transactions are expected to close in the second half of 2021.

Refer to Note 16 Subsequent Events for information on the closing of this sale.

NOTE 7 ACQUISITIONS AND DIVESTITURES

In April 2017, we entered into a development joint venture with MIRA to develop certain of our oil and natural gas properties in the San Joaquin basin in exchange for a 90 % working interest in the related properties.

In August 2021, we purchased MIRA’s entire working interest share in the conveyed assets for $ 53 million, before purchase prices adjustments and transaction costs.

We accounted for this transaction as an asset acquisition.

Prior to the acquisition, our consolidated results reflect only our 10 % working interest share in the productive wells.

During the three months ended September 30, 2021, we sold unimproved land for $ 11 million in proceeds recognizing a $ 2 million gain.

During the nine months ended September 30, 2021 we sold non-core assets, including unimproved land, for $ 13 million in proceeds recognizing a $ 4 million gain.

During the nine months ended September 30, 2020, we sold royalty interests and a non-core asset for $ 41 million.

These divestitures were accounted for as normal retirements with no gain or loss recognized.

NOTE 8 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

Litigation and Claims

We, or certain of our subsidiaries, are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief.

We are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief.

We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated.

Reserve balances at June 30, 2021 and December 31, 2020 were not material to our condensed consolidated balance sheets as of such dates.

Reserve balances for these items at September 30, 2021 and December 31, 2020 were not material to our condensed consolidated balance sheets as of such dates.

We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters.

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Oxy notified us of the claim under the indemnification provisions of the Separation and Distribution Agreement between us and Oxy.

We are currently evaluating this claim.

We have a commitment of $ 12 million for evaluation and development activities at one of our oil and natural gas properties which is not recorded on our condensed consolidated balance sheets.

In the second quarter of 2021, we entered into an amendment allowing us to accept certain land use requirements which will relieve us from our remaining obligation on or before May 2022.

In September 2021, we accepted the indemnification claim from Oxy and will be challenging the order from BSEE.

NOTE 9 DERIVATIVES

We maintain a commodity hedging program primarily focused on crude oil to help protect our cash flows, margins and capital program from the volatility of commodity prices.

We did not have any derivative instruments designated as accounting hedges as of and for the three and six months ended June 30, 2021 and 2020.

Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to achieve our hedging program goals, even though they are not accounted for as accounting hedges.

Our Revolving Credit Facility requires that we hedge a significant amount of crude oil production for a period of 36 months from the effective date of the facility.

In addition, the Revolving Credit Facility requires that we maintain hedges on production for not less than two years from each quarter end.

Summary of open derivative contracts — We held the following Brent-based crude oil contracts as of June 30, 2021:

We did not have any derivative instruments designated as accounting hedges as of and for the three and nine months ended September 30, 2021 and 2020.

Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to achieve our hedging requirements and program goals, even though they are not accounted for as accounting hedges.

Our Revolving Credit Facility requires us to maintain hedges on a minimum amount of crude oil production, determined semi-annually, of no less than (i) 75 % of our reasonably anticipated oil production from our proved reserves for the first 24 months after the closing of the Revolving Credit Facility on October 27, 2020, and (ii) 50 % of our reasonably anticipated oil production from our proved reserves for a period from the 25th month through the 36th month after the same date.

The Revolving Credit Facility specifies the forms of hedges and prices (which can be prevailing prices) that must be used for a portion of those hedges.

Our Revolving Credit Facility also requires us to maintain acceptable commodity hedges for no less than 50 % of the reasonably anticipated oil production from our proved reserves for at least 24 months following the date of delivery of each reserve report if our leverage ratio is greater than 2.00 :1.00.

If our leverage ratio is less than 2.00 :1.00, then the minimum amount of hedges that we are required to maintain is reduced from 50 % to 33 %.

Currently, we may not hedge more than 85 % of reasonably anticipated total forecasted production of crude oil, natural gas and NGLs from our oil and gas properties for a 48 -month period, except that we may purchase puts and floors up to 100 % of such production.

The percentage of our crude oil production hedged is calculated exclusive of offsetting positions on our derivative contracts.

Summary of open derivative contracts — We held the following Brent-based crude oil contracts as of September 30, 2021:

Barrels per day 37,037 35,347 35,343 34,380 25,167 14,790

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We use combinations of these positions to meet the requirements of our Revolving Credit Facility and to increase the efficacy of our hedging program.

Fair value of derivatives — The following tables present the fair values on a recurring basis (at gross and net) of our outstanding commodity derivatives as of June 30, 2021 and December 31, 2020:

June 30, 2021 (Successor)

Fair value of derivatives — The following tables present the fair values on a recurring basis (at gross and net) of our outstanding commodity derivatives as of September 30, 2021 and December 31, 2020:

September 30, 2021 (Successor)

Classification Gross Amounts at Fair Value Netting Net Fair Value

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Other current assets $ 29 $ ( 21 ) $ 8

Other assets 18 ( 18 ) —

Accrued liabilities ( 271 ) 6 ( 265 )

Other long-term liabilities ( 174 ) 18 ( 156 )

Other noncurrent assets 27 ( 25 ) 2

Current - Fair value of derivative contracts ( 296 ) 21 ( 275 )

Noncurrent - Fair value of derivative contracts ( 178 ) 25 ( 153 )

$ ( 418 ) $ — $ ( 418 )

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Assets (in millions)

Other current assets, net $ 21 $ ( 21 ) $ —

Other assets 63 ( 63 ) —

Accrued liabilities ( 71 ) 21 ( 50 )

Other long-term liabilities ( 69 ) 63 ( 6 )

Other current assets $ 21 $ ( 21 ) $ —

Other noncurrent assets 63 ( 63 ) —

Current - Fair value of derivative contracts ( 71 ) 21 ( 50 )

Noncurrent - Fair value of derivative contracts ( 69 ) 63 ( 6 )

$ ( 56 ) $ — $ ( 56 )

Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented.

We recognized fair value changes on derivative instruments each reporting period in net derivative (loss) gain from commodity contracts on our condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020.

We recognized fair value changes on derivative instruments each reporting period in net (loss) gain from commodity derivatives on our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020.

The changes in fair value result from the relationship between our existing positions, volatility, time to expiration, contract prices and the associated forward curves.

NOTE 10 EARNINGS PER SHARE

Basic and diluted earnings per share (EPS) was calculated using the treasury stock method for the three and six months ended June 30, 2021 and the two-class method for the three and six months ended June 30, 2020, which is required for participating securities.

Certain of our restricted and performance stock unit awards outstanding during the six months ended June 30, 2020 were considered participating securities because they had non-forfeitable dividend rights at the same rate as our pre-emergence common stock.

Our restricted and performance stock unit awards granted during the first half of 2021, as described in Note 13 Stock-Based Compensation , are not considered participating securities since the dividend rights on unvested shares are forfeitable.

Basic and diluted earnings per share (EPS) were calculated using the treasury stock method for the three and nine months ended September 30, 2021 and the two-class method for the three and nine months ended September 30, 2020, which is required for participating securities.

Certain of our restricted and performance stock unit awards outstanding during the nine months ended September 30, 2020 were considered participating securities because they had non-forfeitable dividend rights at the same rate as our pre-emergence common stock.

Our restricted and performance stock unit awards granted subsequent to our emergence from bankruptcy, as described in Note 14 Stock-Based Compensation , are not considered participating securities since the dividend rights on unvested shares are forfeitable.

Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to common stock in determining net income available to common stockholders.

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For diluted EPS, the basic shares outstanding are adjusted by adding potential common shares, if dilutive.

The following table presents the calculation of basic and diluted EPS, for the three and six months ended June 30, 2021 and 2020:

The following table presents the calculation of basic and diluted EPS, for the three and nine months ended September 30, 2021 and 2020:

Successor Predecessor Successor Predecessor

Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30,

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

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Numerator for Basic and Diluted EPS

Net loss $ ( 107 ) $ ( 247 ) $ ( 196 ) $ ( 1,992 )

Net income (loss) $ 107 $ ( 7 ) $ ( 89 ) $ ( 1,999 )

net income attributable to noncontrolling interests

( 4 ) ( 22 ) ( 13 ) ( 97 )

Net loss attributable to common stock $ ( 111 ) $ ( 271 ) $ ( 205 ) $ ( 2,067 )

Denominator for Basic and Diluted EPS

Net income (loss) attributable to common stock 103 ( 29 ) ( 102 ) ( 2,096 )

Modification of noncontrolling interest (a)

Net income (loss) available to common stockholders $ 103 $ 109 $ ( 102 ) $ ( 1,958 )

Denominator for Basic EPS

Weighted-average shares 81.6 49.5 82.6 49.4

Potential Dilutive Common Shares:

Restricted Stock Units 0.4 — — —

Performance Stock Units 0.4 — — —

Denominator for Diluted Earnings per Share

Weighted Average Shares - Diluted 82.4 49.5 82.6 49.4

Basic $ 1.26 $ 2.20 $ ( 1.23 ) $ ( 39.64 )

Diluted $ 1.25 $ 2.20 $ ( 1.23 ) $ ( 39.64 )

Weighted-average anti-dilutive shares 6.4 5.2 5.9 4.9

(a) Modification of noncontrolling interest relates to the deemed redemption of ECR's noncontrolling interest in the Ares JV in the third quarter of 2020.

For more information on the Ares JV and the Settlement Agreement, see Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report.

Diluted earnings per share for the three and nine months ended September 30, 2021 excludes 4.3 million common shares issuable upon exercise of warrants that were out-of-the-money based on the average stock price for those periods.

See Note 15 Equity for information on the terms of the warrants.

Diluted earnings per share for the nine months ended September 30, 2021 excludes 0.9 million weighted-average common shares underlying our Restricted Stock Units and 0.6 million weighted-average common shares underlying our Performance Stock Units.

Our Performance Stock Units have a market condition, and an additional 0.2 million potential common shares did not meet the market-based criteria as of September 30, 2021.

Diluted earnings per share for the three and nine months ended September 30, 2020 excludes 1.25 million potential common shares issuable upon exercise of warrants that were out-of-the-money based on the average stock price for those periods.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report for more information on the terms of these warrants.

Diluted earnings per share for the three months ended September 30, 2020 excludes 0.2 million, 0.5 million and 1.4 million weighted-average common shares underlying our then Restricted Stock Units, Performance Stock Units and stock options, respectively.

Diluted earnings per share for the nine months ended September 30, 2020 calculation excludes 0.6 million, 0.8 million and 1.7 million weighted-average common shares underlying our then Restricted Stock Units, Performance Stock Units, and stock options, respectively.

NOTE 11 PENSION AND POSTRETIREMENT BENEFIT PLANS

The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans for the three and six months ended June 30, 2021 and 2020:

The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans for the three and nine months ended September 30, 2021 and 2020:

Successor Predecessor

Three months ended June 30, Three months ended June 30,

Three months ended September 30, Three months ended September 30,

Benefit Postretirement

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Interest cost 1 — — 1

Expected return on plan assets ( 1 ) — — —

Curtailment gain — ( 1 ) — —

$ 1 $ — $ — $ 2

Successor Predecessor

Six months ended June 30, Six months ended June 30,

Nine months ended September 30, Nine months ended September 30,

Benefit Postretirement

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Expected return on plan assets ( 1 ) — ( 1 ) —

Recognized actuarial loss — — 1 —

Curtailment gain — ( 1 ) $ — $ —

$ 1 $ 4 $ 2 $ 6

We contributed $ 1 million to our defined benefit plans during the three and six months ended June 30, 2021.

We expect to satisfy our minimum funding requirements with contributions of approximately $ 3 million to our defined benefit pension plans during the remainder of 2021.

We did no t make significant contributions to our defined benefit pension plans for the three and six months ended June 30, 2020.

The Coronavirus Aid, Relief, and Economic Security Act was enacted on March 27, 2020 and allowed for the deferral of contributions to a single employer pension plan otherwise due during 2020 to January 1, 2021.

During 2020, we deferred contributions to our defined benefit pension plans of approximately $ 5 million, which we funded in December 2020.

We contributed $ 1 million and $ 2 million to our defined benefit plans during the three and nine months ended September 30, 2021, respectively.

We do not expect to make any significant contributions to our defined benefit pension plans during the remainder of 2021.

We did no t make significant contributions to our defined benefit pension plans for the three and nine months ended September 30, 2020.

During these periods, we deferred contributions to our defined benefit pension plans of approximately $ 5 million under the Coronavirus Aid, Relief, and Economic Security Act, which was enacted on March 27, 2020.

Our 2020 plan contributions were funded in December 2020.

In the third quarter of 2021, we adopted a postretirement benefit design change, which terminated the employer cost sharing for post age 65 retiree health benefits effective as of January 1, 2022.

Our retiree health care benefits provided up to age 65 to current and future retirees who meet certain eligibility requirements were not affected by this change.

As a result of this change, our postretirement medical benefit obligation was remeasured as of September 30, 2021.

The remeasurement resulted in a decrease to the benefit obligation of $ 82 million with a corresponding increase to accumulated other comprehensive income.

The benefit from the change in plan design will be recognized in our statement of operations over the average remaining years of future service for active employees as a component of other non-operating expenses, net.

NOTE 12 INCOME TAXES

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Statutory tax rate changes and other significant or unusual items, if any, are not included in our annual effective income tax rate and are instead recognized as discrete items in the quarter in which they occur.

For the six months ended June 30, 2021 and 2020, we did not provide any current or deferred income tax provision or benefit.

For the nine months ended September 30, 2021 and 2020, we did not provide any current or deferred income tax provision or benefit.

The difference between our statutory tax rate and our effective tax rate of zero for all periods presented includes changes to maintain our full valuation allowance against our net deferred tax assets given our recent and anticipated future earnings trends.

We believe that there is a reasonable possibility that some or all of this allowance could be released in the foreseeable future.

We believe that if oil prices continue at current levels, there is a reasonable possibility that some or all of this valuation allowance could be released in the foreseeable future.

However, the amount of the net deferred tax assets considered realizable depends on the sustained level of profitability that we can achieve.

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The following table presents a summary of our asset impairments:

Successor Predecessor

Six months ended June 30, Six months ended June 30,

Successor Predecessor Successor Predecessor

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

(in millions)

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Unproved properties — — — 228

Other 25 — 28 21

Total $ 25 $ — $ 28 $ 1,736

We recognized a $ 3 million impairment charge during the six months ended June 30, 2021 which was triggered by the change in our business strategy and capital allocation priorities resulting in the abandonment of certain capital projects.

During the six months ended June 30, 2020, we recorded a $ 1.7 billion impairment which was triggered by the sharp drop in commodity prices at the end of the first quarter of 2020.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 13 Asset Impairment in our 2020 Annual Report for a description of our impairment of proved and unproved oil and gas properties and other asset impairments during the six months ended June 30, 2020.

We recorded an impairment charge of $ 25 million during the three months ended September 30, 2021 related to the write-down of a commercial office building located in Bakersfield, California to fair value, which was determined based on a market approach (using Level 3 inputs in the fair value hierarchy).

The decline in value of the commercial office building primarily relates to limited demand for office space of this size and type in the Bakersfield market and general trends in commercial real estate due to the COVID-19 pandemic.

We do not own any other commercial office buildings.

No impairment charges were recorded during the same period in 2020.

We recorded impairment charges of $ 28 million for the nine months ended September 30, 2021 which included the $ 25 million write-down of commercial office space in Bakersfield, California to fair value and a $ 3 million write-off of capitalized costs related to projects which were abandoned.

For the same period in 2020, we recorded an impairment charge of $ 1,736 million due to the sharp drop in commodity prices in March 2020, which included $ 1,487 million related to certain of our proved properties and approximately $ 228 million related to unproved acreage that was no longer included in our development plans at that time.

NOTE 14 STOCK-BASED COMPENSATION

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Shares of our common stock may be withheld by us in satisfaction of tax withholding obligations arising upon the vesting of restricted stock units (RSUs) and performance stock units (PSUs).

Stock-based compensation expense is primarily recorded in general and administrative expenses on our condensed consolidated statements of operations based on job function of the employees receiving the grants as shown in the table below.

Stock-based compensation reported as a component of operating costs is not significant for all periods presented.

Stock-based compensation expense is recorded on our condensed consolidated statements of operations based on job function of the employees receiving the grants as shown in the table below.

Successor Predecessor Successor Predecessor

Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30,

Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

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General and administrative expenses $ 5 $ 1 $ 11 $ 3

For the three and six months ended June 30, 2021 and 2020, we did no t recognize any income tax benefit related to our stock-based compensation.

For the three and six months ended June 30, 2020, we made cash payments of $ 7 million and $ 15 million, for the cash-settled portion of our pre-emergence awards, respectively.

Operating costs 1 — 1 —

Total stock-based compensation expense $ 6 $ 1 $ 12 $ 3

For the three and nine months ended September 30, 2021 and 2020, we did no t recognize any income tax benefit related to our stock-based compensation.

For the three months ended September 30, 2020, we made insignificant cash payments for the cash-settled portion of our pre-emergence awards.

For the nine months ended September 30, 2020, we made cash payments of $ 15 million for the cash-settled portion of our pre-emergence awards.

Management Incentive Plan

Restricted Stock Units

Executives and non-employee directors were granted RSUs during the first half of 2021 which are in the form of, or equivalent in value to, actual shares of our common stock.

Executives and non-employee directors were granted RSUs during the first nine months of 2021 which are in the form of, or equivalent in value to, actual shares of our common stock.

The awards generally vest ratably over three years , with one third of the granted units vesting on each of the first three anniversaries of the applicable date of grant.

RSUs are settled in shares of our common stock at the end of the third year of the three-year vesting period.

The following table sets forth RSU activity for the six months ended June 30, 2021:

The following table sets forth RSU activity for the nine months ended September 30, 2021:

Number of Units Weighted-Average Grant-Date Fair Value

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Cancelled or Forfeited ( 67 ) $ 24.50

Unvested at June 30, 2021 (Successor) 1,144

Unvested at September 30, 2021 (Successor) 1,118

Compensation expense was measured on the date of grant using the quoted market price of our common stock and is recognized on a straight-line basis over the requisite service periods adjusted for actual forfeitures, if any.

As of June 30, 2021, the unrecognized compensation expense for all of our unvested RSUs was approximately $ 25 million and is expected to be recognized over a weighted-average period of approximately three years .

As of September 30, 2021, the unrecognized compensation expense for our unvested RSUs was approximately $ 22 million and is expected to be recognized over a weighted-average remaining service period of approximately two years .

Performance Stock Units

Executives were granted PSUs during the first half of 2021 which contained a market condition.

Executives were granted PSUs during the first nine months of 2021.

PSUs are earned upon the attainment of specified 60 -trading day volume weighted average prices for shares of our common stock generally during a three-year service period commencing on the grant date.

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Earned PSUs generally vest on the third anniversary of the grant date and are settled in shares of our common stock at that time.

The following table sets forth PSU activity for the six months ended June 30, 2021:

The following table sets forth PSU activity for the nine months ended September 30, 2021:

Number of Units Weighted-Average Grant-Date Fair Value

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Cancelled or Forfeited ( 53 ) $ 19.31

Unvested at June 30, 2021 (Successor) 948

Unvested at September 30, 2021 (Successor) 916

The grant date fair value and associated equity compensation expense was measured using a Monte Carlo simulation model which runs a probabilistic assessment of the number of units that will be earned based on a projection of our stock price during the three-year service period.

The range of assumptions used in the Monte Carlo simulation model for the PSUs granted during the first and second quarter of 2021 were as follows:

Second Quarter First Quarter

The range of assumptions used in the Monte Carlo simulation model for the PSUs granted during the first nine months of 2021 were as follows:

Nine months ended September 30, 2021

Expected volatility (a)

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0.16 % - 0.32 %

0.17 % - 0.32 %

Dividend yield — %

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(b) Based on the U.S.

Treasury yield for a three-year term at the grant date.

Treasury yield for a two - or three-year term at the grant date.

Compensation expense is recognized on a straight-line basis over the requisite service periods adjusted for actual forfeitures, if any.

As of June 30, 2021, the unrecognized compensation expense for all of our unvested PSUs was approximately $ 17 million and is expected to be recognized over a weighted-average period of approximately three years .

As of September 30, 2021, the unrecognized compensation expense for our unvested PSUs was approximately $ 14 million and is expected to be recognized over a weighted-average remaining service period of approximately two years .

Long-Term Cash Incentive Awards

On June 30, 2021, we granted $ 16 million of performance cash awards to approximately 500 non-executive employees where half of the award is variable with payouts ranging from 75 % to 150 % of the grant value.

The variable portion of the award is determined based upon the attainment of specified 60 -trading day volume weighted average prices for shares of our common stock preceding each vesting date.

These awards vest over a three-year service period commencing on the grant date and are settled in cash.

The fair value of the awards is adjusted on a quarterly basis for the cumulative change in the value determined using a Monte Carlo simulation model which runs a probabilistic assessment of our stock price during each of the three-year service periods.

The assumptions used in the Monte Carlo simulation model for the performance cash awards as of September 30, 2021 were as follows:

Nine months ended September 30, 2021

Expected volatility (a)

Risk-free interest rate (b)

Dividend yield — %

Forecast period (in years) 2.7

(a) Expected volatility was calculated using a peer group due to our limited trading history since our emergence from bankruptcy.

(b) Based on the U.S.

Treasury yield for the 2.7 year remaining term.

As of September 30, 2021, the unrecognized compensation expense for all of our unvested cash-settled awards was $ 14 million and is expected to be recognized over a weighted-average remaining service period of approximately three years .

The awards forfeited during the three months ended September 30, 2021 were insignificant.

NOTE 15 EQUITY

In May 2021, our Board of Directors authorized a Share Repurchase Program to acquire up to $ 150 million of our common stock through March 31, 2022.

See Note 15 Subsequent Events for more information on an increase to our Share Repurchase Program.

Share Repurchase Program

In 2021, our Board of Directors authorized a Share Repurchase Program to acquire up to $ 250 million of our common stock through March 31, 2022, which was extended through June 30, 2022 as described in Note 16 Subsequent Events .

The repurchases may be effected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, derivative contracts or otherwise in compliance with Rule 10b-18, subject to market conditions.

The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares and our Board of Directors may modify, suspend, or discontinue authorization of the program at any time.

As of June 30, 2021, we repurchased 1.4 million shares of our common stock, at an average price of $ 31.56 per share, through either open market purchases or a Rule 10b5-1 plan at an aggregate cost of $ 45 million.

Shares repurchased were held as treasury stock as of June 30, 2021.

As of September 30, 2021, we repurchased 2.6 million shares of our common stock, at an average price of $ 32.39 per share, through either open market purchases or our Rule 10b5-1 plan for $ 84 million.

Shares repurchased were held as treasury stock as of September 30, 2021.

In accordance with the Plan, we reserved an aggregate 4.4 million shares of our common stock for warrants issued to holders of our Predecessor debt claims.

The warrants are exercisable at an initial exercise price of $ 36 per share for a period of four years beginning October 27, 2020, the effective date of the Plan.

The Warrant Agreement contains customary anti-dilution adjustments in the event of any stock split, reverse stock split, stock dividend, equity awards under a management incentive plan that our Board of Directors may establish pursuant to the Plan (if any) or other distributions.

The warrant holder may elect, in its sole discretion, to pay cash or to exercise on a cashless basis, pursuant to which the holder will not be required to pay cash for shares of common stock upon exercise of the warrant but will instead receive fewer shares.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 15 Equity in our 2020 Annual Report for a description of our warrants.

During the three and nine months ended September 30, 2021, we issued 47,416 shares of common stock and received approximately $ 2 million related to warrants exercised.

In February 2017, we entered into a development joint venture (JV) with Benefit Street Partners (BSP) to develop certain oil and natural gas assets in exchange for a preferred interest in the BSP JV.

BSP invested $ 200 million and was entitled to preferred distributions and, upon receiving cash distributions equal to a predetermined threshold in September 2021, the preferred interest was automatically redeemed in full under the terms of the joint venture agreement.

For the three and nine months ended September 30, 2021, we distributed $ 19 million and $ 50 million, respectively, to BSP.

Upon redemption, we reduced the remaining balance in noncontrolling interest to zero and increased our additional paid-in capital by the same amount.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 6 Joint Ventures in our 2020 Annual Report for more information on our BSP JV.

NOTE 16 SUBSEQUENT EVENTS

In April 2017, we entered into a development joint venture with Macquarie Infrastructure and Real Assets Inc.

(MIRA) to develop certain of our oil and natural gas properties in the San Joaquin basin in exchange for a 90 % working interest in the related properties.

In August 2021, we purchased MIRA’s entire working interest share in the conveyed assets for $ 53 million, before transaction costs.

Prior to the acquisition, our consolidated results reflect only our 10 % working interest share in the productive wells.

Ventura Basin Divestiture

After the quarter-end, closings for the sale of our Ventura basin operations occurred with respect to the majority of the basin's assets and subsequent closings are expected to occur in the following quarters.

With the divestitures closed to date, we realized $ 62 million of cash paid at closing (before purchase price adjustments) and our liability for related asset retirement obligations was approximately $ 100 million which were assumed by the buyer.

See Note 6 Assets Held for Sale for more information regarding this transaction.

On November 11, 2021, our Board of Directors declared a quarterly cash dividend of $ 0.17 per share of common stock.

The dividend is payable to shareholders of record at the close of business on December 1, 2021 and is expected to be paid on December 16, 2021.

This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $ 0.68 , payable in quarterly increments of $ 0.17 per share of common stock.

The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by our Board of Directors each quarter after reviewing our financial performance and position.

The dividend will be recorded as a reduction of additional paid-in capital.

Share Repurchase Program

In August 2021, our Board of Directors authorized an increase to the Share Repurchase Program of $ 100 million to $ 250 million of our common stock through March 31, 2022.

On November 11, 2021, our Board of Directors extended the time period for our Share Repurchase Program through June 30, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements