Document And Entity Information
v3.20.1
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2020
May 11, 2020
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Registrant Name TENGASCO INC  
Entity Central Index Key 0001001614  
Entity File Number 1-15555  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 87-0267438  
Entity Address, Address Line One 8000 E. Maplewood Ave  
Entity Address, Address Line Two Suite 130  
Entity Address, City or Town Greenwood Village  
Entity Address, State or Province CO  
Entity Address, Postal Zip Code 80111  
City Area Code 720  
Local Phone Number 420-4460  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   10,673,539
Title of 12(b) Security Common Stock  
Trading Symbol tgc  
Security Exchange Name NYSE  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  

Condensed Consolidated Balance Sheets
v3.20.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Current    
Cash and cash equivalents $ 3,140 $ 3,055
Accounts receivable 372 557
Inventory 271 415
Prepaid expenses 199 247
Other current assets 4 4
Total current assets 3,986 4,278
Loan fees, net 4 4
Right of use asset - operating leases 26 41
Oil and gas properties, net (full cost accounting method) 4,192 4,385
Other property and equipment, net 121 149
Accounts receivable - noncurrent   65
Total assets 8,329 8,922
Current liabilities    
Accounts payable - trade 132 269
Accrued liabilities 282 164
Lease liabilities - operating leases - current 26 41
Lease liabilities - finance leases - current 56 61
Asset retirement obligation - current 75 75
Total current liabilities 571 610
Lease liabilities - finance leases - noncurrent 26 41
Asset retirement obligation - noncurrent 1,907 1,923
Total liabilities 2,504 2,574
Commitments and contingencies (Note 10)
Preferred stock, 25,000,000 shares authorized:    
Series A Preferred stock, $0.0001 par value, 10,000 shares designated; 0 shares issued and outstanding
Common stock, $.001 par value, authorized 100,000,000 shares, 10,666,211 and 10,658,775 shares issued and outstanding 11 11
Additional paid-in capital 58,297 58,293
Accumulated deficit (52,483) (51,956)
Total stockholders' equity 5,825 6,348
Total liabilities and stockholders' equity $ 8,329 $ 8,922

Condensed Consolidated Balance Sheets (Parenthetical)
v3.20.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2020
Dec. 31, 2019
Preferred stock, shares authorized 25,000,000 25,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 10,666,211 10,658,775
Common stock, shares outstanding 10,666,211 10,658,775
Series A Preferred Stock [Member]    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000 10,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0

Condensed Consolidated Statements Of Operations
v3.20.1
Condensed Consolidated Statements Of Operations - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Revenues    
Revenues $ 963 $ 1,171
Cost and expenses    
Production costs and taxes 964 779
Depreciation, depletion, and amortization 160 184
General and administrative 366 346
Total cost and expenses 1,490 1,309
Net loss from operations (527) (138)
Other income (expense)    
Interest expense (2) (3)
Gain on sale of assets 2 45
Total other income   42
Net loss from operations before income tax (527) (96)
Deferred income tax benefit (expense)
Net loss $ (527) $ (96)
Net loss per share    
Basic and fully diluted $ (0.05) $ (0.01)
Shares used in computing earnings per share    
Basic and fully diluted 10,666,129 10,644,197
Oil And Gas Proeprties [Member]    
Revenues    
Revenues $ 963 $ 1,171

Condensed Consolidated Statements Of Cash Flows
v3.20.1
Condensed Consolidated Statements Of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Operating activities    
Net loss $ (527) $ (96)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation, depletion, and amortization 160 184
Amortization of loan fees-interest expense   2
Accretion on asset retirement obligation 31 35
Gain on asset sales (2) (45)
Stock based compensation 4 4
Changes in assets and liabilities:    
Accounts receivable 250 (75)
Inventory and other assets 192 (55)
Accounts payable (54) 50
Accrued and other current liabilities 123 (15)
Settlement on asset retirement obligation (3) (7)
Net cash provided by (used in) operating activities 174 (18)
Investing activities    
Additions to oil and gas properties (96) (11)
Proceeds from sale of oil and gas properties 20  
Additions to other property and equipment (5)  
Proceeds from sale of materials inventory   150
Net cash provided by (used in) investing activities (81) 139
Financing activities    
Repayments of borrowings (8) (12)
Proceeds from borrowings
Net cash used in financing activities (8) (12)
Net change in cash and cash equivalents 85 109
Cash and cash equivalents, beginning of period 3,055 3,115
Cash and cash equivalents, end of period 3,140 3,224
Supplemental cash flow information:    
Cash interest payments 2 1
Supplemental non-cash investing and financing activities:    
Financed company vehicles
Capital expenditures included in accounts payable and accrued liabilities

Changes In Stockholders' Equity
v3.20.1
Changes In Stockholders' Equity - USD ($)
$ in Thousands
Common Stock [Member]
Paid-In Capital [Member]
Accumulated Deficit [Member]
Total
Balance, value at Dec. 31, 2018 $ 11 $ 58,276 $ (51,520) $ 6,767
Balance, shares at Dec. 31, 2018 10,639,290      
Net income (loss)     (96) (96)
Compensation expense related to stock issued   4   4
Compensation expense related to stock issued, shares 4,962      
Balance, shares at Mar. 31, 2019 10,644,252      
Balance, value at Mar. 31, 2019 $ 11 58,280 (51,616) 6,675
Balance, value at Dec. 31, 2019 $ 11 58,293 (51,956) $ 6,348
Balance, shares at Dec. 31, 2019 10,658,775     10,658,775
Net income (loss)     (527) $ (527)
Compensation expense related to stock issued   4   $ 4
Compensation expense related to stock issued, shares 7,436      
Balance, shares at Mar. 31, 2020 10,666,211     10,666,211
Balance, value at Mar. 31, 2020 $ 11 $ 58,297 $ (52,483) $ 5,825

Description Of Business And Significant Accounting Policies
v3.20.1
Description Of Business And Significant Accounting Policies
3 Months Ended
Mar. 31, 2020
Description Of Business And Significant Accounting Policies [Abstract]  
Description Of Business And Significant Accounting Policies

(1)  Description of Business and Significant Accounting Policies



Tengasco, Inc. (the “Company”) is a Delaware corporation.  The Company is in the business of exploration for and production of oil and natural gas.  The Company’s primary area of exploration and production is in Kansas. 



Basis of Presentation



The accompanying unaudited condensed consolidated financial statements as of March 31, 2020 and March 31, 2019 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The condensed consolidated balance sheet as of December 31, 2019 is derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP.  The Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included as required by Regulation S-X, Rule 10-01.  Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.



Principles of Consolidation



The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany transactions and balances.



Use of Estimates



The accompanying condensed consolidated financial statements are prepared in conformity with U.S. GAAP which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Significant estimates include reserve quantities and estimated future cash flows associated with proved reserves, which significantly impact depletion expense and potential impairments of oil and natural gas properties, income taxes and the valuation of deferred tax assets, stock-based compensation, and commitments and contingencies.  We analyze our estimates based on historical experience and various other assumptions that we believe to be reasonable. While we believe that our estimates and assumptions used in preparation of the condensed consolidated financial statements are appropriate, actual results could differ from those estimates and assumptions.



Revenue Recognition



The Company identifies the contracts with each of its customers and the separate performance obligations associated with each of these contracts.  Revenues are recognized when the performance obligations are satisfied and when control of goods or services are transferred to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.



Crude oil is sold on a month-to-month contract at a price based on an index price from the purchaser, net of differentials.  Crude oil that is produced is stored in storage tanks.  The Company will contact the purchaser and request it to pick up the crude oil from the storage tanks.  When the purchaser picks up the crude from the storage tanks, control of the crude transfers to the purchaser, the Company’s contractual obligation is satisfied, and revenues are recognized.  The sales of oil represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others.  When selling oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports revenues on a net basis to the Company.  Fees and other deductions incurred prior to transfer of control are recorded as production costs.  Revenues are reported net of fees and other deductions incurred after transfer of control.



The Company operates certain salt water disposal wells, some of which accept water from third parties.  The contracts with the third parties primarily require a flat monthly fee for the third parties to dispose water into the wells.  In some cases, the contract is based on a per barrel charge to dispose water into the wells.  There is no requirement under the contracts for these third parties to use these wells for their water disposal.  If the third parties do dispose water into the Company operated wells during a given month, the Company has met its contractual obligations and revenues are recognized for that month.



The following table presents the disaggregated revenue by commodity for the three months ended March 31, 2020 and 2019 (in thousands):  









 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended



 

March 31,



 

2020

 

2019



 

 

 

 

 

 

Crude oil

 

$

959 

 

$

1,164 

Saltwater disposal fees

 

 

 

 

Total

 

$

963 

 

$

1,171 



There were no natural gas imbalances at March 31, 2020 or December 31, 2019. 



Cash and Cash Equivalents



Cash and cash equivalents include temporary cash investments with a maturity of ninety days or less at date of purchase.



Inventory



Inventory consists of crude oil in tanks and is carried at lower of cost or market value.  The cost value component of the oil inventory is calculated using the average cost per barrel for the three months ended March 31, 2020 and December 31, 2019.  These costs include production costs and taxes.  At December 31, 2019, the cost component was used to value oil inventory.  The market value component is calculated using the average March 2020 and December 2019 oil sales prices received by the Company.  At March 31, 2020, the market component was used to value oil inventory.  At March 31, 2020 and December 31, 2019, inventory consisted of the following (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Oil – carried at lower of cost or market

 

$

271 

 

$

415 

Total inventory

 

$

271 

 

$

415 



Full Cost Method of Accounting



The Company follows the full cost method of accounting for oil and gas property acquisition, exploration, and development activities.  Under this method, all costs incurred in connection with acquisition, exploration, and development of oil and gas reserves are capitalized.  Capitalized costs include lease acquisitions, seismic related costs, certain internal exploration costs, drilling, completion, and estimated asset retirement costs. The capitalized costs of oil and gas properties, plus estimated future development costs relating to proved reserves and estimated asset retirement costs which are not already included, net of estimated salvage value, are amortized on the unit-of-production method based on total proved reserves. The Company has determined its reserves based upon reserve reports provided by LaRoche Petroleum Consultants Ltd. since 2009. The costs of unproved properties are excluded from amortization until the properties are evaluated, subject to an annual assessment of whether impairment has occurred.  The Company had $0 in unevaluated properties as of March 31, 2020 and at December 31, 2019.  Proceeds from the sale of oil and gas properties are accounted for as reductions to capitalized costs unless such sales cause a significant change in the relationship between costs and the estimated value of proved reserves, in which case a gain or loss is recognized.



At the end of each reporting period, the Company performs a “ceiling test” on the value of the net capitalized cost of oil and gas properties. This test compares the net capitalized cost (capitalized cost of oil and gas properties, net of accumulated depreciation, depletion and amortization and related deferred income taxes) to the present value of estimated future net revenues from oil and gas properties using an average price (arithmetic average of the beginning of month prices for the prior 12 months) and current cost discounted at 10%  plus cost of properties not being amortized and the lower of cost or estimated  fair value of unproven properties included in the cost being amortized (ceiling). If the net capitalized cost is greater than the ceiling, a write-down or impairment is required.  A write-down of the carrying value of the asset is a non-cash charge that reduces earnings in the current period.  Once incurred, a write-down may not be reversed in a later period.  The Company did not record any impairment of its oil and gas properties during the three months ended March 31, 2020 and 2019.



Accounts Receivable



Accounts receivable consist of uncollateralized joint interest owner obligations due within 30 days of the invoice date, uncollateralized accrued revenues due under normal trade terms, generally requiring payment within 30 days of sales of oil and gas production, and other miscellaneous receivables. No interest is charged on past-due balances. Payments made on accounts receivable are applied first to the earliest unpaid items. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible. There was no allowance recorded at March 31, 2020 or December 31, 2019.



The following table sets forth information concerning the Company’s accounts receivable (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Revenue

 

$

211 

 

$

415 

Tax

 

 

130 

 

 

65 

Joint interest

 

 

31 

 

 

77 

Accounts receivable - current

 

$

372 

 

$

557 



 

 

 

 

 

 

Tax - noncurrent

 

$

 —

 

$

65 

 

At March 31, 2020 and December 31, 2019, the Company recorded a tax related current receivable of $130,000 and $65,000, respectively, and a tax related non-current receivable of $0 and $65,000, respectively. 



On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES” Act) was enacted in response to the COVID-19 pandemic.  The Cares Act, among other things, accelerated the Company’s ability to recover refundable AMT credits to 2018 and 2019.  As a result, the Company has reclassified the $65,000 of the remaining noncurrent AMT credit carryforwards from a noncurrent receivable to a current receivable as the Company expects to recover the refundable AMT credits when it files its 2019 tax return.  (See Note (2) Income Taxes)

 


Description Of Business And Significant Accounting Policies (Policy)
v3.20.1
Description Of Business And Significant Accounting Policies (Policy)
3 Months Ended
Mar. 31, 2020
Description Of Business And Significant Accounting Policies [Abstract]  
Basis Of Presentation

Basis of Presentation



The accompanying unaudited condensed consolidated financial statements as of March 31, 2020 and March 31, 2019 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The condensed consolidated balance sheet as of December 31, 2019 is derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP.  The Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included as required by Regulation S-X, Rule 10-01.  Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Principles Of Consolidation

Principles of Consolidation



The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany transactions and balances.

Use Of Estimates

Use of Estimates



The accompanying condensed consolidated financial statements are prepared in conformity with U.S. GAAP which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Significant estimates include reserve quantities and estimated future cash flows associated with proved reserves, which significantly impact depletion expense and potential impairments of oil and natural gas properties, income taxes and the valuation of deferred tax assets, stock-based compensation, and commitments and contingencies.  We analyze our estimates based on historical experience and various other assumptions that we believe to be reasonable. While we believe that our estimates and assumptions used in preparation of the condensed consolidated financial statements are appropriate, actual results could differ from those estimates and assumptions.

Revenue Recognition

Revenue Recognition



The Company identifies the contracts with each of its customers and the separate performance obligations associated with each of these contracts.  Revenues are recognized when the performance obligations are satisfied and when control of goods or services are transferred to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.



Crude oil is sold on a month-to-month contract at a price based on an index price from the purchaser, net of differentials.  Crude oil that is produced is stored in storage tanks.  The Company will contact the purchaser and request it to pick up the crude oil from the storage tanks.  When the purchaser picks up the crude from the storage tanks, control of the crude transfers to the purchaser, the Company’s contractual obligation is satisfied, and revenues are recognized.  The sales of oil represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others.  When selling oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports revenues on a net basis to the Company.  Fees and other deductions incurred prior to transfer of control are recorded as production costs.  Revenues are reported net of fees and other deductions incurred after transfer of control.



The Company operates certain salt water disposal wells, some of which accept water from third parties.  The contracts with the third parties primarily require a flat monthly fee for the third parties to dispose water into the wells.  In some cases, the contract is based on a per barrel charge to dispose water into the wells.  There is no requirement under the contracts for these third parties to use these wells for their water disposal.  If the third parties do dispose water into the Company operated wells during a given month, the Company has met its contractual obligations and revenues are recognized for that month.



The following table presents the disaggregated revenue by commodity for the three months ended March 31, 2020 and 2019 (in thousands):  









 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended



 

March 31,



 

2020

 

2019



 

 

 

 

 

 

Crude oil

 

$

959 

 

$

1,164 

Saltwater disposal fees

 

 

 

 

Total

 

$

963 

 

$

1,171 



There were no natural gas imbalances at March 31, 2020 or December 31, 2019. 

Cash And Cash Equivalents

Cash and Cash Equivalents



Cash and cash equivalents include temporary cash investments with a maturity of ninety days or less at date of purchase.

Inventory

Inventory



Inventory consists of crude oil in tanks and is carried at lower of cost or market value.  The cost value component of the oil inventory is calculated using the average cost per barrel for the three months ended March 31, 2020 and December 31, 2019.  These costs include production costs and taxes.  At December 31, 2019, the cost component was used to value oil inventory.  The market value component is calculated using the average March 2020 and December 2019 oil sales prices received by the Company.  At March 31, 2020, the market component was used to value oil inventory.  At March 31, 2020 and December 31, 2019, inventory consisted of the following (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Oil – carried at lower of cost or market

 

$

271 

 

$

415 

Total inventory

 

$

271 

 

$

415 



Full Cost Method Of Accounting

Full Cost Method of Accounting



The Company follows the full cost method of accounting for oil and gas property acquisition, exploration, and development activities.  Under this method, all costs incurred in connection with acquisition, exploration, and development of oil and gas reserves are capitalized.  Capitalized costs include lease acquisitions, seismic related costs, certain internal exploration costs, drilling, completion, and estimated asset retirement costs. The capitalized costs of oil and gas properties, plus estimated future development costs relating to proved reserves and estimated asset retirement costs which are not already included, net of estimated salvage value, are amortized on the unit-of-production method based on total proved reserves. The Company has determined its reserves based upon reserve reports provided by LaRoche Petroleum Consultants Ltd. since 2009. The costs of unproved properties are excluded from amortization until the properties are evaluated, subject to an annual assessment of whether impairment has occurred.  The Company had $0 in unevaluated properties as of March 31, 2020 and at December 31, 2019.  Proceeds from the sale of oil and gas properties are accounted for as reductions to capitalized costs unless such sales cause a significant change in the relationship between costs and the estimated value of proved reserves, in which case a gain or loss is recognized.



At the end of each reporting period, the Company performs a “ceiling test” on the value of the net capitalized cost of oil and gas properties. This test compares the net capitalized cost (capitalized cost of oil and gas properties, net of accumulated depreciation, depletion and amortization and related deferred income taxes) to the present value of estimated future net revenues from oil and gas properties using an average price (arithmetic average of the beginning of month prices for the prior 12 months) and current cost discounted at 10%  plus cost of properties not being amortized and the lower of cost or estimated  fair value of unproven properties included in the cost being amortized (ceiling). If the net capitalized cost is greater than the ceiling, a write-down or impairment is required.  A write-down of the carrying value of the asset is a non-cash charge that reduces earnings in the current period.  Once incurred, a write-down may not be reversed in a later period.  The Company did not record any impairment of its oil and gas properties during the three months ended March 31, 2020 and 2019.

Accounts Receivable

Accounts Receivable



Accounts receivable consist of uncollateralized joint interest owner obligations due within 30 days of the invoice date, uncollateralized accrued revenues due under normal trade terms, generally requiring payment within 30 days of sales of oil and gas production, and other miscellaneous receivables. No interest is charged on past-due balances. Payments made on accounts receivable are applied first to the earliest unpaid items. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible. There was no allowance recorded at March 31, 2020 or December 31, 2019.



The following table sets forth information concerning the Company’s accounts receivable (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Revenue

 

$

211 

 

$

415 

Tax

 

 

130 

 

 

65 

Joint interest

 

 

31 

 

 

77 

Accounts receivable - current

 

$

372 

 

$

557 



 

 

 

 

 

 

Tax - noncurrent

 

$

 —

 

$

65 

 

At March 31, 2020 and December 31, 2019, the Company recorded a tax related current receivable of $130,000 and $65,000, respectively, and a tax related non-current receivable of $0 and $65,000, respectively. 



On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES” Act) was enacted in response to the COVID-19 pandemic.  The Cares Act, among other things, accelerated the Company’s ability to recover refundable AMT credits to 2018 and 2019.  As a result, the Company has reclassified the $65,000 of the remaining noncurrent AMT credit carryforwards from a noncurrent receivable to a current receivable as the Company expects to recover the refundable AMT credits when it files its 2019 tax return.  (See Note (2) Income Taxes)


Description Of Business And Significant Accounting Policies (Tables)
v3.20.1
Description Of Business And Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2020
Description Of Business And Significant Accounting Policies [Abstract]  
Disaggregation Of Revenue



 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended



 

March 31,



 

2020

 

2019



 

 

 

 

 

 

Crude oil

 

$

959 

 

$

1,164 

Saltwater disposal fees

 

 

 

 

Total

 

$

963 

 

$

1,171 



Inventory



 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Oil – carried at lower of cost or market

 

$

271 

 

$

415 

Total inventory

 

$

271 

 

$

415 



Accounts Receivable



 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Revenue

 

$

211 

 

$

415 

Tax

 

 

130 

 

 

65 

Joint interest

 

 

31 

 

 

77 

Accounts receivable - current

 

$

372 

 

$

557 



 

 

 

 

 

 

Tax - noncurrent

 

$

 —

 

$

65 




Description Of Business And Significant Accounting Policies (Narrative) (Details)
v3.20.1
Description Of Business And Significant Accounting Policies (Narrative) (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Mar. 27, 2020
Description Of Business And Significant Accounting Policies [Line Items]        
Unevaluated properties $ 0      
Impairment 0 $ 0    
Accounts receivable - current 372,000   $ 557,000  
Allowance for doubtful accounts 0   0  
Revenue 963,000 $ 1,171,000    
Tax [Member]        
Description Of Business And Significant Accounting Policies [Line Items]        
Accounts receivable - current 130,000   65,000 $ 65,000
Accounts receivable - noncurrent 0   65,000  
Natural Gas Imbalances [Member]        
Description Of Business And Significant Accounting Policies [Line Items]        
Revenue $ 0   $ 0  

Description Of Business And Significant Accounting Policies (Disaggregation Of Revenue) (Details)
v3.20.1
Description Of Business And Significant Accounting Policies (Disaggregation Of Revenue) (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Disaggregation of Revenue [Line Items]      
Revenue $ 963,000 $ 1,171,000  
Crude Oil [Member]      
Disaggregation of Revenue [Line Items]      
Revenue 959,000 1,164,000  
Saltwater Disposal Fees [Member]      
Disaggregation of Revenue [Line Items]      
Revenue 4,000 $ 7,000  
Natural Gas Imbalances [Member]      
Disaggregation of Revenue [Line Items]      
Revenue $ 0   $ 0

Description Of Business And Significant Accounting Policies (Inventory) (Details)
v3.20.1
Description Of Business And Significant Accounting Policies (Inventory) (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Description Of Business And Significant Accounting Policies [Abstract]    
Oil - carried at lower of cost or market $ 271 $ 415
Total inventory $ 271 $ 415

Description Of Business And Significant Accounting Policies (Accounts Receivable) (Details)
v3.20.1
Description Of Business And Significant Accounting Policies (Accounts Receivable) (Details) - USD ($)
Mar. 31, 2020
Mar. 27, 2020
Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable - current $ 372,000   $ 557,000
Revenue [Member]      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable - current 211,000   415,000
Tax [Member]      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable - current 130,000 $ 65,000 65,000
Accounts receivable - noncurrent 0   65,000
Joint Interest [Member]      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable - current $ 31,000   $ 77,000

Income Taxes
v3.20.1
Income Taxes
3 Months Ended
Mar. 31, 2020
Income Taxes [Abstract]  
Income Taxes

(2)  Income Taxes



Income taxes are reported in accordance with U.S. GAAP, which requires the establishment of deferred tax accounts for all temporary differences between the financial reporting and tax bases of assets and liabilities, using currently enacted federal and state income tax rates.  In addition, deferred tax accounts must be adjusted to reflect new rates if enacted into law.



The deferred income tax assets or liabilities for an oil and gas exploration and development company are dependent on many variables such as estimates of the economic lives of depleting oil and gas reserves and commodity prices.  Accordingly, the asset or liability is subject to continuous recalculation and revision of the numerous estimates required, and may change significantly in the event of occurrences such as major acquisitions, divestitures, commodity price changes, changes in reserve estimates, changes in reserve lives, and changes in tax rates or tax laws.



The estimated annual effective tax rate of 0% differs from the statutory rate of 21% due primarily to adjustments to the valuation allowance on the deferred tax assets.



At December 31, 2019, federal net operating loss carryforwards amounted to approximately $33.8 million, of which $31.5 million expires between 2020 and 2037 which can offset 100% of taxable income and $2.3 million that has an indefinite carryforward period which can offset 80% of taxable income per year. The total net deferred tax asset was $0 at March 31, 2020 and $65,000 at December 31, 2019.  The Company recorded an allowance on the remaining deferred tax asset at March 31, 2020 and December 31, 2019 primarily due to expected future losses in the near term which would cause cumulative losses being incurred during the 3 year period.  There were no recorded unrecognized tax benefits at March 31, 2020 and December 31, 2019

 


Income Taxes (Narrative) (Details)
v3.20.1
Income Taxes (Narrative) (Details) - USD ($)
3 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Income Taxes [Line Items]    
Unrecognized tax benefits $ 0 $ 0
Federal net operating loss carryforwards   33,800,000
Deferred tax asset $ 0 65,000
Federal tax rate 21.00%  
Estimated annual effective tax rate 0.00%  
Tax Period Between 2020 And 2037 [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards   31,500,000
Indefinite Tax Period [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards   $ 2,300,000
Minimum [Member] | Tax Period Between 2020 And 2037 [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards expiration between, years Jan. 01, 2020  
Maximum [Member] | Tax Period Between 2020 And 2037 [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards expiration between, years Dec. 31, 2037  

Capital Stock
v3.20.1
Capital Stock
3 Months Ended
Mar. 31, 2020
Capital Stock [Abstract]  
Capital Stock

(3) Capital Stock

Common Stock

On January 2, 2020, the Company issued 7,436 shares of common stock in the aggregate to the Company’s three directors and CFO and interim CEO.

On April 2, 2020, the Company issued 7,328 shares of common stock in the aggregate to the Company’s three directors and CFO and interim CEO.



Rights Agreement

Effective March 17, 2017 the Board of Directors declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock, $0.001 par value per share (“Common Stock”). The dividend was paid to the stockholders of record at the close of business on March 27, 2017 (the “Record Date”). Each Right entitles the registered holder, subject to the terms of the Rights Agreement dated as of March 16, 2017 (the “Rights Agreement”) between the Company and the Rights Agent, Continental Stock Transfer & Trust Company, to purchase from the Company one one-thousandth of a share of the Company’s Series A Preferred Stock at a price of $1.10 (the “Exercise Price”), subject to certain adjustments.

The purpose of the Rights Agreement is to reduce the risk that the Company’s ability to use its net operating losses to reduce potential future federal income tax obligations would be limited if the Company’s experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code. A company generally experiences an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section 382 of the Tax Code, increases by more than 50 percentage points over a rolling three-year period. The Rights Agreement is designed to reduce the likelihood that the Company will experience an ownership change under Section 382 of the Tax Code by discouraging any person or group from becoming a 4.95% shareholder and also discouraging any existing 4.95% (or more) shareholder from acquiring additional shares of the Company’s stock.

The Rights will not be exercisable until the “Distribution Date”, which is generally defined as the earlier to occur of:(i) a public announcement or filing that a person or group has, become an “Acquiring Person” which is defined as a person or group of affiliated or associated persons or persons acting in concert who, at any time after the date of the Rights Agreement, have acquired, or obtained the right to acquire, beneficial ownership of 4.95% or more of the Company’s outstanding shares of Common Stock; or a person or group currently owning 4.95% (or more) of the Company’s outstanding shares acquires additional shares of the Company’s stock; subject to certain exceptions; or (ii) the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person. 

The Rights, unless extended by the Board of Directors will expire prior to the earlier of March 16, 2020; or a date the Board of Directors determines by resolution in its business judgment that the Agreement is no longer necessary or appropriate; or in certain other specified circumstances.  On March 16, 2020 the Board of Directors by unanimous resolution acting without meeting determined to extend the expiration date of the Rights Agreement to March 16, 2021 as expressly contemplated by the Rights Agreement.

At any time after any person or group of affiliated or associated persons becomes an Acquiring Person, the Board, at its option, may exchange each Right (other than Rights owned by such person or group of affiliated or associated persons which will have become void), in whole or in part, at an exchange ratio of two shares of Common Stock per outstanding Right (subject to adjustment).

For further information on the Rights Agreement, please refer to the Rights Agreement that was attached in full as an exhibit to the Company’s Form 8-K filed with SEC on March 17, 2017.



Preferred Stock

Series A Preferred Stock has a par value of $0.0001 and 10,000 shares have been designated.  No shares of Series A Preferred Stock have been issued by the Company pursuant to the Rights Agreement described above or otherwise.


Capital Stock (Narrative) (Details)
v3.20.1
Capital Stock (Narrative) (Details)
3 Months Ended
Apr. 02, 2020
item
shares
Jan. 02, 2020
item
shares
Mar. 17, 2017
$ / shares
Mar. 31, 2020
$ / shares
shares
Dec. 31, 2019
$ / shares
shares
Mar. 16, 2017
$ / shares
Capital Stock [Line Items]            
Common stock, par value | $ / shares     $ 0.001 $ 0.001 $ 0.001  
Number of directors | item   3        
Preferred stock, shares authorized       25,000,000 25,000,000  
Rights Plan [Member]            
Capital Stock [Line Items]            
Number of preferred share purchase right for each outstanding share of its common stock to shareholder | $ / shares     $ 1      
Common stock, Threshold for exercise of rights percentage     4.95%      
Subsequent Event [Member]            
Capital Stock [Line Items]            
Number of directors | item 3          
Right [Member]            
Capital Stock [Line Items]            
Date declared       Mar. 17, 2017    
Date to be paid       Mar. 27, 2017    
Date of record       Mar. 16, 2017    
Directors, CFO And Interim CEO [Member]            
Capital Stock [Line Items]            
Common stock, New shares issued   7,436        
Directors, CFO And Interim CEO [Member] | Subsequent Event [Member]            
Capital Stock [Line Items]            
Common stock, New shares issued 7,328          
Series A Preferred Stock [Member]            
Capital Stock [Line Items]            
Preferred stock, par value | $ / shares       $ 0.0001 $ 0.0001  
Preferred stock, shares issued       0 0  
Preferred stock, shares authorized       10,000 10,000  
Dividends conversion ratio       0.001    
Exercise price | $ / shares           $ 1.10
Series A Preferred Stock [Member] | Rights Plan [Member]            
Capital Stock [Line Items]            
Preferred stock, shares issued       0    

Earnings Per Common Share
v3.20.1
Earnings Per Common Share
3 Months Ended
Mar. 31, 2020
Earnings Per Common Share [Abstract]  
Earnings Per Common Share

(4)  Earnings per Common Share



We report basic earnings per common share, which exclude the effect of potentially dilutive securities, and diluted earnings per common share which include the effect of all potentially dilutive securities unless their impact is anti-dilutive. The following are reconciliations of the numerators and denominators of our basic and diluted earnings per share (in thousands except for share and per share amounts):







 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended



 

March 31,



 

2020

 

2019

Income (numerator):

 

 

 

 

 

 

Net loss

 

$

(527)

 

$

(96)

Weighted average shares (denominator):

 

 

 

 

 

 

Weighted average shares – basic

 

 

10,666,129 

 

 

10,644,197 

Dilution effect of share-based compensation, treasury method

 

 

 —

 

 

 —

Weighted average shares – dilutive

 

 

10,666,129 

 

 

10,644,197 

Loss per share:

 

 

 

 

 

 

Basic and fully diluted

 

$

(0.05)

 

$

(0.01)



Options issued to the Company’s directors in which the exercise price was higher than the average market price each quarter were excluded from diluted shares as they would have been anti-dilutive.  In addition, the shares that would be issued to employees and Company directors if the thirty day trailing average of WTI postings as published by the U.S. Energy Information Administration meets or exceeds $85 per barrel have also been excluded from this calculation.  (See Note (10) Commitments and Contingencies)


Earnings Per Common Share (Tables)
v3.20.1
Earnings Per Common Share (Tables)
3 Months Ended
Mar. 31, 2020
Earnings Per Common Share [Abstract]  
Reconciliations Of The Numerators And Denominators Of Basic And Diluted Earnings Per Share



 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended



 

March 31,



 

2020

 

2019

Income (numerator):

 

 

 

 

 

 

Net loss

 

$

(527)

 

$

(96)

Weighted average shares (denominator):

 

 

 

 

 

 

Weighted average shares – basic

 

 

10,666,129 

 

 

10,644,197 

Dilution effect of share-based compensation, treasury method

 

 

 —

 

 

 —

Weighted average shares – dilutive

 

 

10,666,129 

 

 

10,644,197 

Loss per share:

 

 

 

 

 

 

Basic and fully diluted

 

$

(0.05)

 

$

(0.01)




Earnings Per Common Share (Narrative) (Details)
v3.20.1
Earnings Per Common Share (Narrative) (Details)
3 Months Ended
Mar. 31, 2020
$ / bbl
Derivative [Line Items]  
Period of trailing average of WTI 30 days
Minimum [Member] | West Texas Intermediate [Member]  
Derivative [Line Items]  
Compensation reimbursement 85

Earnings Per Common Share (Reconciliations Of The Numerators And Denominators Of Basic And Diluted Earnings Per Share) (Details)
v3.20.1
Earnings Per Common Share (Reconciliations Of The Numerators And Denominators Of Basic And Diluted Earnings Per Share) (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Earnings Per Common Share [Abstract]    
Net loss $ (527) $ (96)
Weighted average shares - basic 10,666,129 10,644,197
Dilution effect of share-based compensation, treasury method
Weighted average shares - dilutive 10,666,129 10,644,197
Basic and fully diluted $ (0.05) $ (0.01)

Oil And Gas Properties
v3.20.1
Oil And Gas Properties
3 Months Ended
Mar. 31, 2020
Oil And Gas Properties [Abstract]  
Oil And Gas Properties

(5)  Oil and Gas Properties



The following table sets forth information concerning the Company’s oil and gas properties (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Oil and gas properties

 

$

6,697 

 

$

6,751 

Unevaluated properties

 

 

 —

 

 

 —

Accumulated depreciation, depletion, and amortization

 

 

(2,505)

 

 

(2,366)

Oil and gas properties, net

 

$

4,192 

 

$

4,385 



The Company recorded depletion expense of $142,000 and $163,000 for the three months ended March 31, 2020 and 2019, respectively.  During the three months ended March 31, 2020 and 2019, the Company also recorded in “Accumulated depreciation, depletion, and amortization” a $2,000 loss on asset retirement obligations and a $7,000 loss on asset retirement obligations, respectively.

 


Oil And Gas Properties (Tables)
v3.20.1
Oil And Gas Properties (Tables)
3 Months Ended
Mar. 31, 2020
Oil And Gas Properties [Abstract]  
Schedule Of Oil And Gas Properties



 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Oil and gas properties

 

$

6,697 

 

$

6,751 

Unevaluated properties

 

 

 —

 

 

 —

Accumulated depreciation, depletion, and amortization

 

 

(2,505)

 

 

(2,366)

Oil and gas properties, net

 

$

4,192 

 

$

4,385 




Oil And Gas Properties (Narrative) (Details)
v3.20.1
Oil And Gas Properties (Narrative) (Details) - USD ($)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Oil And Gas Properties [Abstract]    
Depletion expense $ 142,000 $ 163,000
Gain (loss) on asset retirement obligations $ 2,000 $ 7,000

Oil And Gas Properties (Schedule Of Oil And Gas Properties) (Details)
v3.20.1
Oil And Gas Properties (Schedule Of Oil And Gas Properties) (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Oil And Gas Properties [Abstract]    
Oil and gas properties $ 6,697 $ 6,751
Unevaluated properties
Accumulated depreciation, depletion, and amortization (2,505) (2,366)
Oil and gas properties, net $ 4,192 $ 4,385

Asset Retirement Obligation
v3.20.1
Asset Retirement Obligation
3 Months Ended
Mar. 31, 2020
Asset Retirement Obligation [Abstract]  
Asset Retirement Obligation



(6)  Asset Retirement Obligation



Our asset retirement obligations represent the estimated present value of the amount we will incur to plug, abandon, and remediate our producing properties at the end of their productive lives in accordance with applicable laws. The following table summarizes the Company’s Asset Retirement Obligation transactions for the three months ended March 31, 2020 (in thousands):







 

 

 



 

 

 

Balance December 31, 2019

 

$

1,998 

Accretion expense

 

 

31 

Liabilities incurred

 

 

 —

Liabilities settled

 

 

(47)

Liabilities relieved - sold properties

 

 

 —

Balance March 31, 2020

 

$

1,982 

 


Asset Retirement Obligation (Tables)
v3.20.1
Asset Retirement Obligation (Tables)
3 Months Ended
Mar. 31, 2020
Asset Retirement Obligation [Abstract]  
Asset Retirement Obligation Transactions



 

 

 



 

 

 

Balance December 31, 2019

 

$

1,998 

Accretion expense

 

 

31 

Liabilities incurred

 

 

 —

Liabilities settled

 

 

(47)

Liabilities relieved - sold properties

 

 

 —

Balance March 31, 2020

 

$

1,982 




Asset Retirement Obligation (Asset Retirement Obligation Transactions) (Details)
v3.20.1
Asset Retirement Obligation (Asset Retirement Obligation Transactions) (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Asset Retirement Obligation [Abstract]    
Balance $ 1,998  
Accretion expense 31 $ 35
Liabilities incurred  
Liabilities settled (47)  
Liabilities relieved - sold properties  
Balance $ 1,982  

Long-Term Debt And Lease Liabilities
v3.20.1
Long-Term Debt And Lease Liabilities
3 Months Ended
Mar. 31, 2020
Long-Term Debt And Lease Liabilities [Abstract]  
Long-Term Debt And Lease Liabilities



(7)  Long-Term Debt and Lease Liabilities



Long Term Debt



At March 31, 2020, the Company had a revolving credit facility with Prosperity Bank.  This has historically been the Company’s primary source to fund working capital and capital spending.  Under the credit facility, loans and letters of credit are available to the Company on a revolving basis in an amount outstanding not to exceed the lesser of $50 million or the Company’s borrowing base in effect from time to time. As of March 31, 2020, the Company’s borrowing base was $4 million, subject to a credit limit based on current covenants of $1.97 million.  The credit facility is secured by substantially all of the Company’s producing and non-producing oil and gas properties.  The credit facility includes certain covenants with which the Company is required to comply.  At March 31, 2020, these covenants include the following: (a) Current Ratio > 1:1; (b) Funded Debt to EBITDA < 3.5x; and (c) Interest Coverage > 3.0x.  At March 31, 2020, the interest rate on this credit facility was 3.75%.  The Company was in compliance with all covenants during the quarter ended March 31, 2020.  The Company had no outstanding borrowing under the facility as of March 31, 2020 or December 31, 2019.  However, if the Company had borrowings under the credit facility at March 31, 2020, the Company would not have been in compliance with EBITDA related covenants as the Company reported negative EBITDA for the trailing four quarters ended March 31, 2020.  



During April 2020, the Company’s senior credit facility with Prosperity Bank after Prosperity Bank’s most recent review of the Company’s currently owned producing properties was amended to decrease the borrowing base to $3.1 million, subject to a credit limit based on current covenants of $1.442 million.  The borrowing base remains subject to the existing periodic redetermination provisions in the credit facility. The interest rate remained prime plus 0.50% per annum.  This rate was 3.75% at the date of the amendment.  The maximum line of credit of the Company under the Prosperity Bank credit facility remained $50 million.  The next borrowing base review will take place in July 2020. 



During the second quarter of 2020, the Company was approved by the Small Business Administration to receive a Paycheck Protection Program (“PPP”) loan in the amount of approximately $166,000.  This loan was funded by Prosperity Bank in May 2020.  The PPP loan is not part of the credit facility with Prosperity Bank as described above and therefore is not subject to the same terms as Company’s credit facility.  The PPP loan has an interest rate of 1% with a maturity date of May 2022.  There are no payments due during the first six months of the loan.  After the six-month period has expired, all outstanding accrued interest is due.  At that time, the remaining unforgiven portion of the loan will be due in 18 equal monthly installments of principal and interest.  The Company may apply for forgiveness of the amount due on the PPP loan based on spending the loan proceeds on eligible expenses as defined by statute.



Lease Liabilities



Effective January 1, 2019, the Company adopted ASU 2016-02 Leases (Topic 842).    We first determine if a contract is a lease at inception of the arrangement.  To the extent that we determine an arrangement represents a lease, we then classify that lease as an operating lease or a finance lease.  As of January 1, 2019, the Company capitalizes its operating leases on the Consolidated Balance Sheet as a right of use asset and a corresponding lease liability.  The Company also capitalizes its finance leases on the Consolidated Balance Sheet as other property and equipment and a corresponding lease liability.  The right of use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.  Short term leases that have an initial term of one year or less are not capitalized unless the Company intends to renew the lease to extend the initial term past one year.



We lease certain office space, a storage yard, and field vehicles to support our operations.  A more detailed description of the Company’s lease types is included below.



Office and Storage Yard



The Company maintains an office to support its corporate operations.  This office agreement is with a third party and was structured with a 39 month initial term.  The Company can renew the lease for 36 additional months by providing to the Landlord written notice of intent to exercise the renewal not less than nine months prior to expiration of the initial term.  The Company’s corporate office lease is classified as an operating lease.



The Company maintains an office to support its field operations.  This office is with a third party and is on a month-to-month lease.  However, the Company intends to continue to renew this lease for the foreseeable future.  Based on the Company’s intent to renew the lease, the Company is assuming the same lease term as its corporate office lease for calculation of its right of use asset and lease liability.  The Company’s field office lease is classified as an operating lease.



The Company maintains a yard to store certain equipment used in its field operations.  This storage yard agreement is with a third party and is on a month-to-month lease.  However, the Company intends to continue to renew this lease for the foreseeable future.  Based on the Company’s intent to renew the lease, the Company is assuming the same lease term as its corporate office lease for calculation of its right of use asset and lease liability.  The Company’s storage yard is classified as an operating lease.



Field Vehicles



The Company leases certain vehicles from a third party for use in its field operations.  The lease term for each vehicle is based on expected daily use of the vehicles by the field personnel, typically between 18 and 36 months.  The Company also pays an upfront fee at the commencement of the lease term.  The Company can continue to lease the vehicles past the initial lease term on a month-to-month basis.  In addition, each vehicle has a residual value guarantee at the end of the lease term.  The Company’s field vehicle leases are classified as finance leases.



Significant Judgment



In order to determine whether the Company’s contracts contain a lease component, the Company is required to exercise significant judgment.  The Company will review each contract to determine if: an asset is specified in the contract; the asset is physically distinct; the supplier does not have substantive substitution rights; the Company obtains substantially all economic benefit from use of the asset; and the Company can direct the use of the asset.  The Company also determines the appropriate discount rate to use on each lease.  If there is a stated rate in the contract, the Company will use the stated rate as its discount rate.  The contract associated with the field vehicles includes a stated rate typically between 5% and 6.5%.  These stated rates for the field vehicle agreements were used as the discount rates.  If there is no stated rate, the Company will use its borrowing rate as the discount rate.  The contracts associated with the offices and yard do not include a stated rate.  The Company used its borrowing rate of 6% as the discounts rate for these agreements.



Components of lease costs for the three months ended March 31, 2020 and 2019 (in thousands):







 

 

 

 

 

 

 



 

 

Period Ended



 

 

Three Months

 

Three Months



Statement of Operations Account

 

March 31, 2020

 

March 31, 2019



 

 

 

 

 

 

 

Operating lease cost:

 

 

 

 

 

 

 



Production costs and taxes

 

$

 

$



General and administrative

 

 

12 

 

 

12 

Total operating lease cost

 

 

$

15 

 

$

15 



 

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

 

     Amortization of right of use assets

Depreciation, depletion, and amortization

 

$

18 

 

$

21 

     Interest on lease liabilities

Net interest expense

 

 

 

 

Total finance lease cost

 

 

$

20 

 

$

22 



Supplemental lease related cash flow information for the three months ended March 31, 2020 and 2019 (in thousands):







 

 

 

 

 

 

 



 

 

Period Ended



 

 

Three Months

 

Three Months



 

 

March 31, 2020

 

March 31, 2019



 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

     Operating cash flows from operating leases

 

$

15 

 

$

15 

     Operating cash flows from finance leases

 

 

 

 

     Finance cash flows from finance leases

 

 

 

 

12 



 

 

 

 

 

 

 

Right of use assets obtained in exchange for lease obligations:

 

 

 

 

 

 

     Operating leases

 

 

 

 —

 

 

98 



Supplemental lease related balance sheet information as of March 31, 2020 and December 31, 2019 (in thousands):







 

 

 

 

 

 

 



 

 

Balance Sheet as of



 

 

March 31, 2020

 

December 31, 2019



 

 

 

 

 

 

 

Operating Leases:

 

 

 

 

 

 

 



 

 

 

 

 

 

 

     Right of use asset - operating leases

 

 

$

26 

 

$

41 



 

 

 

 

 

 

 

     Lease liabilities - current

 

 

$

26 

 

$

41 

     Lease liabilities - noncurrent

 

 

 

 —

 

 

 —

     Total operating lease liabilities

 

 

$

26 

 

$

41 



 

 

 

 

 

 

 



 

 

 

 

 

 

 

Finance Leases:

 

 

 

 

 

 

 



 

 

 

 

 

 

 

     Other property and equipment, gross

 

 

$

264 

 

$

295 

     Accumulated depreciation

 

 

 

(143)

 

 

(146)

     Other property and equipment, net

 

 

$

121 

 

$

149 



 

 

 

 

 

 

 

     Lease liabilities - current

 

 

$

56 

 

$

61 

     Lease liabilities - noncurrent

 

 

 

26 

 

 

41 

     Total finance lease liabilities

 

 

$

82 

 

$

102 



Weighted average remaining lease term and discount rate as of March 31, 2020:







 

 

 

 

 

 

 



 

 

Operating Leases

 

Finance Leases



 

 

 

 

 

 

 

Weighted average remaining lease term

 

 

 

0.4 years

 

 

0.9 years

Weighted average discount rate

 

 

 

6.0% 

 

 

5.6% 



Maturity of lease liabilities as of March 31, 2020 (in thousands):







 

 

 

 

 

 

 



 

 

Operating Leases

 

Finance Leases



 

 

 

 

 

 

 

2020

 

 

$

26 

 

$

44 

2021

 

 

 

 —

 

 

39 

Total lease payments

 

 

 

26 

 

 

83 

     Less imputed interest

 

 

 

 —

 

 

(1)

Total

 

 

$

26 

 

$

82