Quarterly report pursuant to Section 13 or 15(d)

PROPERTY AND EQUIPMENT

v3.21.2
PROPERTY AND EQUIPMENT
 6 Months Ended
Jun. 30, 2021
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated DD&A and impairment as of June 30, 2021 and December 31, 2020 are as follows:
Successor Predecessor
June 30, 2021 December 31, 2020
Proved oil and natural gas properties $ 1,737,778  $ 9,359,866 
Unproved properties 224,214  1,457,043 
Other depreciable property and equipment 5,407  85,530 
Land 1,507  3,008 
Total property and equipment 1,968,906  10,905,447 
Accumulated DD&A and impairment (150,175) (8,819,178)
Property and equipment, net $ 1,818,731  $ 2,086,269 

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the book value of the Company's oil and natural gas properties. At June 30, 2021, the net book value of the Company's oil and gas properties was above the calculated ceiling for the period leading up to June 30, 2021. As a result, the Company recorded impairment of its oil and natural gas properties of $117.8 million for the Successor Period. No impairments were recorded in either of the Current Predecessor Quarter or the Current Predecessor YTD Period. The Company recorded an impairment of its oil and natural gas properties of $532.9 million and $1.1 billion for the Prior Predecessor Quarter and the Prior Predecessor YTD Period, respectively, as a result of the significant decrease in commodity prices.
Certain general and administrative costs are capitalized to the full cost pool and represent management’s estimate of costs incurred directly related to exploration and development activities. All general and administrative costs not capitalized are charged to expense as they are incurred. Capitalized general and administrative costs were approximately $2.2 million for the Successor Period, $2.5 million, for the Current Predecessor Quarter, and $8.0 million for Current Predecessor YTD Period. Capitalized general and administrative costs were approximately $8.2 million and $13.6 million for the Prior Predecessor Quarter and the Prior Predecessor YTD Period, respectively.
The Company evaluates the costs excluded from its amortization calculation at least annually. Individually insignificant unevaluated properties are grouped for evaluation and periodically transferred to evaluated properties over a timeframe consistent with their expected development schedule.
The following table summarizes the Company’s unevaluated properties excluded from amortization by area at June 30, 2021:
Successor
June 30, 2021
(In thousands)
Utica $ 186,036 
SCOOP 38,178 
Total unproved properties $ 224,214 
Impairment of Other Property and Equipment
During the Current Predecessor YTD Period, the Company recorded an impairment of $14.6 million related to its corporate headquarters as a result of changes in the expected future use.
Asset Retirement Obligation
The following table provides a reconciliation of the Company’s asset retirement obligation for the periods presented:
Asset retirement obligation at January 1, 2021 (Predecessor) $ 63,566 
Liabilities incurred 546 
Accretion expense 1,229 
Ending balance as of May 17, 2021 (Predecessor) 65,341 
Fresh start adjustments(1)
(46,257)
Asset retirement obligation at May 18, 2021 (Successor) 19,084 
Liabilities incurred 37 
Accretion expense 226 
Asset retirement obligation at June 30, 2021 $ 19,347