Annual report pursuant to Section 13 and 15(d)

Accounts Receivable and Major Customers

v3.20.4
Accounts Receivable and Major Customers
12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Accounts Receivable and Major Customers Accounts Receivable and Revenues from Contracts with Customers 
The following table summarizes our accounts receivable by type as of the dates presented:
  December 31,
  2020 2019
Customers $ 39,672  $ 63,165 
Joint interest partners 3,079  6,929 
Other 674 
  42,759  70,768 
Less: Allowance for credit losses (197) (52)
  $ 42,562  $ 70,716 
Revenue from Contracts with Customers
For the year ended December 31, 2020, three customers accounted for $150.8 million, or approximately 56% of our consolidated product revenues. The revenues generated from these customers during 2020 were $72.3 million, $50.2 million, and $28.3 million or 27%, 19%, and 10% of the consolidated total, respectively. As of December 31, 2020, $18.6 million, or approximately 47% of our consolidated accounts receivable from customers was related to these customers. For the year ended December 31, 2019, four customers accounted for $354.6 million, or approximately 76% of our consolidated product revenues. The revenues generated from these customers during 2019 were $172.3 million, $84.6 million, $50.7 million and $47.0 million or approximately 37%, 18%, 11% and 10% of the consolidated total, respectively. As of December 31, 2019, $44.5 million, or approximately 70% of our consolidated accounts receivable from customers was related to these customers.
Credit Losses and Allowance for Credit Losses
Adoption of ASU 2016–13
Effective January 1, 2020, we adopted ASU 2016–13 and have applied the guidance therein to our portfolio of accounts receivable including those from our customers and our joint interest partners. We have adopted ASU 2016–13 using the modified retrospective method resulting in an adjustment of less than $0.1 million to the beginning balance of retained earnings and a corresponding increase to the allowance for credit losses as of January 1, 2020. As of December 31, 2020, the allowance for credit losses is entirely attributable to certain receivables from joint interest partners as described below.
Customers. We sell our commodity products to approximately 20 customers. A substantial majority of these customers are large, internationally recognized refiners and marketers in the case of our crude oil sales and large domestic processors and interstate pipelines with respect to our NGL and natural gas sales. As noted in our disclosures regarding major customers above, a significant portion of our outstanding customer accounts receivable are concentrated within a group of up to five customers at any given time. Due primarily to the historical market efficiencies and generally timely settlements associated with commodity sale transactions for crude oil, NGLs and natural gas, we have assessed this portfolio segment at zero risk for credit loss upon the adoption of ASU 2016–13 and for each of the periods included in the year ended December 31, 2020. Historically, we have never experienced a credit loss with such customers. No significant uncertainties exist related to the collectability of amounts owed to us by any of these customers.
Mutual Operators. As of December 31, 2020, we had mutual joint interest partner relationships with two upstream producers that also operate properties within the Eagle Ford for which we have non-operated working interests. Historically we have had full and timely collection experiences with these entities and we ourselves are timely with respect to our payments to them of joint venture costs. Upon adoption of ASU 2016–13, we had assessed this portfolio segment at zero risk for credit loss; however, in light of the potential for liquidity concerns due to current economic conditions in the near-term, we have assessed receivables originating in 2020 with a 5 percent risk.
Large Partners. As of December 31, 2020, three legal entities had working interests of 10 percent or greater in properties that we operate. These entities are primarily passive investors. Historically we have had full and timely collection experiences with these entities. Upon adoption of ASU 2016–13, we had assessed this portfolio segment at a risk of 1 percent for credit loss; however, in light of the potential for liquidity concerns due to current economic conditions in the near-term, we have increased the assessed receivables originating in 2020 to a 2 percent risk.
All Others. As of December 31, 2020, approximately 20 legal entities had working interests of less than 10 percent in properties that we operate. Historically, this is the only portfolio segment with whom we have experienced credit losses. Generally, this group includes passive investors and smaller producers that may not have the wherewithal or alternative sources of liquidity to settle their obligations to us in the event of individual challenges unique to smaller entities as well as adverse economic conditions in general. Upon adoption of ASU 2016–13, we had assessed this portfolio segment at a risk of 5 percent for credit loss; however, in light of the potential for liquidity concerns due to current economic conditions in the near-term, we have increased the assessed receivables originated in 2020 to a 10 percent risk. As of December 31, 2020, approximately $0.2 million of accounts receivables attributable to this portfolio segment was past due, or over 60 days.
    The following table summarizes the activity in our allowance for credit losses, by portfolio segment, for the year ended December 31, 2020:
Joint Interest Partners
Customers Mutual Operators Large Partners All Others Total
Balance at beginning of period $ —  $ —  $ —  $ 52  $ 52 
Adjustment upon adoption —  —  60  16  76 
Provision for expected credit losses —  27  33  69 
Write-offs and recoveries —  —  —  —  — 
Balance at end of period $ —  $ $ 87  $ 101  $ 197