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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
 FORM 10-Q
_______________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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: 1-13283
  rocc-20210930_g1.jpg
RANGER OIL CORPORATION
(Exact name of registrant as specified in its charter)
__________________________________________________________
Virginia 23-1184320
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
16285 PARK TEN PLACE, SUITE 500
HOUSTON, TX 77084
(Address of principal executive offices) (Zip Code)
(713722-6500
(Registrant’s telephone number, including area code)
Penn Virginia Corporation
(Former names or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValueROCCThe Nasdaq Stock Market LLC
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 (“Exchange Act”) 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 FilerAccelerated Filer
Non-accelerated FilerSmaller 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  

 As of October 29, 2021, there were 43,637,251 shares of common stock outstanding, including 21,088,253 shares of Class A Common Stock and 22,548,998 shares of Class B Common Stock.



RANGER OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
 For the Quarterly Period Ended September 30, 2021
 Table of Contents
Part I - Financial Information
Item Page
1.Financial Statements - unaudited
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Comprehensive Income (Loss)
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statements of Equity
Notes to Condensed Consolidated Financial Statements:
1. Nature of Operations
 2. Basis of Presentation
3. Juniper Transactions
4. Revenue Recognition
5. Derivative Instruments
 6. Property and Equipment
 7. Long-Term Debt
8. Income Taxes
 9. Supplemental Balance Sheet Detail
 10. Fair Value Measurements
 11. Commitments and Contingencies
 12. Share-Based Compensation and Other Benefit Plans
13. Earnings per Share
14. Subsequent Events
Forward-Looking Statements
2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview and Executive Summary
Results of Operations
Liquidity and Capital Resources
Off Balance Sheet Arrangements
Critical Accounting Estimates
3.Quantitative and Qualitative Disclosures About Market Risk
4.Controls and Procedures
Part II - Other Information
1.Legal Proceedings
1A.Risk Factors
5.Other Information
6.Exhibits
Signatures



Part I. FINANCIAL INFORMATION
Item 1.     Financial Statements
RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS unaudited
(in thousands, except per share data) 
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenues and other
Crude oil$127,995 $63,227 $326,222 $190,732 
Natural gas liquids7,165 2,824 15,115 6,295 
Natural gas4,973 2,563 10,893 7,273 
Other operating income, net928 797 2,085 1,972 
Total revenues and other141,061 69,411 354,315 206,272 
Operating expenses
Lease operating10,647 8,275 29,200 27,901 
Gathering, processing and transportation5,688 5,760 15,535 16,797 
Production and ad valorem taxes7,534 4,368 19,768 13,152 
General and administrative10,932 8,585 31,094 23,801 
Depreciation, depletion and amortization30,975 37,038 83,654 114,891 
Impairments of oil and gas properties 235,989 1,811 271,498 
Total operating expenses65,776 300,015 181,062 468,040 
Operating income (loss)75,285 (230,604)173,253 (261,768)
Other income (expense)
Interest expense, net of amounts capitalized(10,582)(7,497)(21,282)(24,213)
Loss on extinguishment of debt  (1,231) 
Derivatives(21,084)(6,891)(119,679)109,879 
Other, net(7)21 (13)(42)
Income (loss) before income taxes43,612 (244,971)31,048 (176,144)
Income tax (expense) benefit(549)1,558 (410)1,110 
Net income (loss)43,063 (243,413)30,638 (175,034)
Net income attributable to Noncontrolling interest(25,676) (23,778) 
Net income (loss) attributable to common shareholders$17,387 $(243,413)$6,860 $(175,034)
Net income (loss) per share:
Basic$1.13 $(16.03)$0.45 $(11.54)
Diluted$1.11 $(16.03)$0.44 $(11.54)
Weighted average shares outstanding – basic15,319 15,183 15,298 15,168 
Weighted average shares outstanding – diluted15,713 15,183 15,669 15,168 
See accompanying notes to condensed consolidated financial statements.

3


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) unaudited
(in thousands) 
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net income (loss)$43,063 $(243,413)$30,638 $(175,034)
Other comprehensive income (loss):
Change in pension and postretirement obligations, net of tax1 (2)4 (4)
 1 (2)4 (4)
Comprehensive income (loss)43,064 (243,415)30,642 (175,038)
Net income attributable to Noncontrolling interest(25,676) (23,778) 
Other comprehensive income attributable to Noncontrolling interest(1) (4) 
Comprehensive income (loss) attributable to common shareholders$17,387 $(243,415)$6,860 $(175,038)

See accompanying notes to condensed consolidated financial statements.
4


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS unaudited
(in thousands, except share data)
September 30,December 31,
 20212020
Assets  
Current assets  
Cash and cash equivalents$35,258 $13,020 
Restricted cash - current15,439 — 
Accounts receivable, net of allowance for credit losses87,773 45,849 
Derivative assets4,909 75,506 
Prepaid and other current assets8,532 19,045 
Total current assets151,911 153,420 
Property and equipment, net (full cost method)864,878 723,549 
Restricted cash - non-current396,072  
Derivative assets2,152 25,449 
Other assets4,304 4,908 
Total assets$1,419,317 $907,326 
Liabilities and Shareholders’ Equity  
Current liabilities  
Accounts payable and accrued liabilities152,330 63,089 
Derivative liabilities63,089 85,106 
Current portion of long-term debt7,500  
Total current liabilities222,919 148,195 
Deferred income taxes837  
Derivative liabilities21,416 28,434 
Other non-current liabilities8,227 8,362 
Long-term debt, net739,328 509,497 
Commitments and contingencies (Note 11)
Equity  
Preferred stock of $0.01 par value – 5,000,000 shares authorized; 225,489.98 and none issued at September 30, 2021 and December 31, 2020, respectively
2  
Common stock of $0.01 par value – 110,000,000 shares authorized; 15,330,598 and 15,200,435 shares issued as of September 30, 2021 and December 31, 2020, respectively
153 152 
Paid-in capital156,950 203,463 
Retained earnings16,214 9,354 
Accumulated other comprehensive loss(130)(131)
Ranger Oil shareholders’ equity173,189 212,838 
Noncontrolling interest253,401  
Total equity426,590 212,838 
Total liabilities and shareholders’ equity$1,419,317 $907,326 

See accompanying notes to condensed consolidated financial statements.
5


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS unaudited
(in thousands)
 Nine Months Ended September 30,
 20212020
Cash flows from operating activities  
Net income (loss)$30,638 $(175,034)
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
Loss on extinguishment of debt1,231  
Depreciation, depletion and amortization83,654 114,891 
Impairments of oil and gas properties1,811 271,498 
Derivative contracts:
Net (gains) losses119,679 (109,879)
Cash settlements and premiums received (paid), net(46,041)65,295 
Deferred income tax expense (benefit)130 (31)
Gain on sales of assets, net(7)(14)
Non-cash interest expense1,742 3,336 
Share-based compensation 4,179 2,582 
Other, net20 23 
Changes in operating assets and liabilities, net7,048 17,056 
Net cash provided by operating activities204,084 189,723 
Cash flows from investing activities  
Capital expenditures(146,638)(139,010)
Proceeds from sales of assets, net157 83 
Net cash used in investing activities(146,481)(138,927)
Cash flows from financing activities  
Proceeds from credit facility borrowings20,000 51,000 
Repayments of credit facility borrowings(121,500)(89,000)
Repayments of second lien facility(56,890) 
Proceeds from 9.25% Senior Notes due 2026, net of discount396,072  
Proceeds from redeemable common units151,160  
Proceeds from redeemable preferred stock2  
Transaction costs paid on behalf of Noncontrolling interest(5,543) 
Issue costs paid for Noncontrolling interest securities(3,758) 
Debt issuance costs paid(3,397)(78)
Net cash provided by (used in) financing activities376,146 (38,078)
Net increase in cash, cash equivalents and restricted cash433,749 12,718 
Cash, cash equivalents and restricted cash – beginning of period13,020 7,798 
Cash, cash equivalents and restricted cash – end of period$446,769 $20,516 
Supplemental disclosures:  
Cash paid for:  
Interest, net of amounts capitalized$14,298 $20,959 
Income taxes, net of (refunds)$360 $(2,471)
Non-cash investing and financing activities:
Changes in property and equipment related to capital contributions$(38,561)$ 
Changes in asset retirement obligation related to capital contributions$14 $ 
Changes in accrued liabilities related to capital contributions$146 $ 
Changes in accrued liabilities related to capital expenditures$30,303 $(30,579)
 

See accompanying notes to condensed consolidated financial statements.



6


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in thousands)
Preferred StockCommon StockPaid-in CapitalRetained Earnings/(Accumulated Deficit)Accumulated Other Comprehensive LossNoncontrolling interestTotal Equity
Balance as of December 31, 2020$ $152 $203,463 $9,354 $(131)$ $212,838 
Net loss— — — (13,572)— (6,449)(20,021)
Issuance of preferred stock2 — — — — — 2 
Issuance of Noncontrolling interest
— — (50,068)— — 229,620 179,552 
All other changes 1
— 1 1,769 — 1 1 1,772 
Balance as of March 31, 2021$2 $153 $155,164 $(4,218)$(130)$223,172 $374,143 
Net income— — — 3,045 — 4,551 7,596 
All other changes 1
— — 922 — 1 1 924 
Balance as of June 30, 2021$2 $153 $156,086 $(1,173)$(129)$227,724 $382,663 
Net income— — — 17,387 — 25,676 43,063 
All other changes 1
— — 864 — (1)1 864 
Balance as of September 30, 2021$2 $153 $156,950 $16,214 $(130)$253,401 $426,590 
_______________________
1     Includes equity-classified share-based compensation of $4.2 million during the nine months ended September 30, 2021. During the nine months ended September 30, 2021, 122,911 and 7,252 shares of common stock were issued in connection with the vesting of certain time-vested restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”), net of shares withheld for income taxes.

Common StockPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Equity
Balance as of December 31, 2019$151 $200,666 $319,987 $(59)$520,745 
Net income— — 163,094 — 163,094 
Cumulative effect of change in accounting principle 1
— — (76)— (76)
All other changes 2
1 556  (1)556 
Balance as of March 31, 2020$152 $201,222 $483,005 $(60)$684,319 
Net loss— — (94,715)— (94,715)
All other changes 2
— 936 — (1)935 
Balance as of June 30, 2020$152 $202,158 $388,290 $(61)$590,539 
Net income— — (243,413)— (243,413)
All other changes 2
— 608 — (2)606 
Balance as of September 30, 2020$152 $202,766 $144,877 $(63)$347,732 
_______________________
1     Attributable to the adoption of Accounting Standards Update 2016–13, Measurement of Credit Losses on Financial Instruments, as of January 1, 2020.
2 Includes equity-classified share-based compensation of $2.6 million during the nine months ended September 30, 2020. During the nine months ended September 30, 2020, 45,435 and 19,402 shares of common stock were issued in connection with the vesting of certain RSUs and PRSUs, net of shares withheld for income taxes.





See accompanying notes to condensed consolidated financial statements.

7


RANGER OIL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS unaudited
For the Quarterly Period Ended September 30, 2021
(in thousands, except per share amounts or where otherwise indicated)

1.     Nature of Operations
Ranger Oil Corporation (together with its consolidated subsidiaries, unless the context otherwise requires, “Ranger,” “Ranger Oil,” the “Company,” “we,” “us” or “our”) is an independent oil and gas company focused on the onshore development and production of oil, natural gas liquids (“NGLs”) and natural gas. Our current operations consist of drilling unconventional horizontal development wells and operating our producing wells in the Eagle Ford Shale (the “Eagle Ford”) in South Texas. We operate in and report our financial results and disclosures as one segment, which is the development and production of crude oil, NGLs and natural gas.
On October 5, 2021, the Company acquired Lonestar Resources US Inc., a Delaware corporation (“Lonestar”), as a result of which Lonestar and its subsidiaries became wholly-owned subsidiaries of the Company (the “Merger”). The Merger was effected pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated July 10, 2021, by and between the Company and Lonestar. Following the completion of the Merger, the Company changed its name from Penn Virginia Corporation (“Penn Virginia”) to Ranger Oil Corporation, and its Class A Common Stock (“Class A Common Stock”), par value of $0.01 per share, began trading on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “ROCC” on October 18, 2021.

2.    Basis of Presentation
Our unaudited condensed consolidated financial statements include the accounts of Ranger Oil and all of our subsidiaries as of the relevant dates. Intercompany balances and transactions have been eliminated. A substantial noncontrolling interest in our subsidiaries is provided for in our condensed consolidated statements of operations and comprehensive income (loss) as well as our condensed consolidated balance sheets as of and for the period ended September 30, 2021 (see Note 3 for additional detail including the basis of presentation of the noncontrolling interest). Our condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Preparation of these statements involves the use of estimates and judgments where appropriate. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of our condensed consolidated financial statements, have been included. Our condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. Certain reclassifications have been made to prior period amounts to conform to the current period presentation. Such reclassifications did not have a material impact on prior period financial statements. As the Merger was completed after the quarterly period ended September 30, 2021, our unaudited condensed consolidated financial statements exclude Lonestar’s financial information and operating results for all periods presented.

3.    Juniper Transactions
On January 15, 2021 (the “Juniper Closing Date”), the Company consummated the transactions (collectively, the “Juniper Transactions”) contemplated by: (i) the Contribution Agreement, dated November 2, 2020 (the “Contribution Agreement”), by and among the Company, PV Energy Holdings, L.P. (the “Partnership”) and JSTX Holdings, LLC (“JSTX”), an affiliate of Juniper Capital Advisors, L.P. (“Juniper Capital” and, together with JSTX and Rocky Creek, “Juniper”); and (ii) the Contribution Agreement, dated November 2, 2020 (the “Asset Agreement,” and, together with the Contribution Agreement, the “Juniper Transaction Agreements”), by and among Rocky Creek Resources, LLC, an affiliate of Juniper Capital (“Rocky Creek”), the Company and the Partnership.
In connection with the consummation of the Juniper Transactions, the Company completed a reorganization into an up-C structure which was intended to, among other things, result in the affiliates of Juniper Capital having a voting interest in the Company that is commensurate with such holders’ economic interest in the Partnership, including (i) the conversion of each of the Company’s corporate subsidiaries into limited liability companies which are disregarded for U.S. federal income tax purposes, including the conversion of Penn Virginia Holding Corp. into Penn Virginia Holdings, LLC, a Delaware limited liability company (“Holdings”), and (ii) the Company’s contribution of all of its equity interests in Holdings to the Partnership in exchange for 15,268,686 newly issued common units representing limited partner interests (the “Common Units”).

8


On the Juniper Closing Date, (i) pursuant to the terms of the Contribution Agreement, JSTX contributed to the Partnership, as a capital contribution, $150 million in cash in exchange for 17,142,857 newly issued Common Units and the Company issued to JSTX 171,428.57 shares of Series A Preferred Stock, par value $0.01 per share, of the Company (“Series A Preferred Stock”) at a price equal to the par value of the shares acquired, and (ii) pursuant to the terms of the Asset Agreement, including certain closing adjustments based on a September 1, 2020 effective date (the “Effective Date”), Rocky Creek contributed to our operating subsidiary certain oil and gas assets in exchange for 5,405,252 newly issued Common Units and the Company issued to Rocky Creek 54,052.52 shares of Series A Preferred Stock (5,406,141 Common Units and 54,061.41 shares of Series A Preferred Stock after post-closing adjustments) at a price equal to the par value of the shares acquired, including 495,900 Common Units and 4,959 shares of Series A Preferred Stock placed in a restricted account to support post-closing indemnification claims, 50% of such amount of which was disbursed 180 days after the Juniper Closing Date and the remainder to be disbursed one year after the Juniper Closing Date. In connection with the contribution of the oil and gas assets under the Asset Agreement, we received $1.2 million of revenues attributable to production from the Rocky Creek assets for the period from December 1, 2020 through the Juniper Closing Date.
We incurred a total of $19.0 million of professional fees, including advisory, legal, consulting fees and other costs in connection with the Juniper Transactions. A total of $5.0 million were attributable to services and costs incurred and recognized in 2020 as general and administrative expenses (“G&A”). The remaining $14.0 million of costs were incurred in January 2021 or otherwise incurred contingent upon the closing of the Juniper Transactions, including $5.5 million of transaction costs incurred by Juniper that were required to be paid by the Company under the Juniper Transaction Agreements as well as $3.8 million of costs incurred by us related to the issuance of the Series A Preferred Stock and Common Units. Collectively, these amounts were classified as a reduction to the capital contribution on our condensed consolidated balance sheet. The remainder of $4.7 million, representing professional fees and other costs, was recognized as a component of G&A in the quarter ended March 31, 2021.
In determining the appropriate accounting for the Partnership and Juniper’s interest, we considered the guidance in Accounting Standards Codification (“ASC”) 810, Consolidation. The Partnership is considered a variable interest entity for which the Company is the primary beneficiary as it has a controlling financial interest in the Partnership and has the power to direct the activities most significant to the Partnership’s economic performance, as well as the obligation to absorb losses and receive benefits that are potentially significant. As such, the Partnership is reflected as a consolidated subsidiary in the condensed consolidated financial statements. The ownership interest in the Partnership held by Juniper (the “Noncontrolling interest”) is included in the condensed consolidated balance sheet as Noncontrolling interest, which is classified within permanent equity. The Noncontrolling interest is classified in permanent equity as it does not meet the definition of a liability under ASC 480, Distinguishing Liabilities from Equity and, among other considerations, the Common Units are optionally redeemable by the holder for a fixed number of shares (on a one-for-one basis) and there is no fixed or determinable date or fixed or determinable price for redemption; further, while the Common Units may be redeemed with Class A Common Stock or cash, the method of settlement is solely at the discretion of the Company, with the Company having the ability to settle the redemption in shares. Additionally, while the holders of the Series A Preferred Stock (now Class B Common Stock as described below), who also own the Common Units, could cause the Noncontrolling interest to be redeemed through an event that is not solely within the control of the Company such as a change-in-control, through their majority voting rights, all holders of equally and more subordinated equity interests in the Company would be entitled to receive the same form of consideration upon such event.
The Noncontrolling interest percentage is based on the proportionate amount of the number of Common Units held by Juniper to the total Common Units outstanding which is also equivalent to the voting power in the Company associated with the Series A Preferred Stock (now Class B Common Stock as described below) held by Juniper. The Noncontrolling interest was initially measured on the Juniper Closing Date as the sum of (i) total Shareholders’ equity immediately prior to the closing of the Juniper Transactions, (ii) the fair value of Juniper’s and Rocky Creek’s contributions provided in exchange for Common Units and Series A Preferred Stock (net of the Juniper transaction costs and securities issuance costs paid by the Company and including the cash received directly by the Company for a portion of the Rocky Creek revenues as discussed above and asset retirement obligations (“AROs”) associated with the contributed properties); and (iii) a deferred income tax adjustment attributable to the Juniper Transactions, the total of which was then multiplied by the Noncontrolling interest percentage. The difference between the calculated Noncontrolling interest and the fair value of the consideration received was recorded as a reduction to paid-in capital.
On October 6, 2021, the Company, JSTX and Rocky Creek entered into a Contribution and Exchange Agreement, whereby all outstanding shares of the Series A Preferred Stock were exchanged for newly issued shares of Class B Common Stock (“Class B Common Stock”), at a ratio of one share of Class B Common Stock for each 1/100th of a share of Series A Preferred Stock and the designation of the Series A Preferred Stock was cancelled. See Note 14 for additional information.
9


The following table reconciles the initial investment by Juniper and the carrying value of their Noncontrolling interest as of the Juniper Closing Date (after post-closing adjustments):
Cash contribution$150,000 
Issue costs paid for Noncontrolling interest securities(3,758)
Transaction costs paid on behalf of Noncontrolling interest(5,543)
Fair value of Rocky Creek oil and gas properties contributed38,561 
Revenues received attributable to contributed properties1,160 
Suspense revenues attributable to the contributed properties(146)
Asset retirement obligations of the contributed properties(14)
Fair value of capital contributions180,260 
Income tax adjustment attributable to the Juniper Transactions(708)
Total shareholders’ equity prior to the Juniper Closing Date205,558 
$385,110 
Juniper voting power through Series A Preferred Stock59.6 %
Noncontrolling interest as of the Juniper Closing Date$229,620 

4.       Revenue Recognition
Revenue from Contracts with Customers
Crude oil. We sell our crude oil production to our customers at either the wellhead or a contractually agreed-upon delivery point, including certain regional central delivery point terminals or pipeline inter-connections. We recognize revenue when control transfers to the customer, considering factors associated with custody, title, risk of loss and other contractual provisions as appropriate. Pricing is based on a market index with adjustments for product quality, location differentials and, if applicable, deductions for intermediate transportation. Costs incurred by us for gathering and transporting the products to an agreed-upon delivery point are recognized as a component of Gathering, processing and transportation (“GPT”) in our condensed consolidated statements of operations.
NGLs. We have natural gas processing contracts in place with certain midstream processing vendors. We deliver “wet” natural gas to our midstream processing vendors at the inlet of their processing facilities through gathering lines, certain of which we own and others which are owned by gathering service providers. Subsequent to processing, NGLs are delivered or otherwise transported to a third-party customer. Currently, for these contracts, we have determined that we are the agent and the midstream processing vendor is our customer. Accordingly, we recognize these revenues on a net basis with processing costs presented as a reduction of revenue.

Natural gas. Subsequent to the processing of “wet” natural gas and the separation of NGL products, the “dry” or residue gas is delivered to us at the tailgate of the midstream processing vendors’ facilities and we market the product to our customers, most of whom are interstate pipelines. We recognize revenue when control transfers to the customer, considering factors associated with custody, title, risk of loss and other contractual provisions as appropriate. Pricing is based on a market index with adjustments for product quality and location differentials, as applicable. Costs incurred by us for gathering and transportation from the wellhead through the processing facilities are recognized as a component of GPT in our condensed consolidated statements of operations.
Performance obligations
We record revenue in the month that our oil and gas production is delivered to our customers. However, the collection of revenues from oil and gas production may take up to 60 days following the month of production. Therefore, we make accruals for revenues and accounts receivable based on estimates of our share of production. We record any differences, which historically have not been significant, between the actual amounts ultimately received and the original estimates in the period they become finalized.

We apply a practical expedient which provides for an exemption from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Under our commodity product sales contracts, we bill our customers and recognize revenue when our performance obligations have been satisfied. At that time, we have determined that payment is unconditional. Accordingly, our commodity sales contracts do not create contract assets or liabilities.


10


Our accounts receivable consists mainly of trade receivables from commodity sales and joint interest billings due from partners on properties we operate. Our allowance for credit losses is entirely attributable to receivables from joint interest partners. The following table summarizes our accounts receivable by type as of the dates presented:
September 30,December 31,
 20212020
Customers$76,909 $39,672 
Joint interest partners10,102 3,079 
Derivative settlements from counterparties1,000 3,287 
Other8 8 
  Total88,019 46,046 
Less: Allowance for credit losses(246)(197)
  Accounts receivable, net of allowance for credit losses
$87,773 $45,849 
Major Customers
For the nine months ended September 30, 2021, three customers accounted for $185.5 million, or approximately 53%, of our consolidated product revenues. The revenues generated from these customers during the nine months ended September 30, 2021, were $69.3 million, $71.0 million and $45.2 million, or 20%, 20% and 13% of the consolidated total, respectively. For the nine months ended September 30, 2020, three customers accounted for $113.4 million, or approximately 56%, of our consolidated product revenues. As of September 30, 2021 and December 31, 2020, $27.0 million and $24.1 million, or approximately 35% and 61%, respectively, of our consolidated accounts receivable from customers was related to the three customers referenced above. No significant uncertainties exist related to the collectability of amounts owed to us by any of these customers.

5.    Derivative Instruments
We utilize derivative instruments, typically swaps, put options and call options which are placed with financial institutions that we believe are acceptable credit risks, to mitigate our financial exposure to commodity price volatility associated with anticipated sales of our future production and volatility in interest rates attributable to our variable rate debt instruments. For our commodity derivatives, we typically combine swaps, purchased put options, purchased call options, sold put options and sold call options in order to achieve various hedging objectives. Certain of these objectives result in combinations that operate as 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, among others.
Our derivative instruments are not formally designated as hedges for accounting purposes. While the use of derivative instruments limits the risk of adverse commodity price and interest rate movements, such use may also limit the beneficial impact of future product revenues and interest expense from favorable commodity price and interest rate movements. From time to time, we may enter into incremental derivative contracts in order to increase the notional volume of production we are hedging, restructure existing derivative contracts or enter into other derivative contracts resulting in modification to the terms of existing contracts. In accordance with our internal policies, we do not utilize derivative instruments for speculative purposes.

11


Commodity Derivatives 1
The following table sets forth our commodity derivative positions, presented on a net basis by period of maturity, as of September 30, 2021:
4Q20211Q20222Q20223Q20224Q20221Q20232Q20233Q20234Q20231Q20242Q2024
NYMEX WTI Crude Swaps
Average Volume Per Day (bbl)815 457 457462308
Weighted Average Swap Price ($/bbl)$45.54 $58.75 $58.75$58.75$58.75
NYMEX WTI Crude Collars
Average Volume Per Day (bbl)16,304 13,750 7,830 6,114 4,484 2,917 2,885 
Weighted Average Purchased Put Price ($/bbl)$51.40 $53.94 $47.37 $44.00 $40.00 $40.00 $40.00 
Weighted Average Sold Call Price ($/bbl)$62.23 $66.25 $60.87 $58.36 $52.47 $50.00 $50.00 
NYMEX WTI Purchased Puts
Average Volume Per Day (bbl)3,261 
Weighted Average Purchased Put Price ($/bbl)$55.00 
NYMEX WTI Crude CMA Roll Basis Swaps
Average Volume Per Day (bbl)17,935 6,667 6,593 
Weighted Average Swap Price ($/bbl)$0.168 $0.625 $0.625 
NYMEX HH Swaps
Average Volume Per Day (MMBtu)6,739 
Weighted Average Swap Price ($/MMbtu)$3.540 
NYMEX HH Collars
Average Volume Per Day (MMBtu)9,783 3,333 13,187 13,043 13,043 11,538 11,413 11,413 11,538 11,538 
Weighted Average Purchased Put Price ($/MMBtu)$2.607 $4.150 $2.500 $2.500 $2.500 $2.500 $2.500 $2.500 $2.500 $2.328 
Weighted Average Sold Call Price($/MMBtu)$3.117 $5.750 $3.220 $3.220 $3.220 $2.682 $2.682 $2.682 $3.650 $3.000 
NYMEX HH Sold Puts
Average Volume Per Day (MMBtu)6,522 
Weighted Average Sold Put Price ($/MMBtu)$2.000 
OPIS Mt Belv Ethane Swaps
Average Volume per Day (gal)28,022 27,717 27,717 98,901 34,239 34,239 34,615 
Weighted Average Fixed Price ($/gal)$0.2500 $0.2500 $0.2500 $0.2288 $0.2275 $0.2275 $0.2275 
__________________________________________________________________________________
1    NYMEX WTI refers to New York Mercantile Exchange West Texas Intermediate that serves as the benchmark for crude oil. NYMEX HH refers to NYMEX Henry Hub that serves as the benchmark for natural gas. OPIS Mt Belv refers to Oil Price Information Service Mt. Belvieu that serves as the benchmark for ethane which represents a commodity proxy for NGLs.
Interest Rate Derivatives
As of September 30, 2021, we had a series of interest rate swap contracts (the “Interest Rate Swaps”) establishing fixed interest rates on a portion of our variable interest rate indebtedness. The notional amount of the Interest Rate Swaps totals $300 million, with us paying a weighted average fixed rate of 1.36% on the notional amount, and the counterparties paying a variable rate equal to LIBOR through May 2022.

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Financial Statement Impact of Derivatives
The impact of our derivative activities on income is included within Derivatives on our condensed consolidated statements of operations. Derivative contracts that have expired at the end of a period, but for which cash had not been received or paid as of the balance sheet date, have been recognized as components of Accounts receivable (see Note 4) and Accounts payable and accrued liabilities (see Note 9) on the condensed consolidated balance sheets. The effects of derivative gains and (losses) and cash settlements are reported as adjustments to reconcile net income (loss) to net cash provided by operating activities. These items are recorded within the Derivative contracts section of our condensed consolidated statements of cash flows under Net (gains) losses and Cash settlements and premiums received (paid), net.
The following table summarizes the effects of our derivative activities for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Interest Rate Swap gains (losses) recognized in the condensed consolidated statements of operations$(84)$32 $(48)$(7,527)
Commodity gains (losses) recognized in the condensed consolidated statements of operations(21,000)(6,923)(119,631)117,406 
$(21,084)$(6,891)$(119,679)$109,879 
Interest rate cash settlements recognized in the condensed consolidated statements of cash flows$(973)$(919)$(2,851)$(1,287)
Commodity cash settlements and premiums received (paid) recognized in the condensed consolidated statements of cash flows(21,265)7,337 (43,190)66,582 
$(22,238)$6,418 $(46,041)$65,295 
The following table summarizes the fair values of our derivative instruments, which we elect to present on a gross basis, as well as the locations of these instruments on our condensed consolidated balance sheets as of the dates presented:
  September 30, 2021December 31, 2020
  DerivativeDerivativeDerivativeDerivative
TypeBalance Sheet LocationAssetsLiabilitiesAssetsLiabilities
Interest rate contractsDerivative assets/liabilities – current$ $2,496 $ $3,655 
Commodity contractsDerivative assets/liabilities – current4,909 60,593 75,506 81,451 
Interest rate contractsDerivative assets/liabilities – non-current   1,645 
Commodity contractsDerivative assets/liabilities – non-current2,152 21,416 25,449 26,789 
  $7,061 $84,505 $100,955 $113,540 
As of September 30, 2021, we reported net commodity derivative liabilities of $74.9 million and net Interest Rate Swap liabilities of $2.5 million. The contracts associated with these positions are with nine counterparties for commodity derivatives and four counterparties for Interest Rate Swaps, all of which are investment grade financial institutions and are participants in our revolving credit facility (the “Credit Facility”). This concentration may impact our overall credit risk in that these counterparties may be similarly affected by changes in economic or other conditions. Non-performance risk is incorporated by utilizing discount rates adjusted for the credit risk of our counterparties if the derivative is in an asset position, and our own credit risk if the derivative is in a liability position.
The agreements underlying our derivative instruments include provisions for the netting of settlements with the counterparties for contracts of similar type. We have neither paid to, nor received from, our counterparties any cash collateral in connection with our derivative positions. Furthermore, our derivative contracts are not subject to margin calls or similar accelerations. No significant uncertainties exist related to the collectability of amounts that may be owed to us by these counterparties.
See Note 10 for information regarding the fair value of our derivative instruments.

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6.    Property and Equipment
The following table summarizes our property and equipment as of the dates presented: 
 September 30,December 31,
 20212020
Oil and gas properties:  
Proved$1,762,268 $1,545,910 
Unproved59,560 49,935 
Total oil and gas properties1,821,828 1,595,845 
Other property and equipment28,265 27,746 
Total properties and equipment1,850,093 1,623,591 
Accumulated depreciation, depletion, amortization and impairments(985,215)(900,042)
  Total property and equipment, net$864,878 $723,549 
Unproved property costs of $59.6 million and $49.9 million have been excluded from amortization as of September 30, 2021 and December 31, 2020, respectively. An additional $1.2 million of costs, associated with wells in-progress for which we had not previously recognized any proved undeveloped reserves, were excluded from amortization as of December 31, 2020. We transferred $13.8 million and $4.5 million of undeveloped leasehold costs associated with acreage unlikely to be drilled or associated with proved undeveloped reserves, including capitalized interest, from unproved properties to the full cost pool during the nine months ended September 30, 2021 and 2020, respectively. We capitalized internal costs of $2.8 million and $1.3 million and interest of $2.6 million and $2.1 million during the nine months ended September 30, 2021 and 2020, respectively, in accordance with our accounting policies. Average depreciation, depletion and amortization per barrel of oil equivalent of proved oil and gas properties was $12.96 and $16.63 for the nine months ended September 30, 2021 and 2020, respectively.
At the end of each quarterly reporting period, the unamortized cost of our oil and gas properties, net of deferred income taxes, is limited to the sum of the estimated after-tax discounted future net revenues from proved properties adjusted for costs excluded from amortization (the “Ceiling Test”). During the three and nine months ended September 30, 2021, the Company recorded zero and a $1.8 million impairment of its oil and gas properties, respectively. During the three and nine months ended September 30, 2020, the Company recorded impairments of its oil and gas properties of $236.0 million and $271.5 million, respectively.

7.    Long-Term Debt
The following table summarizes our debt obligations as of the dates presented:
September 30, 2021December 31, 2020
Credit Facility $212,900 $314,400 
Second Lien Facility143,110 200,000 
9.25% Senior Notes due 2026400,000  
Total756,010 514,400 
Less: Unamortized discount 1
(4,855)(1,604)
Less: Unamortized deferred issuance costs 1, 2
(4,327)(3,299)
Total, net$746,828 $509,497 
Less: Current portion(7,500) 
Long-term debt$739,328 $509,497 
_______________________
1     Discount and issuance costs of the Second Lien Facility are being amortized over the term of the underlying loan using the effective-interest method. The discount and issuance costs of the 9.25% Senior Notes due 2026 will be amortized over its respective term beginning in the fourth quarter of 2021 concurrent with the related proceeds being released from escrow and closing of the Lonestar acquisition.
2     Excludes issuance costs of the Credit Facility, which represent costs attributable to the access to credit over its contractual term, that have been presented as a component of Other assets (see Note 9) and are being amortized over the term of the Credit Facility using the straight-line method.

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Credit Facility
As of September 30, 2021, the Credit Facility had a $1.0 billion revolving commitment and a $375 million borrowing base, including a $25 million sublimit for the issuance of letters of credit. Availability under the Credit Facility may not exceed the lesser of the aggregate commitments or the borrowing base; however, outstanding borrowings under the Credit Facility were limited to a maximum of $350 million as of September 30, 2021. The borrowing base under the Credit Facility is redetermined semi-annually, generally in the Spring and Fall of each year. Additionally, we and the Credit Facility lenders generally may, upon request, initiate a redetermination at any time during the six-month period between scheduled redeterminations. The Credit Facility is available to us for general corporate purposes, including working capital. Prior to the Eleventh Amendment (as defined below), the Credit Facility was scheduled to mature in May 2024. We had $0.4 million in letters of credit outstanding as of September 30, 2021 and December 31, 2020. During the nine months ended September 30, 2021, we incurred and capitalized approximately $0.7 million of issue costs associated with amendments to the Credit Facility. During the nine months ended September 30, 2020, we incurred and capitalized approximately $0.1 million of issue costs and wrote-off $0.9 million of previously capitalized issue costs due to a reduction of the borrowing base during the first half of 2020.
The Credit Facility is guaranteed by all of the subsidiaries of the borrower (the “Guarantor Subsidiaries”), except for Boland Building, LLC, effective upon the Eleventh Amendment, which holds real estate assets that are associated with Lonestar’s legacy mortgage obligations. The guarantees under the Credit Facility are full and unconditional and joint and several. Substantially all of our consolidated assets are held by the Guarantor Subsidiaries. The obligations under the Credit Facility are secured by a first priority lien on substantially all of our subsidiaries’ assets.
The outstanding borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (a) a customary reference rate plus an applicable margin ranging from 1.50% to 2.50%, determined based on the utilization level under the Credit Facility or (b) a Eurodollar rate, including LIBOR through 2021, plus an applicable margin ranging from 2.50% to 3.50%, determined based on the utilization level under the Credit Facility. Interest on reference rate borrowings is payable quarterly in arrears and is computed on the basis of a year of 365/366 days, and interest on Eurodollar borrowings is payable every one, three or six months, at the election of the borrower, and is computed on the basis of a year of 360 days. As of September 30, 2021, the actual weighted-average interest rate on the outstanding borrowings under the Credit Facility was 3.09%. Unused commitment fees are charged at a rate of 0.50%.
As of September 30, 2021, the Credit Facility required us to maintain (1) a minimum current ratio (as defined in the Credit Facility, which considers the unused portion of the total commitment as a current asset), measured as of the last day of each fiscal quarter of 1.00 to 1.00, (2) a maximum leverage ratio (consolidated indebtedness to adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses, both as defined in the Credit Facility), measured as of the last day of each fiscal quarter of 3.50 to 1.00 and (3) a maximum first lien leverage ratio (consolidated secured indebtedness to adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses, both as defined in the Credit Facility), measured as of the last day of each fiscal quarter, of 2.50 to 1.00.
The Credit Facility also contains customary affirmative and negative covenants, including as to compliance with laws (including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and annual financial statements, oil and gas engineering reports and budgets, maintenance and operation of property (including oil and gas properties), restrictions on the incurrence of liens and indebtedness, merger, consolidation or sale of assets, payment of dividends, and transactions with affiliates and other customary covenants. In addition, as of September 30, 2021, the Credit Facility contained certain anti-cash hoarding provisions.
The Credit Facility contains events of default and remedies. If we do not comply with the financial and other covenants in the Credit Facility, the lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the Credit Facility.
As of September 30, 2021, we were in compliance with all of the covenants under the Credit Facility in effect at such time.
In August 2021, we entered into the Master Assignment, Agreement and Amendment No. 11 to Credit Agreement (the “Eleventh Amendment”). The Eleventh Amendment, in addition to other changes described therein, amended the Credit Facility to, effective on the closing of the Merger and satisfaction of other conditions set forth therein, (1) increase the borrowing base to $600 million, with aggregate elected commitments of $