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rvra-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the Quarterly Period Ended September 30, 2020

☐	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: 333-225927

Riviera Resources, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

82-5121920

(I.R.S. Employer Identification No.)

717 Texas Avenue, Suite 2000

Houston, Texas

(Address of principal executive offices)

77002

(Zip Code)

(281) 840-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbols(s)		Name of exchange on which registered
None		None		None

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of October 31, 2020, there were 57,907,609 shares of common stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS

		Page
	Glossary of Terms	1

	Part I – Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54

	Part II – Other Information
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60

	Signatures	61

Table of Contents

GLOSSARY OF TERMS

As commonly used in the oil and natural gas industry and as used in this Quarterly Report on Form 10-Q, the following terms have the following meanings:

Bbl. One stock tank barrel or 42 United States gallons liquid volume.

Btu. One British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 degrees to 59.5 degrees Fahrenheit.

MBbls. One thousand barrels of oil or other liquid hydrocarbons.

MBbls/d. MBbls per day.

Mcf. One thousand cubic feet.

Mcfe. One thousand cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids.

MMBbls. One million barrels of oil or other liquid hydrocarbons.

MMBtu. One million British thermal units.

MMcf. One million cubic feet.

MMcf/d. MMcf per day.

MMcfe. One million cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids.

MMcfe/d. MMcfe per day.

MMMBtu. One billion British thermal units.

NGL. Natural gas liquids, which are the hydrocarbon liquids contained within natural gas.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

RIVIERA RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2020			December 31, 2019
	(in thousands, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	94,548		$	116,237
Accounts receivable – trade, net		22,194			51,355
Derivative instruments		375			7,283
Restricted cash		24,887			32,932
Other current assets		11,925			12,853
Assets held for sale		—			104,773
Total current assets		153,929			325,433
Noncurrent assets:
Oil and natural gas properties (successful efforts method)		125,389			180,307
Less accumulated depletion and amortization		(111,480	)		(35,603	)
		13,909			144,704

Other property and equipment		396,449			388,851
Less accumulated depreciation		(292,416	)		(50,381	)
		104,033			338,470

Other noncurrent assets		4,690			7,652
		4,690			7,652
Total noncurrent assets		122,632			490,826
Total assets	$	276,561		$	816,259
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	34,907		$	80,579
Derivative instruments		1,795			1,087
Other accrued liabilities		31,776			26,728
Liabilities held for sale		—			35,177
Total current liabilities		68,478			143,571
Noncurrent liabilities:
Credit facilities		80,000			69,800
Asset retirement obligations and other noncurrent liabilities		16,209			29,337
Total noncurrent liabilities		96,209			99,137
Commitments and contingencies (Note 10)
Equity:
Preferred Stock ($0.01 par value, 30,000,000 shares authorized; no shares issued at September 30, 2020, or December 31, 2019)		—			—
Common Stock ($0.01 par value, 270,000,000 shares authorized; 57,907,609 shares and 58,168,756 shares issued and outstanding at September 30, 2020, and December 31, 2019, respectively)		579			581
Additional paid-in capital		759,186			861,764
Accumulated deficit		(647,891	)		(288,794	)
Total equity		111,874			573,551
Total liabilities and equity	$	276,561		$	816,259

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

Table of Contents

RIVIERA RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(in thousands, except per share amounts)
Revenues and other:
Oil, natural gas and natural gas liquids sales	$	7,340		$	51,029		$	33,072		$	194,131
Gains (losses) on commodity derivatives		(2,948	)		5,665			3,773			12,673
Marketing revenues		29,054			45,828			84,840			166,569
Other revenues		29			5,532			69			16,685
		33,475			108,054			121,754			390,058
Expenses:
Lease operating expenses		2,367			18,307			10,212			66,204
Transportation expenses		818			16,275			4,201			53,478
Marketing expenses		20,284			37,688			58,431			132,888
General and administrative expenses		16,871			16,954			37,994			49,434
Exploration costs		413			1,947			413			4,154
Depreciation, depletion and amortization		3,915			20,060			19,027			65,013
Impairment of assets held for sale and long-lived assets		219,606			95,080			341,264			113,470
Taxes, other than income taxes		846			5,111			3,436			14,010
(Gains) losses on sale of assets and other, net		3,515			(7,587	)		1,484			(24,967	)
		268,635			203,835			476,462			473,684
Operating loss		(235,160	)		(95,781	)		(354,708	)		(83,626	)
Other income and (expenses):
Interest expense, net of amounts capitalized		(700	)		(2,329	)		(2,368	)		(5,403	)
Other, net		(309	)		(595	)		(1,317	)		(708	)
		(1,009	)		(2,924	)		(3,685	)		(6,111	)
Reorganization items, net		(210	)		(284	)		(704	)		(756	)
Loss before income taxes		(236,379	)		(98,989	)		(359,097	)		(90,493	)
Income tax expense		—			126,646			—			129,092
Net loss	$	(236,379	)	$	(225,635	)	$	(359,097	)	$	(219,585	)
Loss per share:
Basic and diluted	$	(4.07	)	$	(3.76	)	$	(6.18	)	$	(3.40	)

Weighted average shares outstanding ‒ basic and diluted		58,044			60,004			58,080			64,576
Distributions declared per share	$	—		$	—		$	1.75		$	—

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

Table of Contents

RIVIERA RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	Common Stock						Additional Paid in Capital			Accumulated Earnings (Deficit)			Total Equity
	Shares			Amount			Additional Paid in Capital			Accumulated Earnings (Deficit)			Total Equity
	(in thousands)

December 31, 2019		58,169		$	581		$	861,764		$	(288,794	)	$	573,551
Net loss					—			—			(101,506	)		(101,506	)
Repurchases of common stock		(323	)		(3	)		(2,063	)		—			(2,066	)
Issuance of common stock		62			1			823			—			824
Distributions to shareholders					—			(57,908	)		—			(57,908	)
March 31, 2020		57,908			579			802,616			(390,300	)		412,895
Net loss					—			—			(21,212	)		(21,212	)
Distributions to shareholders					—			(43,430	)		—			(43,430	)
June 30, 2020		57,908			579			759,186			(411,512	)		348,253
Net loss					—			—			(236,379	)		(236,379	)
September 30, 2020		57,908		$	579		$	759,186		$	(647,891	)	$	111,874


December 31, 2018		69,197		$	692		$	1,256,730		$	4,952		$	1,262,374
Net income					—			—			12,726			12,726
Repurchases of common stock		(2,488	)		(25	)		(34,412	)		—			(34,437	)
Issuance of common stock		82			1			1,485			—			1,486
March 31, 2019		66,791			668			1,223,803			17,678			1,242,149
Net loss					—			—			(6,676	)		(6,676	)
Repurchases of common stock		(3,170	)		(32	)		(43,275	)		—			(43,307	)
June 30, 2019		63,621			636			1,180,528			11,002			1,192,166
Net loss					—			—			(225,635	)		(225,635	)
Repurchases of common stock		(4,989	)		(50	)		(65,303	)		—			(65,353	)
Other					—			258			—			258
September 30, 2019		58,632		$	586		$	1,115,483		$	(214,633	)	$	901,436

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

Table of Contents

RIVIERA RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
	(in thousands)
Cash flow from operating activities:
Net loss	$	(359,097	)	$	(219,585	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: