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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission file number 001-37907
XOG-20200630_G1.JPG
EXTRACTION OIL & GAS, INC.
(Exact name of registrant as specified in its charter)

Delaware 46-1473923
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
370 17th Street
Suite 5300
Denver, Colorado 80202
(Address of principal executive offices)
(720) 557-8300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer
Non-Accelerated Filer Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The total number of shares of common stock, par value $0.01 per share, outstanding as of August 7, 2020 was 138,343,932.



EXTRACTION OIL & GAS, INC.
TABLE OF CONTENTS

Page
PART I—FINANCIAL INFORMATION
2
2
3
4
5
7

1

PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Debtor-In-Possession)
(Unaudited)
June 30,
2020
December 31,
2019
ASSETS
Current Assets:
Cash and cash equivalents $ 62,553    $ 32,382   
Accounts receivable, net
Trade 48,599    32,009   
Oil, natural gas and NGL sales 48,275    105,103   
Inventory, prepaid expenses and other 34,732    36,702   
Commodity derivative asset 55,667    17,554   
Total Current Assets 249,826    223,750   
Property and Equipment (successful efforts method), at cost:
Proved oil and gas properties 4,707,989    4,530,934   
Unproved oil and gas properties 356,741    524,214   
Wells in progress 137,944    149,733   
Less: accumulated depletion, depreciation, amortization and impairment charges (3,135,748)   (2,985,983)  
Net oil and gas properties 2,066,926    2,218,898   
Gathering systems and facilities, net of accumulated depreciation —    315,777   
Other property and equipment, net of accumulated depreciation 71,912    72,542   
Net Property and Equipment 2,138,838    2,607,217   
Non-Current Assets:
Commodity derivative asset —    13,229   
Other non-current assets 15,692    82,761   
Total Non-Current Assets 15,692    95,990   
Total Assets $ 2,404,356    $ 2,926,957   
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 43,329    $ 190,864   
Revenue payable 5,030    108,493   
Production taxes payable —    115,489   
Commodity derivative liability —    1,998   
Accrued interest payable 4,145    20,625   
Asset retirement obligations —    27,058   
DIP Credit Facility—Note 6 37,500    —   
Credit Facility—Note 6 481,935    —   
Total Current Liabilities 571,939    464,527   
Non-Current Liabilities:
Credit Facility —    470,000   
Senior Notes, net of unamortized debt issuance costs —    1,085,777   
Production taxes payable 1,681    98,740   
Commodity derivative liability —    108   
Other non-current liabilities —    54,579   
Asset retirement obligations —    68,850   
Total Non-Current Liabilities 1,681    1,778,054   
Liabilities Subject to Compromise 1,697,341    —   
Total Liabilities 2,270,961    2,242,581   
Commitments and Contingencies—Note 14
Series A Convertible Preferred Stock, $0.01 par value; 50,000,000 shares authorized, 185,280 issued and outstanding
187,975    175,639   
Stockholders' Equity (Deficit):
Common stock, $0.01 par value; 900,000,000 share authorized; 138,343,432 and 137,657,922 issued and outstanding, respectively
1,336    1,336   
Treasury stock, at cost, 38,859,078 shares
(170,138)   (170,138)  
Additional paid-in capital 2,140,327    2,156,383   
Accumulated deficit (2,026,105)   (1,743,208)  
Total Extraction Oil & Gas, Inc. Stockholders' Equity (Deficit) (54,580)   244,373   
Noncontrolling interest —    264,364   
Total Stockholders' Equity (Deficit) (54,580)   508,737   
Total Liabilities and Stockholders' Equity (Deficit) $ 2,404,356    $ 2,926,957   
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2

EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Debtor-In-Possession)
(Unaudited)

For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Revenues:
Oil sales $ 36,290    $ 185,125    $ 160,509    $ 350,549   
Natural gas sales 16,019    21,692    38,321    57,584   
NGL sales 10,820    15,240    28,013    35,841   
Gathering and compression —    —    1,473    —   
Total Revenues 63,129    222,057    228,316    443,974   
Operating Expenses:
Lease operating expense 22,984    23,608    53,374    45,465   
Midstream operating expenses —    —    3,935    —   
Transportation and gathering 26,306    11,854    49,092    22,219   
Production taxes 4,679    18,580    18,133    36,709   
Exploration and abandonment expenses 62,661    13,287    175,141    19,481   
Depletion, depreciation, amortization and accretion 82,620    118,368    158,670    237,138   
Impairment of long lived assets 960    2,985    1,736    11,233   
Gain on sale of property and equipment —    (97)   —    (319)  
General and administrative expense 25,148    30,740    35,744    58,392   
Other operating expenses 13,209    —    65,784    —   
Total Operating Expenses 238,567    219,325    561,609    430,318   
Operating Income (Loss) (175,438)   2,732    (333,293)   13,656   
Other Income (Expense):
Commodity derivative gain (loss) (69,301)   73,519    193,714    (48,572)  
Loss on deconsolidation of Elevation Midstream, LLC —    —    (73,139)   —   
Reorganization items, net (26,919)   —    (26,919)   —   
Interest expense(1) (20,314)   (18,558)   (41,672)   (31,566)  
Other income 38    851    612    1,994   
Total Other Income (Expense) (116,496)   55,812    52,596    (78,144)  
Income (Loss) Before Income Taxes (291,934)   58,544    (280,697)   (64,488)  
Income tax (expense) benefit —    (15,100)   (2,200)   13,900   
Net Income (Loss) $ (291,934)   $ 43,444    $ (282,897)   $ (50,588)  
Net income attributable to noncontrolling interest —    4,097    6,160    8,072   
Net Income (Loss) Attributable to Extraction Oil & Gas, Inc. (291,934)   39,347    (289,057)   (58,660)  
Adjustments to reflect Series A Preferred Stock dividends and accretion of discount (5,818)   (4,359)   (12,336)   (8,676)  
Net Income (Loss) Available to Common Shareholders, Basic and Diluted (297,752)   34,988    $ (301,393)   $ (67,336)  
Income (Loss) Per Common Share (Note 13)
Basic and diluted $ (2.16)   $ 0.22    $ (2.18)   $ (0.41)  
Weighted Average Common Shares Outstanding
Basic and diluted 138,163    159,410    137,945    165,025   
(1)Absent the automatic stay described in Note 6—Long-Term Debt, interest expense for the three and six months ended June 30, 2020 would have been $23.2 million and $44.5 million, respectively.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3

EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Debtor-In-Possession)
(In thousands)
(Unaudited)
For the Six Months Ended June 30,
2020 2019
Cash flows from operating activities:
Net loss $ (282,897)   $ (50,588)  
Reconciliation of net loss to net cash provided by operating activities:
Depletion, depreciation, amortization and accretion 158,670    237,138   
Abandonment and impairment of unproved properties 169,559    14,993   
Impairment of long lived assets 1,736    11,233   
Gain on sale of property and equipment —    (319)  
Gain on repurchase of 2026 Senior Notes —    (10,486)  
Amortization of debt issuance costs 3,190    2,826   
Non-cash lease expense 8,986    5,058   
Non-cash reorganization items, net 13,270    —   
Contract asset 12,317    —   
Commodity derivatives (gain) loss (193,714)   48,572   
Settlements on commodity derivatives 65,447    (21,918)  
Premiums paid on commodity derivatives —    (2,852)  
Earnings in unconsolidated subsidiaries (480)   (576)  
Loss on deconsolidation of Elevation Midstream, LLC 73,139    —   
Distributions from unconsolidated subsidiaries —    1,990   
Deferred income tax expense (benefit) 2,200    (13,900)  
Stock-based compensation 2,560    27,945   
Changes in current assets and liabilities:
Accounts receivable—trade (16,998)   4,163   
Accounts receivable—oil, natural gas and NGL sales 56,828    5,201   
Inventory, prepaid expenses and other (12,289)   600   
Accounts payable and accrued liabilities 64,981    (2,973)  
Revenue payable (18,924)   (23,553)  
Production taxes payable (23,019)   (3,461)  
Accrued interest payable 15,565    (2,602)  
Asset retirement expenditures (16,173)   (8,047)  
Net cash provided by operating activities 83,954    218,444   
Cash flows from investing activities:
Oil and gas property additions (193,334)   (314,975)  
Sale of property and equipment 11,147    19,982   
Gathering systems and facilities additions, net of cost reimbursements 4,193    (115,337)  
Other property and equipment additions (3,386)   (25,161)  
Investment in unconsolidated subsidiaries (10,033)   (14,962)  
Distributions from unconsolidated subsidiary, return of capital —    1,209   
Net cash used in investing activities (191,413)   (449,244)  
Cash flows from financing activities:
Borrowings under Credit Facility 200,500    245,000   
Repayments under Credit Facility (70,000)   (50,000)  
Borrowings under DIP Credit Facility 15,000    —   
Repurchase of 2026 Senior Notes —    (39,325)  
Repurchase of common stock —    (116,496)  
Payment of employee payroll withholding taxes (120)   (582)  
Dividends on Series A Preferred Stock —    (5,443)  
Debt issuance costs and other financing fees (22)   (1,433)  
Net cash provided by financing activities 145,358    31,721   
Effect of deconsolidation of Elevation Midstream, LLC (7,728)   —   
Increase (decrease) in cash and cash equivalents 30,171    (199,079)  
Cash, cash equivalents at beginning of period 32,382    234,986   
Cash, cash equivalents at end of the period $ 62,553    $ 35,907   
Supplemental cash flow information:
Property and equipment included in accounts payable and accrued liabilities $ 64,751    $ 223,527   
Cash paid for interest $ 26,955    $ 45,648   
Cash paid for reorganization items, net $ 3,787    $ —   
Accretion of beneficial conversion feature of Series A Preferred Stock $ 3,587    $ 3,233   
Preferred Units commitment fees and dividends paid-in-kind $ 6,160    $ 8,073   
Series A Preferred Stock dividends paid-in-kind $ 8,749    $ —   
Derivative unwinds reducing the Credit Facility $ 96,065    $ —   

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4

EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTEREST
(Debtor-In-Possession)
(In thousands)
(Unaudited)
Common Stock Treasury Stock Additional Paid in Capital Accumulated Deficit Extraction Oil & Gas, Inc. Stockholders' Equity (Deficit) Noncontrolling Interest Total Stockholders' Equity (Deficit)
Shares Amount Shares Amount Amount
Balance at January 1, 2020 176,517    $ 1,336    38,859    $ (170,138)   $ 2,156,383    $ (1,743,208)   $ 244,373    $ 264,364    $ 508,737   
Preferred Units commitment fees & dividends paid-in-kind —    —    —    —    (6,160)   —    (6,160)   6,160    —   
Series A Preferred Stock dividends —    —    —    —    (4,748)   —    (4,748)   —    (4,748)  
Accretion of beneficial conversion feature on Series A Preferred Stock —    —    —    —    (1,770)   —    (1,770)   —    (1,770)  
Restricted stock issued, net of tax withholdings and other 234    —    —    —    (35)   —    (35)   —    (35)  
Net income —    —    —    —    —    9,037    9,037    —    9,037   
Effects of deconsolidation of Elevation Midstream, LLC —    —    —    —    —    —    —    (270,524)   (270,524)  
Balance at March 31, 2020 176,751    $ 1,336    38,859    $ (170,138)   $ 2,143,670    $ (1,734,171)   $ 240,697    $ —    $ 240,697   
Stock-based compensation —    —    —    —    2,560    —    2,560    —    2,560   
Series A Preferred Stock dividends —    —    —    —    (4,001)   —    (4,001)   —    (4,001)  
Accretion of beneficial conversion feature on Series A Preferred Stock —    —    —    —    (1,817)   —    (1,817)   —    (1,817)  
Restricted stock issued, net of tax withholdings and other 452    —    —    —    (85)   —    (85)   —    (85)  
Net loss —    —    —    —    —    (291,934)   (291,934)   —    (291,934)  
Balance at June 30, 2020 177,203    $ 1,336    38,859    $ (170,138)   $ 2,140,327    $ (2,026,105)   $ (54,580)   $ —    $ (54,580)  

5

Common Stock Treasury Stock Additional Paid in Capital Accumulated Deficit Extraction Oil & Gas, Inc. Stockholders' Equity (Deficit) Noncontrolling Interest Total Stockholders' Equity (Deficit)
Shares Amount Shares Amount Amount
Balance at January 1, 2019 176,210    $ 1,678    4,543    $ (32,737)   $ 2,153,661    $ (375,788)   $ 1,746,814    $ 147,872    $ 1,894,686   
Preferred Units issuance costs —    —    —    —    —    —    —    (10)   (10)  
Preferred Units commitment fees & dividends paid-in-kind —    —    —    —    (3,975)   —    (3,975)   3,975    —   
Stock-based compensation —    —    —    —    13,008    —    13,008    —    13,008   
Series A Preferred Stock dividends —    —    —    —    (2,721)   —    (2,721)   —    (2,721)  
Accretion of beneficial conversion feature on Series A Preferred Stock —    —    —    —    (1,596)   —    (1,596)   —    (1,596)  
Repurchase of common stock —    (77)   7,824    (32,135)   —    —    (32,212)   —    (32,212)  
Restricted stock issued, net of tax withholdings 270    —    —    —    (454)   —    (454)   —    (454)  
Net loss —    —    —    —    —    (94,032)   (94,032)   —    (94,032)  
Balance at March 31, 2019 176,480    $ 1,601    12,367 $ (64,872)   $ 2,157,923    $ (469,820)   $ 1,624,832    $ 151,837    $ 1,776,669   
Preferred Units issuance costs and discount —    —    —    —    —    —    —    10    10   
Preferred Units commitment fees & dividends paid-in-kind —    —    —    —    (4,098)   —    (4,098)   4,098    —   
Stock-based compensation —    —    —    —    14,957    —    14,957    —    14,957   
Series A Preferred Stock dividends —    —    —    —    (2,722)   —    (2,722)   —    (2,722)  
Accretion of beneficial conversion feature on Series A Preferred Stock —    —    —    —    (1,637)   —    (1,637)   —    (1,637)  
Repurchase of common stock —    (217)   21,685    (84,067)   —    —    (84,284)   —    (84,284)  
Restricted stock issued, net of tax withholdings 108    —    —    —    (128)   —    (128)   —    (128)  
Net income —    —    —    —    —    43,444    43,444    —    43,444   
Balance at June 30, 2019 176,588    $ 1,384    34,052 $ (148,939)   $ 2,164,295    $ (426,376)   $ 1,590,364    $ 155,945    $ 1,746,309   


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6

EXTRACTION OIL & GAS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DEBTOR-IN-POSSESSION)

Note 1—Business and Organization

Extraction Oil & Gas, Inc. (the "Company" or "Extraction") is an independent oil and gas company focused on the acquisition, development and production of oil, natural gas and natural gas liquids (“NGLs”) reserves in the Rocky Mountain region, primarily in the Wattenberg Field of the Denver-Julesburg Basin (the "DJ Basin") of Colorado, as well as the construction and support of midstream assets to gather crude oil, natural gas and water production. As described in the section titled Voluntary Reorganization under Chapter 11 of the Bankruptcy Code below, during the second quarter of 2020, the Company filed for bankruptcy and, as a result, was delisted from the NASDAQ Global Select Market on June 25, 2020 and began trading on the Pink Open Market under the symbol "XOGAQ."

Voluntary Reorganization under Chapter 11 of the Bankruptcy Code

On June 14, 2020 (the “Petition Date”), Extraction and its wholly owned subsidiaries (collectively, the “Debtors”), filed voluntary petitions for relief under chapter 11 ("Chapter 11") of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtor's Chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the caption In re Extraction Oil & Gas., et al. Case No. 20-11548 (CSS).

The Debtors continue to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtors-in-possession under the Bankruptcy Code, the Debtors are authorized to continue to operate as an ongoing business; however, they may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. To that end, to ensure the Company’s ability to continue operating in the ordinary course of business during the pendency of the Chapter 11 Cases and minimize the effect of the Chapter 11 Cases on the Company’s customers and employees, the Company filed with the Bankruptcy Court, and the Bankruptcy Court approved, motions (the “First Day Motions”) seeking a variety of relief. Pursuant to the First Day Motions, the Bankruptcy Court authorized the Company to conduct its business in the ordinary course, including to, among other things, pay employee wages and benefits, continue to operate the cash management system and honor certain prepetition obligations related thereto, pay certain vendors and suppliers for goods and services provided both before and after the Petition Date, and other customary operational and financing relief.

The commencement of a voluntary proceeding in bankruptcy constituted an immediate event of default under the Credit Agreement (as defined in Note 6—Long-Term Debt) and the indentures governing the Company’s Senior Notes (as defined below), resulting in the automatic and immediate acceleration of all of the Company’s debt outstanding under the Credit Agreement and Senior Notes. Accordingly, the Company has classified its outstanding senior note debt as liabilities subject to compromise on its condensed consolidated balance sheet as of June 30, 2020. The Credit Facility (as defined in Note 6—Long-Term Debt) was not classified as liabilities subject to compromise because it is fully secured and is expected to be unimpaired. Please refer to Note 4—Liabilities Subject to Compromise for more information. Pursuant to the Bankruptcy Code and as described in Note 6—Long-Term Debt, the filing of the Chapter 11 Cases automatically stayed most actions against the Debtors, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Debtors’ property.

Restructuring Support Agreement

On June 14, 2020, the Company entered into a Restructuring Support Agreement (the “RSA”) with (i) significant holders of its 7.375% senior unsecured notes due 2024 (the “2024 Senior Notes”) issued pursuant to that certain indenture, dated as of August 1, 2017, by and among Extraction, as issuer, certain guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee (such trustee, “WSFS” and such indenture, the “2024 Senior Notes Indenture”) and (ii) significant holders (such holders, together with the foregoing significant holders under the 2024 Senior Notes, the “Consenting Stakeholders”) of its 5.625% senior unsecured notes due 2026 (the “2026 Senior Notes” and, together with the 2024 Senior Notes, the “Senior Notes”) issued pursuant to that certain indenture, dated as of January 25, 2018, by and among Extraction, the subsidiary guarantors party thereto and WSFS, as trustee (the “2026
7

Senior Notes Indenture” and, together with the 2024 Senior Notes Indenture, the “Senior Notes Indentures”). The RSA contemplates a financial restructuring of the existing indebtedness of, and equity interests in, the Company to be effectuated through a joint Chapter 11 plan of reorganization (the “Restructuring Plan”) that effectuates (a) a sale to, or combination or merger with, a third party involving all or substantially all of the Company’s restructured equity or assets pursuant to one or more transactions that the Company determines, in the exercise of its business judgment, satisfies certain requirements set forth in the RSA (a “Combination Transaction”) or (b) a standalone reorganization (the “Stand-Alone Restructuring”).

Restructuring Plan and Disclosure Statement

On July 30, 2020, the Debtors filed a proposed Restructuring Plan and a related Disclosure Statement (the “Disclosure Statement”) describing the Restructuring Plan and the solicitation of votes to approve the same from certain of the Debtors’ creditors with respect to the Chapter 11 Cases. The hearing to consider approval of the Disclosure Statement is currently scheduled for September 3, 2020.

The Restructuring Plan contemplates, among other things, the following:

holders of claims under the Amended and Restated Credit Agreement, dated as of August 16, 2017, by and among Extraction, the subsidiary guarantors party thereto, the lenders from time to time thereto, and Wells Fargo Bank, National Association, as administrative agent (as may be amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), receiving either: (i) on a dollar for dollar basis, their pro rata share of the revolving loans, term loans, letter-of-credit participations, and other fees under an exit facility or (ii) payment in full in cash from (a) if the Combination Transaction is pursued, (A) the proceeds of the exit facility and/or (B) the consideration from the Combination Transaction or (b) if the Stand-Alone Restructuring occurs, the proceeds of (A) the exit facility and/or (B) the Equity Rights Offering (as defined in the Restructuring Plan);

holders of claims under the Senior Notes Indentures (“Senior Notes Claims”) receiving: (i) in the event of a Combination Transaction, their pro rata share of 97% of (a) the new common stock (the “New Common Stock”) of Extraction, as reorganized pursuant to and under the Restructuring Plan (“Reorganized Extraction”), pro forma for the Combination Transaction, subject to dilution by the Management Incentive Plan (as defined below), the Backstop Commitment Premium (as defined in the RSA), and the New Warrants (as defined below) (such allocation, the “Equity Allocation”) or (b) the cash proceeds from the Combination Transaction (the “Alternative Allocation”); or (ii) in the event of a Stand-Alone Restructuring, their pro rata share of (a) 97% of the Equity Allocation and (b) 97% of the subscription rights to purchase New Common Stock in the Equity Rights Offering;

holders of trade claims receiving: (i) if a Combination Transaction is pursued, express assumption of such allowed trade claims by the partner(s) to the Combination Transaction in accordance with the terms of the Combination Transaction agreement and related documents or (ii) if the Stand-Alone Restructuring is pursued, payment in full on the Plan Effective Date or otherwise in the ordinary course of the Debtors’ business;

holders of claims arising from non-funded debt general unsecured obligations receiving, (i) in the event of a Combination Transaction, their pro rata share of 97% of (a) the Equity Allocation pro forma for the Combination Transaction and/or (b) the Alternative Allocation; or (ii) in the event of a Stand-Alone Restructuring, their pro rata share of 97% of the Equity Allocation.

holders of existing preferred interests in the Company receiving: (i) in the event of a Combination Transaction, their pro rata share of (a) 1.5% of (x) the Equity Allocation pro forma for the Combination Transaction and/or (y) the Alternative Allocation and (b) 50% of new tranche A and tranche B warrants (the “New Warrants”); or (ii) in the event of a Stand-Alone Restructuring, (a) 1.5% of the Equity Allocation, (b) 1.5% of the subscription rights to purchase New Common Stock in the Equity Rights Offering and (c) 50% of the New Warrants;

holders of existing common interests in the Company receiving: (i) in the event of a Combination Transaction, their pro rata share of (a) 1.5% of (x) the Equity Allocation pro forma for the Combination Transaction and/or
8

(y) the Alternative Allocation and (b) 50% of the New Warrants; or (ii) in the event of a Stand-Alone Restructuring, (a) 1.5% of the Equity Allocation, (b) 1.5% of the subscription rights to purchase New Common Stock in the Equity Rights Offering and (c) 50% of the New Warrants;

holders of claims arising from the DIP Credit Facility (as defined in Note 6—Long-Term Debt) receiving cash or such other consideration as the DIP Lenders (as defined in Note 6—Long-Term Debt) agree in their sole discretion;

cash payment in full of all administrative expense claims, priority tax claims, other priority claims, and other secured claims or other such treatment rendering such claims unimpaired, including reinstatement pursuant to section 1124 of the Bankruptcy Code or delivery of the collateral securing any such secured claim and payment of any interest required under section 506(b) of the Bankruptcy Code; and

(i) in the event of a Combination Transaction, customary cash incentives will be provided to the management with an aggregate value that is no less than the value of the MIP Equity (as defined below), or (ii) in the event of a Stand-Alone Restructuring, the Restructuring Plan will provide for the establishment of a post-emergence management incentive plan to be adopted by the New Board (the “Management Incentive Plan”), which will include (a) restricted stock units, options, New Common Shares, or other rights exercisable, exchangeable, or convertible into New Common Shares representing up to 10% of the New Common Shares on a fully diluted and fully distributed basis (the “MIP Equity”) and (b) other terms and conditions customary for similar type equity plans.

Information contained in the Restructuring Plan and the Disclosure Statement is subject to change, whether as a result of amendments or supplements to the Restructuring Plan or Disclosure Statement, third-party actions, or otherwise, and should not be relied upon by any party. There is no guarantee the RSA can be implemented and the Restructuring Plan approved.

The information presented in this section is not a solicitation to accept or reject the Restructuring Plan. Any such solicitation will be made pursuant to and in accordance with the Disclosure Statement and applicable law, including orders of the Bankruptcy Court. Capitalized terms used but not specifically defined in this section have the meanings specified for such terms in the Restructuring Plan and Disclosure Statement, as applicable.

Tax Attributes and Net Operating Loss Carryforwards

The Company has substantial tax net operating loss carryforwards and other tax attributes. Under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), our ability to use these net operating losses and other tax attributes may be limited if the Company experiences an “ownership change”, as determined under Section 382 of the Code. Accordingly, on July 13, 2020, the Company obtained a final order from the Bankruptcy Court that is intended to prevent an ownership change during the pendency of the Chapter 11 Cases and therefore protect the Company's ability to use its tax attributes by imposing certain notice procedures and transfer restrictions on the trading of the Company’s existing common stock and preferred stock.

In general, the order applies to any person or entity that, directly or indirectly, beneficially owns (or would beneficially own as a result of a proposed transfer) at least 4.5% of the Company’s common stock or preferred stock. Such persons are required to notify the Company and the Bankruptcy Court before effecting a transaction involving the Company's common stock or preferred stock, and the Company has the right to seek an injunction to prevent the transaction if it might adversely affect the Company's ability to use its tax attributes. The order also requires any person or entity that, directly or indirectly, beneficially owns at least 50% of the Company’s common stock or preferred stock to notify the Company and the Bankruptcy Court prior to claiming any deduction for worthlessness of the Company's common stock or preferred stock for a tax year ending before the Company’s emergence from chapter 11 protection and the Company has the right to seek an injunction to prevent the transaction if it might adversely affect the Company's ability to use its tax attributes.

Any purchase, sale or other transfer of, or any claim of a deduction for worthlessness with respect to, the Company's common stock or preferred stock in violation of the restrictions of the order is null and void ab initio as an act
9

in violation of a Bankruptcy Court order and would therefore confer no rights on a proposed transferee or such holder, as applicable.

Ability to Continue as a Going Concern

The condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.

As discussed above, the filing of the Chapter 11 Cases constituted an event of default under the Company’s outstanding debt agreements, which resulted in the automatic and immediate acceleration of all of the Company’s debt outstanding under the Credit Agreement and Senior Notes. The Company projects that it will not have sufficient cash on hand or available liquidity to repay such debt. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is contingent upon, among other things, its ability to, subject to the Bankruptcy Court’s approval, implement the Restructuring Plan, successfully emerge from the Chapter 11 Cases and generate sufficient liquidity from the Restructuring to meet its obligations and operating needs. As a result of risks and uncertainties related to (i) the Company’s ability to obtain requisite support for the Restructuring Plan from various stakeholders, and (ii) the effects of disruption from the Chapter 11 Cases making it more difficult to maintain business, financing and operational relationships, the Company has concluded that management’s plans do not alleviate substantial doubt regarding the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Deconsolidation of Elevation Midstream, LLC

Elevation Midstream, LLC ("Elevation"), a Delaware limited liability company, is focused on the construction and operation of gathering systems and facilities to serve the development of acreage in the Company’s Hawkeye and Southwest Wattenberg areas. Midstream assets of Elevation are represented as the gathering systems and facilities line item within the condensed consolidated balance sheets for any periods ended on or prior to December 31, 2019.

During the first quarter of 2020, Elevation's then non-controlling interest owner, which owned 100% of Elevation's preferred stock, per contractual agreement, expanded Elevation's then five member board of managers by four seats and filled them with managers of their choosing (the "Board Expansion"). Because Extraction had the right to appoint only three of the managers of Elevation before and after Board Expansion, Extraction determined the Company had lost voting control of Elevation, and on March 16, 2020 deconsolidated Elevation and began accounting for the entity as an equity method investment. Though Extraction determined control of Elevation was lost under the voting interest model of consolidation, the Company also determined significant influence was not lost due to (1) Extraction owning 100% of the common stock, (2) Extraction appointing three of the nine managers of Elevation and (3) Extraction's continuing involvement in the day-to-day operation of Elevation through a management services agreement. Because Extraction also determined the Company is not the primary beneficiary, Elevation Midstream, LLC is not a variable interest entity.

Extraction elected the fair value option to remeasure the Elevation equity method investment and determined it had no fair value. The Company recorded a $73.1 million loss on deconsolidation of the investment in the condensed consolidated statements of operations for the three months ended March 31, 2020. Also during the three months ended March 31, 2020, Elevation determined certain gathering systems and facilities were impaired by $50.3 million as a result of the abandonment of certain projects. In accordance with Accounting Standards Codification ("ASC") Topic 323-10-35-20: Investments—equity method and joint ventures, Extraction discontinued applying the equity method investment for Elevation as the impairment charge would have reduced the investment below zero.

10

On May 1, 2020, Elevation's board of managers issued 1,530,000,000 common units at a price of $0.01 per unit to certain of Elevation's members other than Extraction (the "Capital Raise"). The Capital Raise caused Extraction's ownership of Elevation to be diluted to less than 0.01%. As a result of the Capital Raise, beginning in May 2020 Extraction began accounting for Elevation under the cost method of accounting. The Company reserves all rights related to actions taken by Elevation’s board of managers.

Note 2—Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company, including its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements included herein were prepared from the records of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the Securities and Exchange Commission rules and regulation for interim financial reporting. In the opinion of management, all adjustments, consisting primarily of normal recurring accruals that are considered necessary for a fair statement of the unaudited condensed consolidated financial information, have been included. However, operating results for the period presented are not necessarily indicative of the results that may be expected for a full year. Interim condensed consolidated financial statements and the year-end balance sheets do not include all of the information and notes required by GAAP for audited annual consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“Annual Report”).

Significant Accounting Policies

The significant accounting policies followed by the Company are set forth in Note 2 to the Company’s consolidated financial statements in its Annual Report and are supplemented by the notes to the unaudited condensed consolidated financial statements in this report.

Beginning after the Petition Date, the Company has applied ASC Topic 852 — Reorganizations in preparing the condensed consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the Chapter 11 Cases' filing date, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues and expenses incurred during the bankruptcy proceedings, including unamortized debt issuance costs associated with debt classified as liabilities subject to compromise, are recorded as reorganization items. In addition, pre-petition obligations that may be impacted by the chapter 11 process have been classified on the condensed consolidated balance sheets as liabilities subject to compromise. These liabilities are reported at the amounts the Company anticipates will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. See below for more information regarding reorganization items.

GAAP requires certain additional reporting for financial statements prepared between the Petition Date and the date that the Company emerges from bankruptcy, including:

Reclassification of pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured to a separate line item in the condensed consolidated balance sheets called liabilities subject to compromise; and

Segregation of reorganization items as a separate line in the condensed consolidated statements of operations outside of income from continuing operations.

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Debtor-In-Possession

The Debtors are currently operating as debtors in possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court has approved motions filed by the Debtors that were designed primarily to mitigate the impact of the Chapter 11 Cases on the Company’s operations, customers and employees. As a result, the Company is able to conduct normal business activities and pay all associated obligations for the period following its bankruptcy filing in the ordinary course of business and is authorized to pay and has paid certain pre-petition obligations, including, among other things, for employee wages and benefits and certain goods and services provided. During the Chapter 11 Cases, transactions outside the ordinary course of business require prior approval of the Bankruptcy Court.

Automatic Stay

Subject to certain specific exceptions under the Bankruptcy Code, the Chapter 11 Cases automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to settlement under the Bankruptcy Code.

Executory Contracts

Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assign, or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors from performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance.

Potential Claims

The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims that are not governmental units are required to file proofs of claim by the bar date of August 14, 2020. As of August 5, 2020, the Debtors' have received approximately 344 proofs of claim, primarily representing general unsecured claims, for an amount of approximately $77.5 million. These claims will be reconciled to amounts recorded in liabilities subject to compromise in the condensed consolidated balance sheet. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate. The Company may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. In addition, as a result of this process, the Company may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable time to complete and likely will continue after the Debtors emerge from bankruptcy.

Financial Statement Classification of Liabilities Subject to Compromise

The accompanying condensed consolidated balance sheets as of June 30, 2020 includes amounts classified as liabilities subject to compromise, which represent liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases. These amounts represent the Debtors’ current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases, and may differ from actual future settlement amounts paid. Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process. The Company will continue to evaluate these liabilities throughout the chapter 11 process and adjust amounts as necessary. Such adjustments may be material. Please refer to Note 4Liabilities Subject to Compromise for more information.
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Reorganization Items, Net

The Debtors, have incurred and will continue to incur significant costs associated with the reorganization, primarily legal and professional fees. The amount of these costs, which since the Petition Date, are being expensed as incurred, are expected to significantly affect the Company’s results of operations. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as reorganization items within the Company's accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2020. Please refer to Note 5—Reorganization Items, Net for more information.

Revenue Contract Balances

The Company had a certain revenue contract with an initial term beginning on November 1, 2016 and continuing until October 31, 2020 after which the contract began an automatic month-to-month renewal unless terminated by either party giving notice at least 180 days prior to the effective termination date but in no event could either party give such notice earlier than November 1, 2020. Based on the accounting treatment pursuant to ASC 606 — Revenue from Contracts with Customers, the contract term would end on April 30, 2021 because it could be terminated by either party with no penalty effective as of such date. The contract term impacted the amount of consideration that could be included in the transaction price. The Company recognizes revenue and invoices customers once its performance obligations have been satisfied. When it becomes probable that the Company will not meet its performance obligations, the transaction price allocated to the performance obligation is constrained in the amount of the estimated unmet performance obligation and recognized as a reduction to revenue in the period in which the transaction price changes. For the three and six months ended June 30, 2020, $3.9 million and $12.3 million, respectively, were recorded as a reduction in the transaction price resulting from unsatisfied performance obligations in the period. On June 12, 2020, the Company and the counterparty to the contract mutually cancelled the contract effective June 30, 2020. As a result of the contract termination, the Company incurred an early termination fee of $9.5 million recorded in accounts payable and accrued liabilities and other operating expenses, though the amount is under review and may be disputed. The remaining performance obligation of $42.3 million recorded in other non-current liabilities, $12.1 million recorded in inventory, prepaid expenses and other and $0.9 million recorded in other non-current assets, were extinguished upon termination of the contract on June 30, 2020 and written down to zero. The Company also recorded a liability of $35.7 million in accounts payable and accrued liabilities representative of cash received in excess of barrels delivered through June 30, 2020 and owed to the counterparty upon termination.

Other Operating Expenses

Other operating expenses were $13.2 million and $65.8 million for the three and six months ended June 30, 2020, respectively. There were no other operating expenses for the three and six months ended June 30, 2019. The amounts in the current year are made up of the following:

$46.8 million loss contingency from an alleged breach in contract stemming from a purported failure to complete the pipeline extensions connecting certain wells to the Badger central gathering facility prior to April 1, 2020. Please see Note 14—Commitments and Contingencies for further details.

$9.5 million early termination penalty for the revenue contract terminated in June 2020. Please see the section Revenue Contract Balance immediately above for further details.

$7.1 million charge to income for expenses related to a workforce reductions in February 2020 and May 2020.

$2.4 million charge to income for expenses related to certain drilling rig standby charges during the second quarter of 2020.

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Impairment of Oil and Gas Properties

For the three and six months ended June 30, 2020, the Company recognized $0.8 million and $1.6 million, respectively, of impairment expense on its proved oil and gas properties related to impairment of assets in its northern field. For the three and six months ended June 30, 2019, the Company recognized $3.0 million and $11.2 million, respectively, of impairment expense on its proved oil and gas properties related to impairment of assets in its northern field. The fair value did not exceed the Company's carrying amount associated with its proved oil and gas properties in its northern field. For the three and six months ended June 30, 2020 and 2019, the Company did not have any proved property impairment in its Core DJ Basin field.

Of the Company's $62.7 million in exploration and abandonment expenses for the three months ended June 30, 2020, $62.6 million was lease abandonment expense. Of the Company's $175.1 million in exploration and abandonment expenses for the six months ended June 30, 2020, $169.6 million was lease abandonment expense. Unproved oil and gas properties consist of costs to acquire unevaluated leases as well as costs to acquire unproved reserves. The Company evaluates significant unproved oil and gas properties for impairment based on remaining lease term, drilling results, reservoir performance, seismic interpretation or future plans to develop acreage. When successful wells are drilled on undeveloped leaseholds, unproved property costs are reclassified to proved properties and depleted on a unit-of-production basis. Impairment expense and lease extension payments for unproved properties are reported in exploration and abandonment expenses in the condensed consolidated statements of operations.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments—Credit Losses. In May 2019, ASU No. 2016-13 was subsequently amended by ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses and ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. ASU No. 2016-13, as amended, affects trade receivables, financial assets and certain other instruments that are not measured at fair value through net income. This ASU replaced the incurred loss approach with an expected loss model for instruments measured at amortized cost and was effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. ASU No. 2016-13 will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company adopted this ASU on January 1, 2020, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, which removes or modifies current fair value disclosures and adds additional disclosures. The update to the guidance is the result of the FASB's test of the principles developed in its disclosure effectiveness project, which is designed to improve the effectiveness of disclosures in the notes to the financial statements. The disclosures that have been removed or modified may be applied immediately with retrospective application. For public entities, the new guidance was effective for fiscal years beginning after December 15, 2019, including interim reporting periods within that reporting period. The Company adopted this ASU on January 1, 2020, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. For public entities, the guidance is effective for fiscal years beginning after December 15, 2019, including interim reporting periods within that reporting period. The Company adopted this ASU on January 1, 2020 which did not have a material impact on the consolidated financial statements and related disclosures as capitalized costs for internal-use software were not material as of June 30, 2020.

Other than as disclosed above or in the Company’s Annual Report, there are no other accounting standards applicable to the Company as of June 30, 2020 and through the date of this filing that would have a material effect on the Company’s unaudited condensed consolidated financial statements and related disclosures that have been issued but not yet adopted by the Company.

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Note 3—Divestitures

February 2020 Divestiture

In February 2020, the Company completed the sale of certain non-operated producing properties for aggregate sales proceeds of approximately $12.2 million, subject to customary purchase price adjustments. No gain or loss was recognized for the February 2020 Divestiture. The Company continues to explore divestitures as part of our ongoing initiative to divest non-strategic assets.

December 2019 Divestiture

In December 2019, the Company completed the sale of certain non-operated producing properties for aggregate sales proceeds of approximately $10.0 million, subject to customary purchase price adjustments. No gain or loss was recognized for the December 2019 Divestiture.

August 2019 Divestiture

In August 2019, the Company completed the sale of certain non-operated producing properties for aggregate sales proceeds of approximately $22.0 million, subject to customary purchase price adjustments. No gain or loss was recognized for the August 2019 Divestiture.

March 2019 Divestiture

In March 2019, the Company completed the sale of its interests in approximately 5,000 net acres of leasehold and producing properties for aggregate sales proceeds of approximately $22.4 million. The effective date for the March 2019 Divestiture was July 1, 2018 with purchase price adjustments calculated as of the closing date of $5.9 million, resulting in net proceeds of $16.5 million. No gain or loss was recognized for the March 2019 Divestiture.

Note 4—Liabilities Subject to Compromise

The Company’s liabilities subject to compromise consisted of the following (in thousands):

June 30,
2020
Accounts payable and accrued liabilities $ 126,729   
Revenue payable 85,417   
Production taxes payable - current 168,380   
Production taxes payable - non-current 21,149   
Asset retirement obligations - current 12,832   
Asset retirement obligations - non-current 77,361   
Accrued interest on debt subject to compromise 32,045   
2024 Senior Notes due May 15, 2024 400,000   
2026 Senior Notes due February 1, 2026 700,189   
Deferred liability 16,528   
Deferred tax liability 2,200   
Rejected contracts 7,734   
Other non-current liabilities 46,777   
Total liabilities subject to compromise $ 1,697,341   

As discussed in Note 1—Business and Organization — Voluntary Reorganization under Chapter 11 of the Bankruptcy Code, since the Petition Date, the Company has been operating as debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with provisions of the Bankruptcy Code. On the accompanying consolidated
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balance sheets, the line item liabilities subject to compromise reflects the expected allowed amount of the prepetition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount. Determination of the value at which liabilities will ultimately be settled cannot be made until the Bankruptcy Court approves the Restructuring Plan. The Company will continue to evaluate the amount and classification of its prepetition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of liabilities subject to compromise may change.

Note 5— Reorganization Items, Net

The Company’s reorganization items, net consisted of the following (in thousands):
For the Three and Six Months Ending
June 30,
2020
Professional fees $ 2,350   
Professional services fees 2,200   
Trustee fees 115   
Damages for rejected contracts 7,734   
DIP Credit Facility fees 1,251   
Write-off of debt issuance costs 13,269   
Total reorganization items, net $ 26,919   

As of June 30, 2020, $9.9 million of reorganization costs, net consisting of professional fees, trustee fees and damages for rejected contracts are accrued and unpaid and are presented in either accounts payable and accrued liabilities or liabilities subject to compromise on the condensed consolidated balance sheets. The write-off of the Senior Notes' debt issuance costs are included in reorganization items, net as the Company believes the underlying debt instruments will be impacted by the Chapter 11 Cases. The write-off of the Senior Notes debt issuance costs is a non-cash reorganization item. For the three and six months ended June 30, 2020, the Company had cash charges related to reorganization items, net of $3.8 million.

Note 6—Long-Term Debt

The Company’s long-term debt consisted of the following (in thousands):
June 30,
2020
December 31,
2019
DIP Credit Facility $ 37,500    $ —   
Credit Facility due August 16, 2022 (or an earlier time as set forth in the Credit Facility) 481,935    470,000   
2024 Senior Notes due May 15, 2024 400,000    400,000   
2026 Senior Notes due February 1, 2026 700,189    700,189   
Total principal 1,619,624    1,570,189   
Unamortized debt issuance costs on Senior Notes (1)
—    (14,412)  
Total debt, prior to reclassification to liabilities subject to compromise 1,619,624    1,555,777   
Less amounts reclassified to liabilities subject to compromise (2)
(1,100,189)   —   
Total debt not subject to compromise (3)
519,435    1,555,777   
Less current portion of long-term debt (4)
(519,435)   —   
Total long-term debt $ —    $ 1,555,777   
(1) As a result of the Chapter 11 Cases and the adoption of ASC 852, the Company wrote off all unamortized debt issuance cost balances to reorganization items, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2020.
(2) Debt subject to compromise includes the principal balances of the Company’s Senior Notes, which are unsecured claims in the Chapter 11 Cases and where the payments are stayed.
(3) Debt not subject to compromise includes all borrowings outstanding under the Credit Facility and DIP Credit Facility which are fully secured claims in the Chapter 11 Cases and are expected to be unimpaired.
(4) Due to uncertainties regarding the outcome of the Chapter 11 Cases, the Company has classified the borrowings outstanding under the Credit Facility and DIP Credit Facility as current liabilities on the condensed consolidated balance sheets as of June 30, 2020.

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Chapter 11 Cases and Effect of Automatic Stay

On June 14, 2020, the Company filed for relief under Chapter 11 of the Bankruptcy Code. The commencement of a voluntary proceeding in bankruptcy constituted an immediate event of default under the Credit Agreement and the indentures governing the Company’s Senior Notes, resulting in the automatic and immediate acceleration of all of the Company’s outstanding debt under the Credit Agreement and Senior Notes. In conjunction with the filing of the Chapter 11 Cases, the Company did not make the $14.8 million interest payment on the Company’s 2024 Senior Notes (as defined below) due on May 15, 2020. Any efforts to enforce payment obligations related to the acceleration of the Company’s debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code. Please refer to Note 1—Business and Organization — Ability to Continue as a Going Concern for more information on the Chapter 11 Cases.

Debtor-in-Possession Financing

On June 16, 2020, in connection with the filing of the Chapter 11 Cases, the Debtors entered into a debtor-in-possession credit agreement on the terms set forth in a Superpriority Senior Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), by and among the Company, as borrower, the Company’s subsidiaries party thereto, as guarantors, the lenders party thereto (the “DIP Lenders”), and Wells Fargo Bank, National Association, as DIP agent and issuing lender, pursuant to which, having been granted the approval of the Bankruptcy Court, the DIP Lenders agree to provide the Company with a superpriority senior secured debtor-in-possession credit facility (as amended, the “DIP Credit Facility”) with loans in an aggregate principal amount not to exceed $50.0 million that, among other things, will be used to finance the ongoing general corporate needs of the Debtors during the course of the Chapter 11 Cases. In addition to the $50.0 million of incremental loans, the DIP Credit Facility contemplates $75.0 million in Credit Facility loans to be rolled over into the DIP Credit Facility, for a total facility size of $125.0 million.

The maturity date of the DIP Credit Agreement is the earliest of (i) December 14, 2020, or the date that is six (6) months after the filing of the Chapter 11 Cases; provided, that such date may be extended to March 14, 2021 with the prior written approval of certain of the DIP Lenders; (ii) the consummation of a sale of all or substantially all of the assets of the Debtors; (iii) the effective date of a plan of reorganization or liquidation in the Chapter 11 Cases; (iv) the entry of an order by the Bankruptcy Court dismissing any of the Chapter 11 Cases or converting such Chapter 11 Cases to a case under chapter 7 of title 11 of the United States Bankruptcy Code; and (v) the date of termination of the DIP Lenders’ commitments and the acceleration of any outstanding extensions of credit, in each case, under the DIP Credit Agreement and in accordance with the interim and final orders entered by the Bankruptcy Court concerning the DIP Credit Agreement. Furthermore, the DIP Credit Facility's interest rate varies similar to the Company's Credit Agreement and was a LIBOR loan with a base interest rate of 1.00% and spread of 5.75% as of June 30, 2020.

The DIP Credit Agreement contains a requirement that the Company provide, on a monthly basis, a rolling thirteen-week operating budget and cash flow forecast (the “Approved Budget”) and not vary from the Approved Budget, subject to a Permitted Variance (defined below). The Approved Budget is, subject to certain exceptions, tested on a weekly basis to measure any variance, on an aggregate basis, for all disbursements made in the prior four-week period. The disbursements actually made in such prior four week period compared to the budgeted aggregate disbursements for such four week period reflected in the most recently delivered Approved Budget may not vary by more than 10% (or a greater amount, to the extent agreed upon by the DIP Agent) (such variance, a “Permitted Variance”). As of June 30, 2020, the Company was in compliance with the covenants under the DIP Credit Facility.

The DIP Credit Agreement contains events of default customary to debtor-in-possession financings, including events related to the Chapter 11 Cases, the occurrence of which could result in the acceleration of the Debtors’ obligation to repay the outstanding indebtedness under the DIP Credit Agreement. The Debtors’ obligations under the DIP Credit Agreement will be secured by a security interest in, and lien on, substantially all present and after acquired property (whether tangible, intangible, real, personal or mixed) of the Debtors and will be guaranteed by all of the Company’s restricted subsidiaries.

On July 20, 2020, the Company, together with its subsidiaries party thereto, certain of the DIP Lenders and Wells Fargo Bank, National Association entered into an amendment to the DIP Credit Agreement (“Amendment No. 1”) to, among other things: (i) extend certain Milestones in the DIP Credit Agreement, (ii) modify the limitation on the amount of undrawn New Money Interim Loans and New Money Final Loans in any borrowing so that the amount
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permitted to be drawn in accordance with the Approved Budget gives effect to the Permitted Variance, (iii) provide for customary prohibitions against unreasonable withholding of approvals with respect to the Approved Budget and the Restructuring Plan on the part of the DIP Lenders and the DIP Agent, and (iv) reaffirm the Debtors’ liens, guaranties and representations and warranties under the DIP Credit Agreement.

As of June 30, 2020, the Company's DIP Credit Facility borrowings were $15.0 million and $22.5 million had been rolled over from the Credit Facility for a total outstanding balance of $37.5 million. The DIP Credit Facility is classified as a current liability on the condensed consolidated balance sheets as of June 30, 2020 as it is fully secured and expected to be unimpaired. On July 20, 2020 the Bankruptcy Court entered the final order approving the DIP Credit Agreement and associated DIP Credit Facility (the “Final DIP Order”) and $52.5 million was rolled over from the Credit Agreement into the DIP Credit Facility. As of July 20, 2020, the DIP Credit Facility had $35.0 million of undrawn availability. On July 27, 2020, the Company drew an additional $20.0 million on the DIP Credit Facility leaving $15.0 million of availability on the facility. However, this availability could be restricted by a minimum liquidity covenant of $10.0 million from unrestricted cash and DIP Credit Facility availability.

Credit Agreement

In August 2017, the Company entered into an amendment and restatement of its existing credit facility to provide aggregate commitments of $1.5 billion with a syndicate of banks, which is subject to a borrowing base (as amended, the "Credit Facility"). The Credit Facility matures on the earlier of (a) August 16, 2022, (b) April 15, 2021, if (and only if) (i) the Series A Preferred Stock have not been converted into common equity or redeemed prior to April 15, 2021 (the Company can redeem the Series A Preferred Stock at any time), and (ii) prior to April 15, 2021, the maturity date of the Series A Preferred Stock has not been extended to a date that is no earlier than six months after August 16, 2022 or (c) the earlier termination in whole of the commitments under the Credit Facility. No principal payments are generally required until the Credit Facility matures or in the event that the borrowing base falls below the outstanding balance.

The amount available to be borrowed under the Company’s Credit Facility is subject to a borrowing base that is redetermined semiannually on each May 1 and November 1, and will depend on the volumes of the Company’s proved oil and gas reserves, commodity prices, estimated cash flows from these reserves and other information deemed relevant by the administrative agent under the Company’s Credit Facility. Additionally, the undrawn balance may be constrained by the Company's quantitative covenants under the Credit Facility, including the current ratio and ratio of consolidated debt less cash balances to its consolidated EBITDAX, at the next required quarterly compliance date.

On April 27, 2020, the lenders under the Credit Facility provided notice to the Company that they had completed the redetermination scheduled to occur on May 1, 2020, and via this redetermination, the borrowing base had been reduced from $950.0 million to $650.0 million. Following this redetermination, the Company had outstanding borrowings of $600.5 million and had standby letters of credit of $49.5 million, which reduce the availability of the undrawn borrowing base.

The commencement of the Chapter 11 Cases constituted a termination event with respect to the Company’s derivative instruments, which permits the counterparties to such derivative instruments to terminate their outstanding hedges. Such termination events are not stayed under the Bankruptcy Code. During June 2020, certain of the lenders under the Credit Agreement elected to terminate their International Swaps and Derivatives Association master agreements and outstanding hedges with the Company for aggregate settlement proceeds of $96.1 million. The proceeds from these terminations were applied to the outstanding borrowings under the Credit Facility.

As is described in the Debtor-in-Possession Financing section above, $22.5 million rolled from the Credit Facility to the DIP Credit Facility on June 16, 2020 and an additional $52.5 million rolled on July 20, 2020 upon court approval of the Final DIP Order. As of June 30, 2020, the Credit Facility had a drawn balance of $481.9 million classified as a current liability on the condensed consolidated balance sheet. As of the date of this filing, the available balance under the Credit Facility was zero.

Principal amounts borrowed on the Credit Facility will be payable on the maturity date. The Company can repay any amounts borrowed prior to the maturity date without any premium or penalty other than customary LIBOR breakage costs. Prior to the filing of the Chapter 11 Cases, amounts repaid under the Credit Facility could be re-borrowed from time to time, subject to the terms of the facility.
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Interest on the Credit Facility is payable at one of the following two variable rates as selected by the Company: a base rate based on the Prime Rate or the Eurodollar rate, based on LIBOR. Either rate is adjusted upward by an applicable margin, based on the utilization percentage of the facility as outlined in the pricing grid below. Additionally, the Credit Facility provides for a commitment fee of 0.375% to 0.50%, depending on borrowing base usage. Due to the bankruptcy filing on June 14, 2020, a default penalty of an additional 2.00% went into effect and increased the Credit Agreement interest rates above those interest rates shown in the grid below. The grid below shows the Base Rate Margin and Eurodollar Margin depending on the applicable Borrowing Base Utilization Percentage (as defined in the Credit Agreement) as of the date of this filing:

Borrowing Base Utilization Grid 
    Eurodollar Base Rate Commitment
Borrowing Base Utilization Percentage Utilization Margin Margin Fee Rate
Level 1 <25% 1.50  % 0.50  % 0.38  %
Level 2 25% < 50% 1.75  % 0.75  % 0.38  %
Level 3 50% < 75% 2.00  % 1.00  % 0.50  %
Level 4 75% < 90% 2.25  % 1.25  % 0.50  %
Level 5 ≥90% 2.50  % 1.50  % 0.50  %

The Credit Agreement contains representations, warranties, covenants, conditions and defaults customary for transactions of this type, including but not limited to: (i) limitations on liens and incurrence of debt covenants; (ii) limitations on dividends, distributions, redemptions and restricted payments covenants; (iii) limitations on investments, loans and advances covenants; and (iv) limitations on the sale of property, mergers, consolidations and other similar transactions covenants. Additionally, the Credit Agreement limits the Company entering into hedges in excess of 85% of its anticipated production volumes.
 
The Credit Agreement also contains financial covenants requiring the Company to comply on the last day of each quarter with a current ratio of its restricted subsidiaries’ current assets (includes availability under the revolving Credit Facility and unrestricted cash and excludes derivative assets) to its restricted subsidiaries’ current liabilities (excludes obligations under the revolving Credit Facility, senior notes and certain derivative liabilities), of not less than 1.0 to 1.0 and to maintain, on the last day of each quarter, a ratio of its restricted subsidiaries’ debt less cash balances to its restricted subsidiaries EBITDAX (EBITDAX is defined as net income adjusted for interest expense, income tax expense/benefit, DD&A, exploration and abandonment expenses as well as certain non-recurring cash and non-cash charges and income (such as stock-based compensation expense, unrealized gains/losses on commodity derivatives and impairment of long-lived assets and goodwill), subject to pro forma adjustments for non-ordinary course acquisitions and divestitures) for the four fiscal quarter periods most recently ended, of not greater than 4.0 to 1.0 as of the last day of such fiscal quarter.

The acceleration of the obligations under the Credit Agreement as of June 14, 2020 resulted in a cross-default and acceleration of the maturity of the Company’s other outstanding long-term debt. The Credit Facility is classified as a current liability on the condensed consolidated balance sheets as of June 30, 2020 as it is fully secured and expected to be unimpaired.

Any borrowings under the Credit Facility are collateralized by substantially all of the assets of the Company and certain of its subsidiaries, including oil and gas properties, personal property and the equity interests of those subsidiaries of the Company. The Company has entered into oil and natural gas hedging transactions with several counterparties that are also lenders under the Credit Facility. The Company’s obligations under these hedging contracts are secured by the collateral securing the Credit Facility. Elevation is an unrestricted subsidiary, which is no longer consolidated or controlled by the Company, and the assets and credit of Elevation are not available to satisfy the debts and other obligations of the Company or its other subsidiaries.
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2024 Senior Notes

In August 2017, the Company issued at par $400.0 million principal amount of 7.375% Senior Notes due May 15, 2024 (the "2024 Senior Notes" and the offering, the "2024 Senior Notes Offering"). The 2024 Senior Notes bear an annual interest rate of 7.375%. The interest on the 2024 Senior Notes is payable on May 15 and November 15 of each year which commenced on November 15, 2017. The Company received net proceeds of approximately $392.6 million after deducting fees.

The Company's 2024 Senior Notes are its senior unsecured obligations and rank equally in right of payment with all of its other senior indebtedness and senior to any of its subordinated indebtedness. The Company's 2024 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of the Company's current subsidiaries and by certain future restricted subsidiaries that guarantees its indebtedness under a Credit Facility (the "2024 Senior Notes Guarantors"). The 2024 Senior Notes are effectively subordinated to all of the Company's secured indebtedness (including all borrowings and other obligations under its Credit Facility) to the extent of the value of the collateral securing such indebtedness, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities (including trade payables) of any of its future subsidiaries that do not guarantee the 2024 Senior Notes.

The 2024 Senior Notes also contain affirmative and negative covenants that, among other things, limit the Company's and the 2024 Senior Notes Guarantors' ability to make investments; declare or pay any dividend or make any other payment to holders of the Company’s or any of its 2024 Senior Notes Guarantors’ equity interests; repurchase or redeem any equity interests of the Company; repurchase or redeem subordinated indebtedness; incur additional indebtedness or issue preferred stock; create liens; sell assets; enter into agreements that restrict dividends or other payments by restricted subsidiaries; consolidate, merge or transfer all or substantially all of the assets of the Company; engage in transactions with the Company's affiliates; engage in any business other than the oil and gas business; and create unrestricted subsidiaries. The indenture governing the 2024 Senior Notes also contains customary events of default. Upon the occurrence of events of default arising from certain events of bankruptcy or insolvency, the 2024 Senior Notes shall become due and payable immediately without any declaration or other act of the trustee or the holders of the 2024 Senior Notes.

The filing of the Chapter 11 Cases resulted in an event of default under and acceleration of the maturity of the Company’s 2024 Senior Notes.

2026 Senior Notes

In January 2018, the Company issued at par $750.0 million principal amount of 5.625% Senior Notes due February 1, 2026 (the "2026 Senior Notes" and together with the 2024 Senior Notes, the "Senior Notes" and the offering of the 2026 Senior Notes, the "2026 Senior Notes Offering"). The 2026 Senior Notes bear an annual interest rate of 5.625%. The interest on the 2026 Senior Notes is payable on February 1 and August 1 of each year commencing on August 1, 2018. The Company received net proceeds of approximately $737.9 million after deducting fees.

The Company's 2026 Senior Notes are the Company's senior unsecured obligations and rank equally in right of payment with all of the Company's other senior indebtedness and senior to any of the Company's subordinated indebtedness. The Company's 2026 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of the Company's current subsidiaries and by certain future restricted subsidiaries that guarantee the Company's indebtedness under a Credit Facility (the "2026 Senior Notes Guarantors"). The 2026 Senior Notes are effectively subordinated to all of the Company's secured indebtedness (including all borrowings and other obligations under its Credit Facility) to the extent of the value of the collateral securing such indebtedness, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities (including trade payables) of certain of the Company's future restricted subsidiaries that do not guarantee the 2026 Senior Notes.

The 2026 Senior Notes also contain affirmative and negative covenants that, among other things, limit the Company's and the 2026 Senior Notes Guarantors' ability to make investments; declare or pay any dividend or make any other payment to holders of the Company's or any of its 2026 Senior Notes Guarantors' equity interests; repurchase or redeem any equity interests of the Company; repurchase or redeem subordinated indebtedness; incur additional
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indebtedness or issue preferred stock; create liens; sell assets; enter into agreements that restrict dividends or other payments by restricted subsidiaries; consolidate, merge or transfer all or substantially all of the assets of the Company; engage in transactions with the Company’s affiliates; engage in any business other than the oil and gas business; and create unrestricted subsidiaries. The indenture governing the 2026 Senior Notes also contains customary events of default. Upon the occurrence of events of default arising from certain events of bankruptcy or insolvency, the 2026 Senior Notes shall become due and payable immediately without any declaration or other act of the trustee or the holders of the 2026 Senior Notes.

The filing of the Chapter 11 Cases resulted in an event of default under and acceleration of the maturity of the Company’s 2026 Senior Notes.

Debt Issuance Costs

Debt issuance costs include origination, legal and other fees incurred in connection with the Company’s Credit Facility and Senior Notes. As of June 30, 2020, the Company had debt issuance costs, net of accumulated amortization, of $0.9 million related to its Credit Facility which has been reflected on the Company's condensed consolidated balance sheets within the line item other non-current assets. As a result of the bankruptcy, the Company wrote-off $13.3 million in unamortized debt issuance costs on the 2024 and 2026 Senior Notes to reorganization items, net in the condensed consolidated statements of operations. For the three months ended June 30, 2020 and 2019, the Company recorded amortization expense related to the debt issuance costs of $1.9 million and $1.3 million, respectively. For the six months ended June 30, 2020 and 2019, the Company recorded amortization expense related to the debt issuance costs of $3.2 million and $2.8 million, respectively.

Interest Incurred on Long-Term Debt

For the three and six months ended June 30, 2020, the Company incurred interest expense on long-term debt of $20.2 million and $42.5 million, respectively, as compared to $22.2 million and $43.0 million, respectively, for the three and six months ended June 30, 2019. Absent the automatic stay, interest expense for the three and six months ended June 30, 2020 would have been $23.2 million and $44.5 million, respectively. For the three and six months ended June 30, 2020, the Company capitalized interest expense on long term debt of $1.9 million and $4.0 million, respectively, as compared to $1.8 million and $3.8 million, respectively, for the three and six months ended June 30, 2019, which has been reflected in the Company’s consolidated financial statements.

Senior Note Repurchase Program

On January 4, 2019, the Board of Directors authorized a program to repurchase up to $100.0 million of the Company’s Senior Notes (the “Senior Notes Repurchase Program”). The Company’s Senior Notes Repurchase Program is subject to restrictions under the Credit Facility and does not obligate it to acquire any specific nominal amount of Senior Notes. For the three and six months ended June 30, 2020, the Company did not repurchase any Senior Notes. As a result of the Chapter 11 Cases, the authorization to repurchase Senior Notes is no longer applicable. For the three and six months ended June 30, 2019, the Company repurchased 2026 Senior Notes with a nominal value of $14.0 million and $49.8 million, respectively, for $10.9 million and $39.3 million, respectively, in connection with the Senior Notes Repurchase Program. Interest expense for the three and six months ended June 30, 2019 included $3.1 million and $10.5 million of gain on debt repurchase, respectively, related to the Company's Senior Notes Repurchase Program.

Note 7—Commodity Derivative Instruments

The Company has entered into commodity derivative instruments, as described below. The Company has utilized swaps, put options and call options to reduce the effect of price changes on a portion of the Company’s future oil and natural gas production.

A swap has an established fixed price. When the settlement price is below the fixed price, the counterparty pays the Company an amount equal to the difference between the settlement price and the fixed price multiplied by the hedged contract volume. When the settlement price is above the fixed price, the Company pays its counterparty an amount equal to the difference between the settlement price and the fixed price multiplied by the hedged contract volume.
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A put option has an established floor price. The buyer of the put option pays the seller a premium to enter into the put option. When the settlement price is below the floor price, the seller pays the buyer an amount equal to the difference between the settlement price and the strike price multiplied by the hedged contract volume. When the settlement price is above the floor price, the put option expires worthless. Some of the Company’s purchased put options have deferred premiums. For the deferred premium puts, the Company agrees to pay a premium to the counterparty at the time of settlement.
A call option has an established ceiling price. The buyer of the call option pays the seller a premium to enter into the call option. When the settlement price is above the ceiling price, the seller pays the buyer an amount equal to the difference between the settlement price and the strike price multiplied by the hedged contract volume. When the settlement price is below the ceiling price, the call option expires worthless.

The Company combines swaps, purchased put options, purchased call options, sold put options and sold call options in order to achieve various hedging strategies. Some examples of the Company’s hedging strategies are collars which include purchased put options and sold call options, three-way collars which include purchased put options, sold put options and sold call options, and enhanced swaps, which include either sold put options or sold call options with the associated premiums rolled into an enhanced fixed price swap. The Company has historically relied on commodity derivative contracts to mitigate its exposure to lower commodity prices.

The objective of the Company’s use of commodity derivative instruments is to achieve more predictable cash flows in an environment of volatile oil and natural gas prices and to manage its exposure to commodity price risk. While the use of these commodity derivative instruments limits the downside risk of adverse price movements, such use may also limit the Company’s ability to benefit from favorable price movements. The Company may, from time to time, add incremental derivatives to hedge additional production, restructure existing derivative contracts or enter into new transactions to modify the terms of current contracts in order to realize the current value of the Company’s existing positions. The Company does not enter into derivative contracts for speculative purposes.

To reduce the impact of fluctuations in oil and natural gas prices on the Company's revenues, the Company has periodically entered into commodity derivative contracts with respect to certain of its oil and natural gas production through various transactions that limit the downside of future prices received. The Company plans to continue its practice of entering into such transactions to reduce the impact of commodity price volatility on its cash flow from operations. Future transactions may include price swaps whereby the Company will receive a fixed price for its production and pay a variable market price to the contract counterparty. Additionally, the Company may enter into collars, whereby it receives the excess, if any, of the fixed floor over the floating rate or pay the excess, if any, of the floating rate over the fixed ceiling price. These hedging activities are intended to support oil and natural gas prices at targeted levels and to manage the Company's exposure to oil and natural gas price fluctuations.

The use of derivatives involves the risk that the counterparties to such instruments will be unable to meet the financial terms of such contracts. The Company’s derivative contracts are currently with one counterparty, who is a lender under the Credit Agreement and the DIP Credit Facility. The Company has netting arrangements with the counterparty that provide for the offset of payables against receivables from separate derivative arrangements with the counterparties in the event of contract termination. The derivative contracts may be terminated by a non-defaulting party in the event of default by one of the parties to the agreement. There is no credit risk related contingent features or circumstances in which the features could be triggered in derivative instruments that are in a net liability position at the end of the reporting period.

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Effect of Chapter 11 Cases

The commencement of the Chapter 11 Cases constituted a termination event with respect to the Company’s derivative instruments, which permits the counterparties to such derivative instruments to terminate their outstanding hedges. Such termination events are not stayed under the Bankruptcy Code. During June 2020, certain of the lenders under the Credit Agreement elected to terminate their International Swaps and Derivatives Association master agreements and outstanding hedges with the Company for aggregate settlement proceeds of $96.1 million. The proceeds from these terminations were applied to the outstanding borrowings under the Credit Facility. After the June 2020 terminations, the remaining active contracts consisted of the items shown in the table immediately below.

The Company’s open commodity derivative contracts by quarter as of June 30, 2020 are summarized below:

9/30/2020 12/31/2020 3/31/2021 6/30/2021
NYMEX WTI Crude Swaps:
Notional volume (Bbl) 1,400,000    1,350,000    750,000    450,000   
Weighted average fixed price ($/Bbl) $ 50.10    $ 50.10    $ 60.07    $ 60.07   
NYMEX WTI Crude Purchased Puts:
Notional volume (Bbl) —    —    150,000    150,000   
Weighted average purchased put price ($/Bbl) $ —    $ —    $ 55.04    $ 55.04   
NYMEX WTI Crude Sold Calls:
Notional volume (Bbl) —    —    150,000    150,000   
Weighted average sold call price ($/Bbl) $ —    $ —    $ 65.00    $ 65.00   
NYMEX WTI Crude Sold Puts:
Notional volume (Bbl) —    —    900,000    600,000   
Weighted average sold put price ($/Bbl) $ —    $ —    $ 43.92    $ 43.88   
NYMEX HH Natural Gas Swaps:
Notional volume (MMBtu) 2,400,000    2,400,000    —    —   
Weighted average fixed price ($/MMBtu) $ 2.76    $ 2.76    $ —    $ —   
NYMEX HH Natural Gas Purchased Puts:
Notional volume (MMBtu) 1,200,000    1,200,000    —    —   
Weighted average fixed basis price ($/MMBtu) $ (0.60)   $ (0.60)   $ —    $ —   

The following tables detail the fair value of the Company’s derivative instruments, including the gross amounts and adjustments made to net the derivative instruments for the presentation in the condensed consolidated balance sheets (in thousands):
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As of June 30, 2020
Location on Balance Sheet Gross Amounts of Recognized Assets and Liabilities
Gross Amounts Offsets in the Balance Sheet(1)
Net Amounts of Assets and Liabilities Presented in the Balance Sheet
Gross Amounts not Offset in the Balance Sheet(2)
Net Amounts(3)
Current assets
$ 61,226    $ (5,559)   $ 55,667    $ —    $ 55,667   
Non-current assets —    —    —    —    —   
Current liabilities
(5,559)   5,559    —    —    —   
Non-current liabilities —    —    —    —    —   
As of December 31, 2019
Location on Balance Sheet Gross Amounts of Recognized Assets and Liabilities
Gross Amounts Offsets in the Balance Sheet(1)
Net Amounts of Assets and Liabilities Presented in the Balance Sheet
Gross Amounts not Offset in the Balance Sheet(2)
Net Amounts(3)
Current assets
$ 48,605    $ (31,051)   $ 17,554    $ —    $ 30,783   
Non-current assets 38,034    (24,805)   13,229    —    —   
Current liabilities
(33,049)   31,051    (1,998)   —    (2,106)  
Non-current liabilities (24,913)   24,805    (108)   —    —   

(1)Agreements are in place that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements.