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What changed in RING ENERGY, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RING ENERGY, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+362 added−383 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-07)

Top changes in RING ENERGY, INC.'s 2024 10-K

362 paragraphs added · 383 removed · 273 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+19 added−33 removed93 unchanged
Biggest changeDelivery Commitments As of December 31, 2023, we were not committed to providing a fixed quantity of oil or natural gas under any existing contracts.
Biggest changeFor the Year Ended As of December 31, 2024 December 31, 2024 Percentage of Oil, Natural Gas, and Natural Gas Liquids Revenues Percentage of accounts receivables from the sale of our Oil, Natural Gas and NGL production Customer: Phillips 66 Company ("Phillips") 61% 64% Concord Energy LLC ("Concord") 14% 11% LPC Crude III, LLC ("LPC") 13% 11% Total of top three customers 88% 86% Delivery Commitments As of December 31, 2024, we were not committed to providing a fixed quantity of oil or natural gas under any existing contracts.
Item 1: Business General Ring Energy, Inc., a Nevada corporation (“Ring,” “Ring Energy,” the “Company,” “we,” “us,” “our,” or similar terms), is a growth oriented independent oil and natural gas exploration and production company based in The Woodlands, Texas and is engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in the Permian Basin of Texas.
Item 1: Business General Ring Energy, Inc., a Nevada corporation (“Ring,” “Ring Energy,” the “Company,” “we,” “us,” “our,” or similar terms), is a growth oriented independent oil and natural gas exploration and production company based in The Woodlands, Texas engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in the Permian Basin of Texas.
The FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services.
FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services.
Therefore, we cannot provide any assurance that the less stringent regulatory approach established by the FERC will continue. However, we do not believe that any action taken will affect us in a way that materially differs from the way it affects other natural gas producers. Intrastate natural gas transportation is subject to regulation by state regulatory agencies.
Therefore, we cannot provide any assurance that the less stringent regulatory approach established by FERC will continue. However, we do not believe that any action taken will affect us in a way that materially differs from the way it affects other natural gas producers. Intrastate natural gas transportation is subject to regulation by state regulatory agencies.
The CWA prohibits the placement of dredge or fill material in wetlands or other WOTUS unless authorized by a permit issued by the U.S. Army Corps of Engineers (“Corps”) or a delegated state agency pursuant to Section 404.
The CWA prohibits the placement of dredge or fill material in wetlands or other WOTUS unless authorized by a permit issued by the U.S. Army Corps of Engineers (“Corps”) or a delegated state agency pursuant to Section 404 of the CWA.
Under CERCLA, RCRA and analogous state laws, we could be required to remove or remediate environmental impacts on properties we currently own and lease or formerly owned or leased (including hazardous substances or wastes disposed of or released by prior owners or operators), to clean up contaminated off-site disposal facilities where our wastes have come to be located or to implement remedial measures to prevent or mitigate future contamination.
Under CERCLA, RCRA and analogous state laws, we could be required to remove or remediate environmental impacts on properties we currently lease or formerly owned or leased (including hazardous substances or wastes disposed of or released by prior owners or operators), to clean up contaminated off-site disposal facilities where our wastes have come to be located or to implement remedial measures to prevent or mitigate future contamination.
In addition, the proposed rule would establish “Emissions Guidelines,” creating a Subpart OOOOc that would require states to develop plans to reduce methane emissions from existing sources that must be at least as effective as presumptive standards set by the EPA. In November 2022, the EPA issued a proposed rule supplementing the November 2021 proposed rule.
In addition, the proposed rule sought to establish “Emissions Guidelines,” creating a Subpart OOOOc that would require states to develop plans to reduce methane emissions from existing sources that must be at least as effective as presumptive standards set by the EPA. In November 2022, the EPA issued a proposed rule supplementing the November 2021 proposed rule.
Environmental Compliance and Risks Our oil and natural gas exploration, development, and production operations are subject to stringent federal, state, and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection.
Environmental Compliance and Risks Our oil and natural gas exploration, development, and production operations are subject to numerous stringent federal, state, and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection.
While the State of Texas has not formally conducted a recent rulemaking related to air emissions, scrutiny of oil and natural gas operations and the rules affecting them have increased in recent years.
While the State of Texas has not formally conducted recent rulemaking related to air emissions, scrutiny of oil and natural gas operations and the rules affecting them have increased in recent years.
In September 2023, the EPA and the Corps published a direct-to-final rule that conforms the regulatory definition of “Waters of the United States” to the Supreme Court’s May 2023 decision in Sackett.
In September 2023, the EPA and the Corps published a direct-to-final rule that conforms the regulatory definition of “Waters of the United States” to the Supreme Court’s May 2023 decision in Sackett v. EPA .
Ring Energy’s Strengths Our strengths include: • high quality asset base in one of North America’s leading oil and gas producing regions characterized by relatively low declines and attractive margins; • de-risked Permian Basin acreage position with multi-year drilling inventory of horizontal and vertical development potential; • concentrated acreage position with high degree of operational control; • experienced and proven management team with substantive technical and operational expertise; • operating control over most of our production and development activities; and • commitment to cost efficient operations, health, safety, protecting the environment, our employees, and the communities in which we work and operate.
Ring Energy’s Strengths Our strengths include: 9 Table of Contents • High quality asset base in one of North America’s leading oil and gas producing regions characterized by relatively low declines and attractive margins; • De-risked Permian Basin acreage position with multi-year drilling inventory of horizontal and vertical development potential; • Concentrated acreage position with high degree of operational control; • Experienced and proven management team with substantive technical and operational expertise; • Operating control over most of our production and development activities; and • Commitment to cost efficient operations, health, safety, protecting the environment, our employees, and the communities in which we work and operate.
The proposed rule would make the existing regulations in Subpart OOOOa more stringent and create a Subpart OOOOb to expand reduction requirements for new, modified, and reconstructed oil and gas sources, including standards focusing on certain source types that have never been regulated under the CAA (including intermittent vent pneumatic controllers, associated gas, and liquids unloading facilities).
The proposed rule sought to make the existing regulations in Subpart OOOOa more stringent and create a Subpart OOOOb to expand reduction requirements for new, modified, and reconstructed oil and gas sources, including standards focusing on certain source types that have never been regulated under the CAA (including intermittent vent pneumatic controllers, associated gas, and liquids unloading facilities).
Federal and state regulatory agencies can impose administrative, civil, and criminal penalties for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations. In January 2023, the EPA and the Corps issued a final rule that revises the definition of WOTUS. Separately, in May 2023, the U.S. Supreme Court’s decision in Sackett v.
Federal and state regulatory agencies can impose administrative, civil, and criminal penalties for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations. In January 2023, the EPA and the Corps issued a final rule that revised the definition of WOTUS. Separately, in May 2023, the U.S. Supreme Court’s decision in Sackett v.
Our capital program is funded by operational cash flow and seeks to balance our production and reserve growth with paying down debt. We believe that remaining focused and disciplined in this regard will lead to meaningful returns for our shareholders and provide additional financial flexibility to manage potential future swings in business cycles.
Our capital program is funded by operational cash flow and we seek to balance our production and reserve growth with paying down debt. We believe that remaining focused and disciplined in this regard will lead to meaningful returns for our shareholders and provide additional financial flexibility to manage potential future swings in business cycles.
Since 1985, the FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers on an open and non-discriminatory basis.
Since 1985, FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers on an open and non-discriminatory basis.
Among other things, the November 2022 supplemental proposed rule removes an emissions monitoring exemption for small wellhead-only sites and creates a new third-party monitoring program to flag large emissions events, referred to in the proposed rule as “super emitters.” In December 2023, the EPA announced a final rule, which, among other things, requires the phase out of routine flaring of natural gas from newly constructed wells (with some exceptions) and routine leak monitoring at all well sites and compressor stations.
Among other things, the November 2022 supplemental proposed rule sought to remove an emissions monitoring exemption for small wellhead-only sites and creates a new third-party monitoring program to flag large emissions events, referred to in the proposed rule as “super emitters.” In December 2023, the EPA announced a final rule, which, among other things, requires the phase out of routine flaring of natural gas from newly constructed wells (with some exceptions) and routine leak monitoring at all well sites and compressor stations.
Generally, these laws (i) regulate air and water quality, impose limitations on the discharge of pollutants and establish standards for the handling of solid and hazardous wastes; (ii) subject our operations to certain permitting and registration requirements; (iii) require remedial measures to mitigate pollution from former or ongoing operations; and (iv) may result in the assessment of administrative, civil and criminal penalties for failure to comply with such laws.
Generally, these laws (i) regulate air and water quality, impose limitations on 12 Table of Contents the discharge of pollutants and establish standards for the handling of solid and hazardous wastes; (ii) subject our operations to certain permitting and registration requirements; (iii) require remedial measures to mitigate pollution from former or ongoing operations; and (iv) may result in the assessment of administrative, civil and criminal penalties for failure to comply with such laws.
Finally, to the extent increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, and other climatic events, such events could have a material adverse effect on the Company and potentially subject the Company to further regulation.
Finally, to the extent increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, and other climatic events, such events could have a material adverse 17 Table of Contents effect on the Company and potentially subject the Company to further regulation.
To be in compliance, the facility’s SPCC plan must satisfy all of the applicable requirements for drainage, bulk storage tanks, tank car and truck loading and unloading, transfer operations (intra-facility piping), inspections and records, security, and training. Most importantly, the facility must fully implement the SPCC plan and train personnel in its execution.
To be in compliance, the facility’s SPCC plan must satisfy all of the applicable requirements for drainage, bulk storage tanks, tank car and truck loading and unloading, transfer operations (intra-facility 14 Table of Contents piping), inspections and records, security, and training. Most importantly, the facility must fully implement the SPCC plan and train personnel in its execution.
These permits may require us to install emission control technologies to limit emissions, which can impose significant costs on our business. In November 2021, the EPA issued a proposed rule under the CAA’s New Source Performance Standards, known as Subpart OOOOa, intended to reduce methane emissions from new and existing oil and gas sources.
These permits may require us to install emission control technologies to limit emissions, which can impose significant costs on our business. 13 Table of Contents In November 2021, the EPA issued a proposed rule under the CAA’s New Source Performance Standards, known as Subpart OOOOa, intended to reduce methane emissions from new and existing oil and gas sources.
Regulation of Transportation and Sale of Natural Gas Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated pursuant to the Natural Gas Act of 1938 (“NGA”), the Natural Gas Policy Act of 1978 (“NGPA”) and regulations issued 13 Table of Contents under those Acts by the FERC.
Regulation of Transportation and Sale of Natural Gas Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated pursuant to the Natural Gas Act of 1938 (“NGA”), the Natural Gas Policy Act of 1978 (“NGPA”) and regulations issued under those Acts by FERC.
Potentially 14 Table of Contents responsible parties under CERCLA may be subject to strict, joint and several liability for the costs of investigating and cleaning up environmental contamination, for damages to natural resources and for the costs of certain health studies.
Potentially responsible parties under CERCLA may be subject to strict, joint and several liability for the costs of investigating and cleaning up environmental contamination, for damages to natural resources, and for the costs of certain health studies.
Although the FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry. We cannot accurately predict whether the FERC’s actions will achieve the goal of increasing competition in markets in which our natural gas is sold.
Although FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry. We cannot accurately predict whether FERC’s actions have achieved the goal of increasing competition in markets in which our natural gas is sold.
Some of our oil production is sold through third-party pipelines which have no regional competition and all other oil production is transported by the oil purchaser by trucks with competitive trucking costs in the area. Our oil is transported from the wellhead to tank batteries or delivery points through our flow-lines or gathering systems.
Some of our oil production is sold through third-party pipelines that have no regional competition and all other oil production is transported by the oil purchaser by trucks with competitive trucking costs in the area. Our oil is transported from the wellhead to tank batteries or delivery points through our flowlines or gathering systems.
The EPA has adopted and implemented regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant Deterioration (“PSD”) construction and Title V operating permit requirements for GHG emissions from certain large stationary sources that already are major sources of criteria pollutants under the CAA.
The EPA has adopted and implemented regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant 16 Table of Contents Deterioration (“PSD”) construction and Title V operating permit reviews for GHG emissions from certain large stationary sources that already are major sources of criteria pollutants under the CAA.
The rules also allow the RRC to modify, 17 Table of Contents suspend, or terminate permits if a disposal well is determined to be causing seismic activity. Determinations by the RRC under these rules may adversely affect our operations.
The rules also allow the RRC to modify, suspend, or terminate permits if a disposal well is determined to be causing seismic activity. Determinations by the RRC under these rules may adversely affect our operations.
Consequently, state regulators implementing both the federal UIC program and state corollaries are heavily scrutinizing the location of injection facilities relative to faulting and are limiting both the density and injection facilities as well as the rate of injection. In Texas, the RRC regulates the disposal of produced water by injection well.
Consequently, state regulators implementing both the federal UIC program and state corollaries have been heavily scrutinizing the location of injection facilities relative to faulting and are limiting both the density and injection facilities as well as the rate of injection. 15 Table of Contents In Texas, the RRC regulates the disposal of produced water by injection well.
We execute our operations in a safe and environmentally responsible manner, focus on reducing our emissions, apply advanced technologies, and continuously seek ways to reduce our operating cash costs on a per barrel basis.
We execute our operations in a safe and environmentally responsible manner, focus on reducing our emissions, applying advanced technologies, and continuously seeking ways to reduce our operating cash costs on a per barrel basis.
In addition, those companies may be able to pay more for productive oil and natural gas properties 11 Table of Contents and exploratory prospects, and to evaluate, bid for, and purchase a greater number of properties and prospects than what our financial or technical resources permit.
In addition, those companies may be able to pay more for producing oil and natural gas properties and exploratory prospects, and to evaluate, bid for, and purchase a greater number of properties and prospects than what our financial or technical resources permit.
Also, in June 2016, the EPA issued a final rule implementing wastewater pretreatment standards that prohibit onshore unconventional oil and natural gas extraction facilities from sending wastewater to publicly owned treatment works. This restriction of disposal options for hydraulic fracturing waste and other changes to CWA requirements may result in increased costs.
Also, in June 2016, the EPA issued a final rule implementing wastewater pretreatment standards that prohibit onshore unconventional oil and natural gas extraction facilities from sending wastewater to publicly owned treatment works. This restriction of disposal options for hydraulic fracturing waste and other changes to CWA requirements have resulted in increased costs to operators, including us.
In December 2023, the United States participated in the United Nations Climate Change Conference in the United Arab Emirates (“COP28”). Further, several states and local governments remain committed to the principles of the Paris Agreement in their effectuation of policy and regulations.
In December 2023, the United States participated in the United Nations Climate Change Conference in the United Arab Emirates (“COP28”). In November 2024, the United States participated in the United Nations Climate Change Conference in Baku, Azerbaijan ("COP29"). Further, several states and local governments remain committed to the principles of the Paris Agreement in their effectuation of policy and regulations.
Notably, the EPA updated the applicability date for Subparts OOOOb and OOOOc to December 6, 2022, meaning that sources constructed prior to that date will be considered existing sources with later compliance deadlines under state plans. The final rule gives states two years to develop and submit their plans for reducing methane emissions from existing sources.
Notably, the EPA updated the applicability date for Subparts OOOOb and OOOOc to December 6, 2022, meaning that sources constructed prior to that date will be considered existing sources with later compliance deadlines under state plans. The final rule gave states until March 2026 to develop and submit their plans for reducing methane emissions from existing sources.
Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors.
Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in Texas will not affect our operations in any way that is of material difference from those of our competitors.
Some of our key human capital areas of focus include: Building a Safe Workforce Starts with Our Culture: Ring is committed to building a safety culture that empowers employees and contractors to act as needed to work safely and to stop the job, without retribution, if conditions are deemed unsafe. We strive to be incident-free every day across our operations.
Some of our key human capital areas of focus include the following. Building a Safe Workforce Starts with Our Culture: Ring is committed to building a safety culture that empowers employees and contractors to act as needed to work safely and to stop a job, without retribution, if conditions are deemed unsafe.
Key principles supporting Ring’s strategic vision are to: • ensure health, safety, and environmental excellence, and a strong commitment to Ring’s employees and the communities in which we work and operate; • continue our focus on generating adjusted free cash flow to improve and build a sustainable financial foundation; • pursue rigorous capital discipline focused on Ring’s highest returning opportunities; • improve margins and drive value by targeting additional operating cost reductions and capital efficiencies; and • strengthen our balance sheet by steadily paying down debt, divesting of non-core assets and becoming a peer leader in Debt/EBITDA metrics. 8 Table of Contents Our Business Strategy Our business strategy is guided by the above key principles and implemented by pursuing the following five strategic objectives, which are foundational aspects of our culture and success.
Key principles supporting Ring’s strategic vision are to: • Ensure health, safety, and environmental excellence with a strong commitment to Ring’s employees and the communities in which we work and operate; • Continue our focus on generating adjusted free cash flow to improve and build a sustainable financial foundation; • Pursue rigorous capital discipline focused on Ring’s highest returning opportunities; • Improve margins and drive value by targeting additional operating cost reductions and capital efficiencies; and • Strengthen our balance sheet by paying down debt, divesting of non-core assets and becoming a peer leader in Debt/EBITDA metrics.
Competitive Business Conditions We operate in a highly competitive environment for acquiring properties, marketing oil and natural gas, and securing competent personnel. Some of our competitors possess and employ financial resources substantially greater than ours and some of our competitors employ more technical personnel. These factors can be particularly important in the areas in which we operate.
Competitive Business Conditions We operate in a highly competitive environment for acquiring properties, marketing oil and natural gas, and securing competent personnel. Some of our competitors possess and employ financial resources substantially greater than ours and some of our competitors employ more technical personnel.
Within the PD reserve category, 242 recompletion and re-activation opportunities are classified as PDNP and within the PUD reserve category, we have a total of 211 proved locations (33% horizontal and 67% vertical) based on the reserve report as of December 31, 2023.
Within the PD reserve category, 220 recompletion and re-activation opportunities are classified as PDNP and within the PUD reserve category, we have a total of 211 proved locations (27% horizontal and 73% vertical) based on the reserve report as of December 31, 2024.
All of our properties are located in the Permian Basin and our proved reserves are oil-weighted, with approximately 63% consisting of oil, 19% consisting of natural gas, and 18% consisting of NGLs. Approximately 68% of the reserves are classified as PD and 32% are classified as PUD.
All of our properties are located in the Permian Basin and our proved reserves are oil-weighted, with approximately 60% consisting of oil, 19% consisting of natural gas, and 21% consisting of NGLs. Approximately 69% of the reserves are classified as PD and 31% are classified as PUD.
Proved reserves as of December 31, 2023 (based upon the report of our independent petroleum engineer of that date) were approximately 129.8 million Boe, of which we are the operator of approximately 98%.
Proved reserves as of December 31, 2024 (based upon the report of our independent petroleum engineer of that date) were approximately 134.2 million Boe, of which we are the operator of approximately 99%.
Our drilling operations target the oil and liquids rich producing formations in the Northwest Shelf and the Central Basin Platform, in the Permian Basin in Texas. As of December 31, 2023, our leasehold acreage positions totaled 96,127 gross (80,535 net) acres and we held interests in 1,043 gross (864 net) producing wells.
Our drilling operations target the oil and liquids rich producing formations in the Northwest Shelf and the Central Basin Platform, in the Permian Basin in Texas. As of December 31, 2024, our leasehold acreage positions totaled 97,599 gross (80,919 net) acres and we held interests in 935 gross (763 net) producing wells.
However, litigation opposing the September 2023 final rule remains ongoing and substantial uncertainty exists with respect to future implementation of the September 2023 rule and the scope of CWA jurisdiction more generally.
However, litigation opposing the September 2023 final rule remains ongoing and substantial uncertainty exists with respect to future implementation of the September 2023 rule and the scope of CWA jurisdiction more generally. Following legal actions, implementation of the most recent rule is currently split across the country.
Our employees are extremely valuable to the success of the Company, and we encourage their collaboration and respect their diverse points of view and opinions.
As of December 31, 2024, we had 115 full-time employees. Our employees are extremely valuable to the success of the Company, and we encourage their collaboration and respect their diverse points of view and opinions.
The IRA allocated $1.55 billion to the Methane Emissions and Waste Reduction Incentive Program. The IRA also required the EPA to 15 Table of Contents implement a waste emission charge on methane emitted from applicable oil and gas facilities that exceed certain thresholds.
In August 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA allocated $1.55 billion to the Methane Emissions and Waste Reduction Incentive Program. The IRA also required the EPA to implement a waste emission charge ("WEC") on methane emitted from applicable oil and gas facilities that exceed certain thresholds.
Moreover, Texas imposes a production or severance tax with respect to the production and sale of oil, natural gas and NGLs within its jurisdictions. The failure to comply with these rules and regulations can result in substantial penalties. Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations.
Moreover, Texas imposes a production or severance tax with respect to the production and sale of oil, natural gas, and NGLs within its jurisdictions. 11 Table of Contents The failure to comply with these rules and regulations can result in substantial penalties.
As a result, we may incur substantial liabilities to third parties or governmental entities for environmental matters for which we do not have insurance coverage, which could reduce or eliminate funds available for exploration, development or acquisitions or cause us to incur losses. 19 Table of Contents Human Capital Management Key to our mission is our employees upon which the foundation of our Company is built.
As a result, we may incur substantial liabilities to third parties or governmental entities for environmental matters for which we do not have insurance coverage, which could reduce or eliminate funds available for exploration, development or acquisitions or cause us to incur losses.
We seek to employ highly trained people who exemplify our core values of honesty and integrity, and are diligent, hard-working individuals who deliver results, and who are good neighbors that contribute to the communities in which they live. As of December 31, 2023, we had 108 full-time employees.
Human Capital Management Key to our mission is our employees upon which the foundation of our Company is built. We seek to employ highly trained people who exemplify our core values of honesty and integrity, and are diligent, hard-working individuals who deliver results, and who are good neighbors that contribute to the communities in which they live.
Commodity Hedging We have an active commodity hedging program through which we seek to hedge a meaningful portion of our expected oil and gas production, thereby reducing our exposure to downside commodity prices and enabling us to protect cash flows to meet our debt obligations under our credit facility and secondarily to maintain liquidity to fund our capital expenditures needs. 12 Table of Contents Governmental Regulations Oil and natural gas operations such as ours are subject to various types of legislation, regulation and other legal requirements enacted by governmental authorities.
Commodity Hedging We have an active commodity hedging program through which we seek to hedge a meaningful portion of our expected oil and gas production, thereby reducing our exposure to downside commodity prices and enabling us to protect cash flows to meet our debt obligations under our credit facility and secondarily to maintain liquidity to fund our capital expenditure needs.
A strong safety culture is essential to our success, and we emphasize the important role that all personnel play in creating and maintaining a safe work environment.
In addition, our field personnel spend significant time driving on a daily basis, putting them at risk for driving accidents. A strong safety culture is essential to our success, and we emphasize the important role that all personnel play in creating and maintaining a safe work environment.
Pursue operational excellence with a sense of urgency - We seek to deliver low cost, consistent, timely, and efficient execution of our drilling campaigns, work programs, and operations.
It is critical to have compensation, development, and human resource programs that attract, retain, and motivate the people we need to succeed. Pursue operational excellence with a sense of urgency - We seek to deliver low cost, consistent, timely, and efficient execution of our drilling campaigns, work programs, and operations.
Financial strategies associated with these efforts focus on delivering competitive debt-adjusted per share returns. This objective is key to delivering competitive returns to our shareholders on a sustainable basis.
Financial strategies associated with these efforts focus on delivering competitive debt-adjusted per share returns. This objective is key to delivering competitive returns to our shareholders on a sustainable basis. Primary Business Operations We seek to rigorously manage our asset portfolio to optimize shareholder value over the long term.
As of December 31, 2023, Phillips represented 65% of our accounts receivable, Enterprise represented 11% of our accounts receivable and NGL Crude represented 8% of our accounts receivable. We believe that the loss of any of these purchasers would not materially impact our business because we could readily find other purchasers for our oil and natural gas.
We believe that the 10 Table of Contents loss of any of these purchasers would not materially impact our business because we could readily find other purchasers for our oil and natural gas.
Facilities required to obtain PSD permits for their GHG emissions also will be required to meet “best available control technology” standards that typically are GHG emissions could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified facilities that exceed GHG emission thresholds.
Facilities required to obtain PSD permits for their GHG emissions also will be required to meet “best available control technology” standards that typically are GHG emissions.
The Federal Energy Regulatory Commission, (“FERC”), regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.
The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.
We are focused on building and maintaining a safe workplace for all employees and contractors. The oil and gas industry has a number of inherent risks and our workers are often outdoors, in all seasons and all types of weather. In addition, our field personnel spend significant time driving on a daily basis, putting them at risk for driving incidents.
We strive to be incident-free every day across our operations. We are focused on building and maintaining a safe workplace for all employees and contractors. The oil and gas industry has a number of inherent risks and our workers are often outdoors, in all seasons and all types of weather.
Our Executive Vice President of Land, Legal, Human Resources and Marketing, together with our Chief Executive Officer are responsible for developing and executing our human capital strategy, with oversight by the Board of Directors and the Board committees.
We recognize that attracting, retaining and developing our employees is critical for our future success. Our Vice President General Counsel together with our Chief Executive Officer are responsible for developing and executing our 18 Table of Contents human capital strategy, with oversight by the Board of Directors and the board committees.
Regulation of Transportation of Oil Sales of crude oil, condensate, and NGLs are not currently regulated and are made at negotiated prices; however, Congress could reenact price controls in the future. Our sales of crude oil are affected by the availability, terms, and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate regulation.
Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations. Regulation of Transportation of Oil Sales of crude oil, natural gas, and NGLs are not currently regulated and are made at negotiated prices; however, Congress could reenact price controls in the future.
Our produced saltwater is generally moved by pipeline connected to our operated saltwater disposal wells or by pipeline to commercial disposal facilities. Major Customers We principally sell our oil and natural gas production to end users, marketers and other purchasers that have access to nearby pipeline facilities.
Major Customers We principally sell our oil and natural gas production to end users, marketers and other purchasers that have access to nearby pipeline facilities. In areas where there is no practical access to pipelines, oil is trucked to storage facilities.
Although it is not possible at this time to predict what additional domestic legislation may be adopted in light of the Paris Agreement or the 18 Table of Contents Glasgow Climate Pact, or how legislation or new regulations that may be adopted based on the Paris Agreement or the Glasgow Climate Pact to address GHG emissions would impact our business, any such future laws and regulations imposing reporting obligations on, limiting emissions of GHGs from, our equipment and operations, or restricting federal leases could impair our production, could require us to incur costs to reduce emissions of GHGs associated with our operations and could decrease demand for oil and natural gas.
The full impact of these actions remains uncertain at this time; however, any such future laws and regulations imposing reporting obligations on, limiting emissions of GHGs from, our equipment and operations, or restricting federal leases could impair our production, could require us to incur costs to reduce emissions of GHGs associated with our operations and could decrease demand for oil and natural gas.
Regulation of Drilling and Production The production of oil and natural gas is subject to regulation under a wide range of local, state and federal statutes, rules, orders and regulations. Federal, state, and local statutes and regulations require permits for drilling operations, drilling bonds, and reports concerning operations.
The regulatory burden on the oil and natural gas industry increases our cost of doing business and, consequently, can affect our profitability. Regulation of Drilling and Production The production of oil and natural gas is subject to regulation under a wide range of local, state, and federal statutes, rules, orders, and regulations.
This legislation and regulation affecting the oil and natural gas industry is under constant review for amendment or expansion. Some of these requirements carry substantial penalties for failure to comply. The regulatory burden on the oil and natural gas industry increases our cost of doing business and, consequently, can affect our profitability.
Governmental Regulations Oil and natural gas operations such as ours are subject to various types of legislation, regulation and other legal requirements of governmental authorities. This legislation and regulation affecting the oil and natural gas industry is under constant review for amendment or expansion. Some of these requirements carry substantial penalties for failure to comply.
We have implemented a Leak Detection and Repair program, or LDAR, to locate and repair leaking components including valves, pumps and connectors, in order to minimize the emission of fugitive volatile organic compounds and hazardous air pollutants. In addition, as an ongoing practice, we install vapor recovery units in our newly installed tank batteries which also reduces emissions.
We have implemented a Leak Detection and Repair program, or LDAR, to locate and repair leaking components including valves, pumps, and connectors, in order to minimize the emission of fugitive volatile organic compounds and hazardous air pollutants. Our produced saltwater is generally moved by pipeline connected to our operated saltwater disposal wells or by truck to commercial disposal facilities.
On January 12, 2024, the EPA announced a proposed rule to implement the methane emissions charge.The charge will act as an incentive for operators to reduce emissions by minimizing leaks and replacing equipment rather than paying for excessive emissions.
The charge is designed to act as an incentive for operators to reduce emissions by minimizing leaks and replacing equipment rather than paying for excessive emissions. In February 2025, however, the U.S.
Pursuant to the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species’ habitat. The U.S. Fish and Wildlife Service (“FWS”) may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species.
Depending on the locations of our operations, we may be required to comply with expensive mitigation measures intended to protect the dunes sagebrush lizard and its habitat. The U.S. Fish and Wildlife Service (“FWS”) may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species.
To the extent the rule or any future rule or court decision expands the scope of the CWA’s jurisdiction, we could face increased permitting costs and project delays. 16 Table of Contents Underground Injection Control The underground injection of crude oil and natural gas wastes is regulated by the Underground Injection Control (“UIC”) program, as authorized by the SDWA, as well as by state programs.
Underground Injection Control The underground injection of crude oil and natural gas wastes is regulated by the Underground Injection Control (“UIC”) program, as authorized by the SDWA, as well as by state programs.
The trend in oil and natural gas regulation has been to increase regulatory restrictions and limitations on such activities.
Federal, state, and local statutes and regulations require permits for drilling operations, drilling bonds, and reports concerning operations. Until recently, the trend in oil and natural gas regulation was to increase regulatory restrictions and limitations on such activities.
The methane charge goes into effect in 2024 at $900 per metric ton of methane and increases to $1,500 per metric ton of methane by 2026.
The WEC for 2024 was $900 per metric ton of methane and increases to $1,200 in 2025 and $1,500 in 2026. In November 2024, the EPA finalized a rule implementing the WEC that took effect in January 2025.
Our Key Principles Successfully achieving Ring’s mission requires a firm commitment to operating safely in a socially responsible and environmentally friendly manner.
Our Mission Ring’s mission is to deliver competitive and sustainable returns to its shareholders by developing, acquiring, exploring for, and commercializing oil and natural gas resources that are vital to the world’s health and welfare. 8 Table of Contents Our Key Principles Successfully achieving Ring’s mission requires a firm commitment to operating safely in a socially responsible and environmentally friendly manner.
Threatened and endangered species Various federal and state statutes prohibit certain actions that adversely affect endangered or threatened species and their habitat, migratory birds, wetlands, and natural resources. These statutes include the Endangered Species Act (“ESA”), the Migratory Bird Treaty Act (“MBTA”) and the Clean Water Act.
The trend of more expansive and stringent environmental legislation and regulations, including greenhouse gas regulation, could continue, resulting in increased costs of conducting business and consequently affecting our profitability. Threatened and Endangered Species Various federal and state statutes prohibit certain actions that adversely affect endangered or threatened species and their habitat, migratory birds, wetlands, and natural resources.
In areas where there is no practical access to pipelines, oil is trucked to storage facilities. For the year ended December 31, 2023, sales to three customers, Phillips 66 Company ("Phillips"), Enterprise Crude Oil LLC ("Enterprise"), and NGL Crude Partners ("NGL Crude"), and represented 66%, 12%, and 10%, respectively, of our oil, natural gas, and natural gas liquids revenues.
For the year ended December 31, 2024, sales to three customers represented 88% of our oil, natural gas, and natural gas liquids revenues. As of December 31, 2024, accounts receivable from these three customers represented 86% of our total accounts receivable. Refer to the table below for the details of these percentages, respectively.
Removed
We believe our core leasehold in the Northwest Shelf and Central Basin Platform contain additional potential drilling locations.
Added
We believe our core leasehold in the Northwest Shelf and Central Basin Platform contain additional potential drilling locations. 2024 Highlights and Major Developments • Achieved record full year production of 19,648 Boepd (68% oil), a year-over-year increase in total Boe of 9% • Executed a phased drilling program in 2024 that included drilling 44.00 gross / 43.94 net operated wells consisting of 22.00 horizontal and 22.00 vertical wells (gross). • Maintained our revolving credit facility borrowing base of $600 million • Total proved reserves were 134.2 MMBoe at year-end 2024, which increased 4.4 MMBoe, or 3% from year-end 2023.
Removed
For the calculation of Boe, a barrel of oil is weighted on a 6 to 1 ratio to one thousand cubic feet ("Mcf") of natural gas. 2023 Highlights and Major Developments • Closed the Founders Acquisition on August 15, 2023 • Achieved record full year production of 18,119 Boepd (69% oil), a year-over-year increase of 47% • Executed a phased drilling program in 2023 that included drilling 31.00 gross / 29.75 net operated wells consisting of 20.00 horizontal and 11.00 vertical wells (gross).
Added
Lime Rock Purchase and Sale Agreement On February 25, 2025, the Company, as buyer, and Lime Rock Resources IV-A, L.P. ("LRRA") and Lime Rock Resources IV-C, L.P. ("LRRC" and with LRRA, "Lime Rock"), as seller, entered into a purchase and sale agreement (the "Purchase Agreement").
Removed
In addition, the Company participated in 5.00 non-operated wells. • Maintained our revolving credit facility borrowing base of $600 million • Total Proved Reserves were 129.8 MMBoe at year-end 2023 Our Mission Ring’s mission is to deliver competitive and sustainable returns to its shareholders by developing, acquiring, exploring for, and commercializing oil and natural gas resources that are vital to the world’s health and welfare.
Added
The Purchase Agreement provides that the Company will acquire (the "Lime Rock Acquisition") interests in oil and gas leases and related property of Lime Rock located in the Central Basin Platform of Texas for a purchase price (the "Purchase Price") of approximately $90 million in cash with $80 million due at closing and $10 million due on the nine months anniversary of closing, and 7,388,799 shares of our common stock.
Removed
Attract and retain highly qualified people - Achieving our mission is only possible through our employees. It is critical to have compensation, development, and human resource programs that attract, retain, and motivate the people we need to succeed.
Added
The Purchase Price is subject to customary purchase price adjustments with an effective date of October 1, 2024.
Removed
Founders Acquisition On August 15, 2023, the Company, as buyer, and Founders Oil & Gas IV, LLC (“Founders”), as seller, closed the Asset Purchase Agreement (the “Founders Purchase Agreement”) under which the Company acquired (the “Founders Acquisition”) interests in oil and gas leases and related property of Founders in the Central Basin Platform of the Permian Basin in Ector County, Texas.
Added
On February 26, 2025, in connection with the Purchase Agreement, the Company deposited $5.0 million in cash into a third party escrow account as a deposit pursuant to the Purchase Agreement, which will be credited against the Purchase Price upon the closing of the Lime Rock Acquisition.
Removed
Common Warrants Exercised During 2023, the Company reduced its dilutive shares through the exercise of 19,029,593 of the Company's outstanding common warrants, bringing the total outstanding to 78,200 common warrants as of December 31, 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, in response to findings that emissions of carbon dioxide, methane, and other GHGs endanger public health and the environment, the EPA has adopted regulations under existing provisions of the CAA that, among other things, establish PSD construction and Title V operating permit reviews for certain large stationary sources that are already potential major sources of certain principal, or criteria, pollutant emissions.
Biggest changeIn response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment, the EPA has adopted regulations pursuant to the CAA that, among other things, require PSD preconstruction and Title V operating permits for GHG emissions from certain large stationary sources, mandate monitoring and annual reporting of GHG emissions, and impose new standards for reducing methane emissions from oil and gas operations by limiting venting and flaring and implementing leak detection and repair programs.
Actual future prices and costs may differ materially from those used in the present value estimate. If future values decline or costs increase it could negatively impact our ability to finance operations, and individual properties could cease being commercially viable, affecting our decision to continue operations on certain producing properties or to attempt to develop properties.
Actual future prices and costs may differ materially from those used in the present value estimate. If future values decline or costs increase it could negatively impact our ability to finance operations, and individual properties could cease being commercially viable, affecting our decision to continue operations on certain producing properties or to attempt to develop certain properties.
Our exploration and development activities and equipment can be adversely affected by extreme weather conditions, such as abnormally low temperatures, which can cause a loss of production from temporary cessation of activity from regional power outages or lost or damaged facilities and equipment. For example, we had production stoppages in 2022 and 2023 that adversely affected our revenues.
Our exploration and development activities and equipment can be adversely affected by extreme weather conditions, such as abnormally low temperatures, which can cause a loss of production from temporary cessation of activity from regional power outages or lost or damaged facilities and equipment. For example, we had production stoppages in 2022, 2023, and 2024 that adversely affected our revenues.
The coronavirus outbreak impacted various businesses throughout the world, including an impact on the global demand for oil and natural gas, travel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If other pandemics occur, they could have a material adverse impact on our business operations, operating results and financial condition.
The recent coronavirus outbreak impacted various businesses throughout the world, including an impact on the global demand for oil and natural gas, travel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If other pandemics occur, they could have a material adverse impact on our business operations, operating results and financial condition.
The amount of additional future costs is not fully determinable due to such factors as the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions or compliance efforts that may be required, the determination of the Company’s liability in proportion to other responsible parties, and the extent to which such costs are recoverable from third parties.
The amount of any additional future costs is not fully determinable due to such factors as the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions or compliance efforts that may be required, the determination of the Company’s liability in proportion to other responsible parties, and the extent to which such costs are recoverable from third parties.
Any of these risks could adversely affect our ability to conduct operations or result in substantial losses to our Company. We may elect to not obtain certain insurance coverage if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable.
Any of these risks could adversely affect our ability to conduct operations or result in substantial losses. We may elect to not obtain certain insurance coverage if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable.
Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and natural gas reserves most likely will vary from our estimates. Any significant variance could materially affect the estimated quantities and present value of our reported reserves.
Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses, and quantities of recoverable oil and natural gas reserves will likely vary from our estimates. Any significant variance could materially affect the estimated quantities and present value of our reported reserves.
If a significant accident or other event occurs and is not fully covered by insurance, then it could materially and adversely affect us. Unless we replace our oil and natural gas reserves, our reserves and production will decline as reserves are produced.
If a significant accident or other event occurs and is not fully covered by insurance, it could materially and adversely affect us. Unless we replace our oil and natural gas reserves, our reserves and production will decline as reserves are produced.
All of these factors would have a negative impact on earnings and net income, and most likely the trading price of our common stock. These factors could also result in the acceleration of debt repayment and a reduction in our borrowing base under our Credit Facility.
All of these factors would have a negative impact on earnings and net income, and most likely the price of our common stock. These factors could also result in the acceleration of debt repayment and a reduction in our borrowing base under our Credit Facility.
The use of seismic data and other technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling whether oil or natural gas will be present or, if present, whether oil or natural gas will be present in commercial quantities.
The use of seismic data and other technologies and the study of producing fields in the same area may not enable us to know conclusively prior to drilling whether oil or natural gas will be present or, if present, whether oil or natural gas will be present in commercial quantities.
Historically, the markets for oil and natural gas have been volatile and we expect these markets will likely continue to be volatile. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control.
Historically, the markets for oil and natural gas have been volatile and we expect these markets will continue to be volatile. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control.
If we 31 Table of Contents further utilize this facility, the level of our indebtedness could affect our operations in several ways, including the following: • a significant portion of our cash flow would need to be used to service the indebtedness; • we are required to put into place derivative contracts to hedge a significant portion of our oil and gas production; • a high level of debt would increase our vulnerability to general adverse economic and industry conditions; • the covenants contained in our Credit Facility limit our ability to borrow additional funds, dispose of assets, pay dividends, and make certain investments, and; • a high level of debt could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate, or other purposes.
If we further utilize this facility, the level of our indebtedness could affect our operations in several ways, including the following: • a significant portion of our cash flow would need to be used to service the indebtedness; • we are required to put into place derivative contracts to hedge a significant portion of our oil and gas production; • a high level of debt would increase our vulnerability to general adverse economic and industry conditions; • the covenants contained in our Credit Facility limit our ability to borrow additional funds, dispose of assets, pay dividends, and make certain investments, and; • a high level of debt could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate, or other purposes.
The board of director’s ability to determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.
The Board of Directors’ ability to determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.
These factors include, but are not limited to, the following: • changes in global supply and demand for oil and natural gas; • the actions of the Organization of Petroleum Exporting Countries, or OPEC; • the actions of oil exporting countries that are not members of OPEC; • the price and quantity of imports and exports of oil and natural gas; • political conditions, including embargoes, in or affecting other oil-producing activities; • acts of war and related armed conflicts; 23 Table of Contents • the level of global oil and natural gas exploration and production activity; • the level of global oil and natural gas inventories; • weather conditions; • technological advances affecting energy consumption; and • the price and availability of alternative fuels.
These factors include, but are not limited to, the following: • changes in global supply and demand for oil and natural gas; • the actions of the Organization of Petroleum Exporting Countries, or OPEC; • the actions of oil exporting countries that are not members of OPEC; • the price and quantity of imports and exports of oil and natural gas; • political conditions, including embargoes, in or affecting other oil-producing activities; • acts of war and related armed conflicts; • the level of global oil and natural gas exploration and production activity; • the level of global oil and natural gas inventories; • weather conditions; • technological advances affecting energy consumption; and • the price and availability of alternative fuels.
If we are unable to obtain water to use in our operations from local sources, we may be unable to economically produce oil, natural gas and NGLs, which could have an adverse effect on our business, financial condition, and results of operations. Wastewaters from our operations typically are disposed of via underground injection.
If we are unable to obtain water to use in our operations from local sources, we may be unable to economically produce oil, natural gas and NGLs, which could have an adverse effect on our business, financial condition, and results of operations. Waste water from our operations typically are disposed of via underground injection.
We continue to be impacted by inflationary pressures on our operating costs and capital expenditures. Beginning in the second half of 2021 and continuing throughout 2023, we, similar to other companies in our industry, experienced inflationary pressures on our operating costs and capital expenditures - namely the costs of fuel, steel (i.e., wellbore tubulars), labor, and drilling and completion services.
We continue to be impacted by inflationary pressures on our operating costs and capital expenditures. Beginning in the second half of 2021 and continuing throughout 2024, we, similar to other companies in our industry, experienced inflationary pressures on our operating costs and capital expenditures - namely the costs of fuel, steel (i.e., wellbore tubulars), labor, and drilling and completion services.
Such inflationary pressures on our operating and capital costs, which we currently expect to continue in 2024, have impacted our cash flows and results of operations. We have undertaken, and plan to continue with, certain initiatives and actions (such as agreements with service providers to secure the costs and availability of services) to mitigate such inflationary pressures.
Such inflationary pressures on our operating and capital costs, which we currently expect to continue in 2025, have impacted our cash flows and results of operations. We have undertaken, and plan to continue with, certain initiatives and actions (such as agreements with service providers to secure the costs and availability of services) to mitigate such inflationary pressures.
Our oil and natural gas 25 Table of Contents exploration and production activities are subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the possibility of: • environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater; • abnormally pressured formations; • mechanical difficulties, such as stuck oil field drilling and service tools and casing collapses; • fires and explosions; • personal injuries and death; and • natural disasters.
Our oil and natural gas exploration and production activities are subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the possibility of: • environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas, or other pollution into the environment, including groundwater; • abnormally pressured formations; • mechanical difficulties, such as stuck oil field drilling and service tools and casing collapses; • fires and explosions; • personal injuries and death; and • natural disasters.
Natural disasters, adverse weather conditions (particularly abnormally cold weather and thunderstorms), floods, pandemics, acts of terrorism and other catastrophic or geo-political events may cause damage or disruption to our operations and the global economy, or could result in market disruptions, any of which could have an adverse effect on our business, operating results, and financial condition.
Natural disasters, adverse weather conditions (particularly abnormally cold weather in the winter, and hurricanes and thunderstorms in the summer), floods, pandemics, acts of terrorism and other catastrophic or geo-political events may cause damage or disruption to our operations and the global economy, or could result in market disruptions, any of which could have an adverse effect on our business, operating results, and financial condition.
Discounted future net revenues are estimated using oil and natural gas spot prices based on the average price during the preceding 12-month period determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, except for changes which are fixed and determinable by existing contracts.
Discounted future net revenues are estimated using oil and natural gas spot prices based on the average price 23 Table of Contents during the preceding 12-month period determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, except for changes which are fixed and determinable by existing contracts.
Additionally, our credit facility 22 Table of Contents requires us to hedge a significant portion of our production. These derivative contracts typically limit the benefit we would otherwise receive from increases in the prices for oil and natural gas. Hedging transactions may expose us to risk of financial loss.
Additionally, our credit facility requires us to hedge a significant portion of our production. These derivative contracts typically limit the benefit we would otherwise receive from increases in the prices for oil and natural gas. Hedging transactions may expose us to risk of financial loss.
Because a substantial percentage of our proved properties are proved undeveloped (approximately 32%), we will require significant additional capital to develop such properties before they may become productive.
Because a substantial percentage of our proved properties are proved undeveloped (approximately 31%), we will require significant additional capital to develop such properties before they may become productive.
It is difficult to predict with reasonable certainty the amount of any future impairments given the many factors impacting the ceiling test calculation including, but not limited to, future pricing, operating costs, upward or downward reserve revisions, reserve adds, and tax attributes.
It is difficult to estimate with any degree of reasonable certainty the amount of any future impairments given the many factors impacting the ceiling test calculation including, but not limited to, future pricing, operating costs, upward or downward reserve revisions, reserve adds, and tax attributes.
Even so, any cyber incidents or interruptions to our computing and communications infrastructure or our information systems could lead to data corruption, communication interruption, unauthorized release, gathering, monitoring, misuse, or 32 Table of Contents destruction of proprietary or other information, or otherwise significantly disrupt our business operations.
Even so, any cyber incidents or interruptions to our computing and communications infrastructure or our information systems could lead to data corruption, communication interruption, unauthorized release, gathering, monitoring, misuse, or destruction of proprietary or other information, or otherwise significantly disrupt our business operations.
Such physical risks may also impact the infrastructure on which we rely to produce or transport our products. One of more of these developments could have a material adverse effect on our business, financial condition and 30 Table of Contents operations.
Such physical risks may also impact the infrastructure on which we rely to produce or transport our products. One of more of these developments could have a material adverse effect on our business, financial condition, and operations.
Risks that we face while completing our wells include, but are not limited to, the following: • the ability to fracture or stimulate the planned number of stages in a horizontal or lateral wellbore; • the ability to run tools and other equipment the entire length of a wellbore during completion operations; and 21 Table of Contents • the ability to successfully clean out a wellbore after completion of the final fracture stimulation stage.
Risks that we face while completing our horizontal wells include, but are not limited to, the following: • the ability to fracture or stimulate the planned number of stages in a horizontal wellbore; • the ability to run tools and other equipment the entire length of a wellbore during completion operations; and • the ability to successfully clean out a wellbore after completion of the final fracture stimulation stage.
Risks Relating to the Oil and Natural Gas Industry A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments.
Risks Relating to the Oil and Natural Gas Industry 21 Table of Contents A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments.
Decreases in oil and natural gas prices may affect our bank borrowing base, potentially requiring earlier than anticipated debt repayment, which could negatively impact our financial position, results of operations and the trading value of our common stock.
Decreases in oil and natural gas prices may affect our bank borrowing base, potentially requiring earlier than anticipated debt repayment, which could negatively impact our financial position, results of operations, and the price of our common stock.
In addition to the ability of the board of directors to issue preferred stock, the existence of some provisions under Nevada law could delay or prevent a change in control of the Company, which could adversely affect the price of our common stock.
In addition to the ability of the Board of Directors to issue preferred stock, the existence of some provisions under Nevada law could delay or prevent a change in control of the Company, which could adversely affect the price of our 31 Table of Contents common stock.
If we are unable to develop, find or acquire additional reserves to replace our current and future production, our cash flow and income will decline as production declines, until our existing properties would be incapable of sustaining commercial production. Competition is intense in the oil and natural gas industry.
If we are unable to develop, find, or acquire additional reserves to replace our current and future production, our cash flow and income will decline as production declines, until our existing properties would be incapable of producing profitably. Competition is intense in the oil and natural gas industry.
Consequently, our competitors may be able to address these competitive factors more effectively than we can. If we are not successful in our competition for oil and natural gas properties or in our marketing of production, then our financial condition and operation results may be adversely affected.
Consequently, our competitors may be able to address these competitive factors more effectively than we can. If we are not successful in our competition for oil and 24 Table of Contents natural gas properties or in our marketing of production, then our financial condition and operation results would be adversely affected.
It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. Additionally, states in which we operate or own assets may impose new or increased taxes or fees on oil and natural gas extraction.
It is unclear 28 Table of Contents whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. Additionally, states in which we operate or own assets may impose new or increased taxes or fees on oil and natural gas extraction.
Risks Relating to Our Business, Operations, and Strategy Part of our strategy involves using some of the latest available horizontal drilling and completion techniques, which involve additional risks and uncertainties in their application compared to vertical drilling.
Risks Relating to Our Business, Operations, and Strategy 19 Table of Contents Part of our strategy involves using some of the latest available horizontal drilling and completion techniques, which involve additional risks and uncertainties in their application compared to vertical drilling.
Changes in environmental laws and regulations and the interpretation thereof occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal, or cleanup requirements could require us to make significant expenditures to maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position, and financial condition as well as the industry in general.
Changes in environmental laws and regulations and the interpretation thereof occur from time to time, and any changes that result in more stringent or costly waste handling, storage, transport, disposal, or cleanup requirements could require us to make significant expenditures to maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position, and financial condition as well as the industry in 26 Table of Contents general.
Our decisions to purchase, explore, develop or otherwise exploit prospects or properties will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations.
Our decisions to purchase, explore, develop, or otherwise exploit prospects or properties will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data, and engineering studies, the results of which may be inconclusive or subject to varying interpretations.
The availability of a ready market for our oil and natural gas production depends on a number of factors, including the demand for and supply of oil and natural gas and the proximity of reserves to pipelines and terminal facilities.
The availability of a ready market for our oil and natural gas production depends on a number of factors, including the demand for and supply of oil and natural gas and the proximity of our producing properties to pipelines and terminal facilities.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyberattacks.
Risks Relating to Our Common Stock We have recently registered shares of our common stock for possible resale by certain of our stockholders, resulting in significant "market overhang" of our common stock. In connection with the Stronghold Acquisition completed in 2022, Warburg Pincus & Company US, LLC and its affiliates hold approximately 46.1 million shares of our common stock.
Risks Relating to Our Common Stock We have registered shares of our common stock for possible resale by certain of our stockholders, resulting in significant "market overhang" of our common stock. In connection with the Stronghold Acquisition completed in 2022, Warburg Pincus & Company US, LLC and its affiliates hold approximately 28.9 million shares of our common stock.
The net book value is 24 Table of Contents compared to the ceiling on a quarterly basis. The excess, if any, of the net book value above the ceiling is required to be written off as an impairment expense. During the years ended December 31, 2023, 2022, and 2021 we did not incur any write-downs.
The net book value is compared to the ceiling on a quarterly basis. The excess, if any, of the net book value above the ceiling is required to be written off as an impairment expense. During the years ended December 31, 2024, 2023, and 2022 we did not incur any write-downs.
Preferred shares could also have conversion rights into shares of common stock at a discount to the market price of the common stock which could 33 Table of Contents negatively affect the market for our common stock.
Preferred shares could also have conversion rights into shares of common stock at a discount to the market price of the common stock which could negatively affect the market for our common stock.
Recent reluctance to invest in the exploration and production sector based on market volatility, historically perceived underperformance, and ESG trends, among other things, has raised concerns regarding capital availability for the sector.
Recent reluctance to invest in the exploration and production sector based on market volatility, historically perceived underperformance, and ESG trends, among other 29 Table of Contents things, has raised concerns regarding capital availability for the sector.
We have a Credit Facility in place with $600 million in commitments from borrowings and letters of credit under our Second Amended and Restated Credit Agreement dated August 31, 2022 with Truist Bank as Administrative Agent (the "Second Credit Agreement"). As of December 31, 2023, $425.0 million was outstanding on our Credit Facility.
We have a Credit Facility in place with $600 million in commitments from borrowings and letters of credit under our Second Amended and Restated Credit Agreement dated August 31, 2022 with Truist Bank as Administrative Agent (the "Second Credit Agreement"). As of December 31, 2024, $385 million was outstanding on our Credit Facility.
This represents approximately 23% of our presently outstanding shares of common stock and if the selling stockholders choose to sell all or a large number of their shares, from time to time, it likely would have a depressive effect on the market price of our common stock.
This represents approximately 14% of our presently 30 Table of Contents outstanding shares of common stock and if the selling stockholders choose to sell all or a large number of their shares, from time to time, it likely would have a depressive effect on the market price of our common stock.
New legislation and regulatory initiatives or restrictions relating to water disposal wells could have a material adverse effect on our future business, financial condition, operating results and prospects. Water is an essential component of our drilling and hydraulic fracturing processes.
Our operations are substantially dependent on the availability, use and disposal of water. New legislation and regulatory initiatives or restrictions relating to water disposal wells could have a material adverse effect on our future business, financial condition, operating results and prospects. Water is an essential component of our drilling and hydraulic fracturing processes.
Our operations may incur substantial liabilities to comply with environmental laws and regulations. Our oil and natural gas operations are subject to stringent federal, state, and local laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection.
Our oil and natural gas operations are subject to stringent federal, state, and local laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection.
Further, much of our natural gas production is sold to companies who are the only gathering and processing facilities near most of our properties Such restrictions on our ability to sell our oil or natural gas could have several adverse effects, including higher transportation costs, fewer potential purchasers (thereby potentially resulting in increased exposure to facility breakdowns and a lower selling prices) or, in the event we were unable to market and sustain production from a particular lease for an extended time, possibly causing us to lose a lease due to lack of production.
Such restrictions on our ability to sell our oil or natural gas could have several adverse effects, including higher transportation costs, fewer potential purchasers (thereby potentially resulting in increased exposure to facility breakdowns and a lower selling prices) or, in the event we were unable to market and sustain production from a particular lease for an extended time, possibly causing us to lose a lease due to lack of production.
The designation of previously unprotected species in areas where we operate as threatened or endangered could cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration, development and production activities that could have an adverse impact on our ability to develop and produce our reserves. 27 Table of Contents Our operations are substantially dependent on the availability, use and disposal of water.
The designation of previously unprotected species in areas where we operate as threatened or endangered could cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration, development and production activities that could have an adverse impact on our ability to develop and produce our reserves.
The market price of our common stock may be volatile, which could cause the value of your investment to decline. The stock markets have experienced volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.
Further, the market's perception of future sales of common stock may adversely affect the price of our common stock. The market price of our common stock may be volatile, which could cause the value of your investment to decline. The stock markets have experienced volatility that has often been unrelated to the operating performance of particular companies.
Risks Relating to Legal, Regulatory, Privacy, and Tax Matters We are subject to complex laws that can affect the cost, manner, or feasibility of doing business. Exploration, development, production, and sale of oil and natural gas are subject to extensive federal, state, local, and international regulation.
Risks Relating to Legal, Regulatory, Privacy, and Tax Matters We are subject to complex laws that can affect the cost, manner, or feasibility of doing business. Exploration, development, production, and sale of oil and natural gas are subject to extensive federal, state and local regulation. It is not possible to predict how or when regulations affecting our operations might change.
Our ability to market our production depends in substantial part on the availability and capacity of gathering systems, pipelines and processing facilities owned and operated by third parties.
Our ability to market our production depends in substantial part on the availability and capacity of gathering systems, pipelines, and processing facilities owned and operated by third parties. Our failure to obtain such services on acceptable terms could materially harm our business.
Further, many factors may curtail, delay or cancel drilling, including delays imposed by or resulting from compliance with regulatory requirements; pressure or irregularities in geological formations; shortages of or delays in obtaining equipment and qualified personnel; equipment failures or accidents; adverse weather conditions; reductions in oil and natural gas prices; title problems; and limitations in the market for oil and natural gas.
Further, many factors may curtail, delay, or cancel drilling, including delays imposed by or resulting from compliance with regulatory requirements; pressure or irregularities in geological formations; shortages of or delays in obtaining equipment and qualified personnel; equipment failures or accidents; adverse weather conditions; reductions in oil and natural gas prices; title problems; and limitations in the market for oil and natural gas. 22 Table of Contents Decreases in oil and natural gas prices may require us to incur write-downs of the financial carrying values of our oil and natural gas properties which could negatively impact the price of our common stock.
In addition, on March 6, 2024, the SEC adopted a rule requiring registrants to include certain climate-related disclosures, including Scope 1 and 2 GHG emissions, climate-related targets and goals, and certain climate-related financial statement metrics, in registration statements and annual reports. Currently, the ultimate impact of these laws on our business is uncertain.
In addition, on March 6, 2024, the SEC adopted a rule requiring registrants to include certain climate-related disclosures, including Scope 1 and 2 GHG emissions, climate-related targets and goals, and certain climate-related 27 Table of Contents financial statement metrics, in registration statements and annual reports, though the implementation of this rules is currently paused pending the outcome of legal challenges against the rule.
We are unable to predict in advance of drilling and testing whether any particular prospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable. This risk may be enhanced in our situation, due to the fact that a significant percentage of our proved reserves is currently proved undeveloped reserves.
We are unable to predict in advance of drilling and testing whether any particular prospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable.
Risks Relating to Technology and Cybersecurity We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations and/or financial loss.
Risks Relating to Technology and Cybersecurity We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations, and/or financial loss. The oil and natural gas industry is highly dependent upon digital technologies to conduct day-to-day operations including certain exploration, development, and production activities.
Moreover, federal regulators, state and local governments, and private parties have taken (or announced that they plan to take) actions that have or may have a significant influence on our operations.
Moreover, federal regulators, state and local governments, and private parties have taken (or announced that they plan to take) actions that have or may have a significant influence on our operations. International climate commitments made by political, industrial, and financial stakeholders may also impact commercial, regulatory, and consumer trends related to climate change.
The impacts of these orders, pledges, agreements and any legislation or regulation promulgated to fulfill the United States’ commitments under the Paris Agreement, COP26, COP28 or other international conventions cannot be predicted at this time.
The impacts of the United States’ withdrawal and other existing or future climate-related orders, pledges, agreements or any legislation or regulation promulgated in connection with the Paris Agreement, the Global Methane Pledge, or other international conventions cannot be predicted at this time.
These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operation and capital costs, which could have a material adverse effect on our business, financial condition, and results of operations.
These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operation and capital costs, which could have a material adverse effect on our business, financial condition, and results of operations. 25 Table of Contents Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate.
Failure to comply with these laws also may result in the suspension or termination of our operations and subject us to administrative, civil, and criminal penalties. Moreover, these laws could change in ways that substantially increase our costs. Any such liabilities, penalties, suspensions, terminations, or regulatory changes could materially adversely affect our financial condition and results of operations.
Under these laws, we could be liable for personal injuries, property damage, and other damages. Failure to comply with these laws also may result in the suspension or termination of our operations and subject us to administrative, civil, and criminal penalties. Moreover, these laws could change in ways that substantially increase our costs.
Decreases in oil and natural gas prices may require us to take write-downs of the financial carrying values of our oil and natural gas properties which could negatively impact the trading value of our common stock. Accounting rules require that we review periodically the financial carrying value of our oil and natural gas properties for possible impairment.
Accounting rules require that we review periodically the financial carrying value of our oil and natural gas properties for possible impairment.
Other matters subject to regulation include: discharge permits for drilling operations; drilling bonds; reports concerning operations; the spacing of wells; unitization and pooling of properties; and taxation. Under these laws, we could be liable for personal injuries, property damage, and other damages.
There is ongoing controversy regarding the leasing of federal lands. We may be required to make large expenditures to comply with governmental regulations. Other matters subject to regulation include: discharge permits for drilling operations; drilling bonds; reports concerning operations; the spacing of wells; unitization and pooling of properties; and taxation.
The legislation and regulations related to unclaimed property matters are complex and subject to varying interpretations by state governmental authorities. New climate disclosure rules proposed by the SEC may increase our costs of compliance and adversely impact our business. On March 6, 2024, the SEC adopted new rules relating to the disclosure of a range of climate-related risks.
The legislation and regulations related to unclaimed property matters are complex and subject to varying interpretations by state governmental authorities. Risks Relating to Our Capital Structure We have significant indebtedness.
Our failure to obtain such services on acceptable terms could materially harm our business. 26 Table of Contents Currently, some of our production is sold to marketers and other purchasers that have access to pipeline facilities. Much of our production is in areas with limited or no access to pipelines, thereby necessitating delivery by trucking.
Much of our production is in areas with limited or no access to pipelines, thereby necessitating delivery by trucking. Further, much of our natural gas production is sold to companies who are the only gathering and processing facilities near most of our properties.
Removed
For example, in January 2021, President Biden signed an Executive Order directing the Department of Interior (the “DOI”) to temporarily pause new oil and gas leases on federal lands and waters pending completion of a comprehensive review of the federal government’s existing oil and gas leasing and permitting program.
Added
This risk may be enhanced in our situation, due to the 20 Table of Contents fact that a significant percentage of our proved reserves is currently proved undeveloped reserves.
Removed
In June 2021, a federal district court enjoined the DOI from implementing the pause and leasing resumed, although litigation over the leasing pause remains ongoing. In February 2022, another judge ruled that the Biden Administration’s efforts to raise the cost of climate change in its environmental assessments, would increase energy costs and damage state revenues from energy production.
Added
For example, for the year ended December 31, 2024, we experienced a negative price of $1.44 per Mcf of natural gas with negative net sales of approximately $9.3 million, adversely affecting our cash flows and net income. Currently, some of our production is sold to marketers and other purchasers that have access to pipeline facilities.
Removed
This ruling has cause federal agencies to delay issuing new oil and gas leases and permits on federal lands and waters.
Added
Any such liabilities, penalties, suspensions, terminations, or regulatory changes could materially adversely affect our financial condition and results of operations. Our operations may incur substantial liabilities to comply with environmental laws and regulations.
Removed
While we do not have any federal lands acreage at this time, these actions could have a material adverse effect on our industry, the public perception of oil and gas companies such as ours and the willingness of the public and financial institutions to provide capital for our industry.
Added
The IRA contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, and supporting infrastructure and carbon capture and sequestration, among other provisions.
Removed
Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate.
Added
The IRA also imposes the first-ever fee on GHG emissions through a WEC, which the EPA has finalized regulations to implement. In May 2024, the EPA published a final rule expanding GHG emissions reporting obligations for certain oil and natural gas sector sources.
Removed
It is not possible to predict how or when regulations affecting our operations might change. There is ongoing controversy regarding the leasing of federal lands. We may be required to make large expenditures to comply with governmental regulations.
Added
While the first Trump administration took a number of actions to revise federal regulation of methane from the oil and natural gas sector, these actions were subsequently reversed by both the Biden administration and Congress.
Removed
However, President Biden has 28 Table of Contents highlighted addressing climate change as a priority of his administration, which includes certain potential initiatives for climate change legislation to be proposed and passed into law.
Added
Moreover, in December 2023, the EPA published a final rule that established more stringent performance standards for new sources and first-time standards for existing sources under applicable agency regulations at 40 C.F.R. Part 60 for methane and VOC emissions for the crude oil and natural gas sources.
Removed
Facilities required to obtain PSD permits for their GHG emissions also will be required to meet “best available control technology” standards that will be established by the states or, in some cases, by the EPA for those emissions.
Added
The requirements imposed by this rule include enhanced leak detection and repair obligations, zero-emission requirements for certain processes and practices, “green well” completion standards, limitations on routine flaring, and a “Super Emitter Response Program” which triggers additional requirements following certain large emissions events.
Removed
These EPA rules could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified sources.
Added
Compliance with these rules and legislation will likely require enhanced record-keeping practices, the purchase of new equipment, such as optical gas imaging instruments to detect leaks, increased frequency of maintenance and repair activities to address emissions leakage and additional personnel time to support these activities or the engagement of third-party contractors to assist with and verify compliance.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Chairperson of the Audit Committee subsequently reports on the Company’s cybersecurity risk, monitoring, and mitigation activities to the full Board, which equips the Board and its committees to fulfill their risk oversight role. 34 Table of Contents The Board and Audit Committee are supported in their oversight capacity by our Management Cybersecurity Committee (the “MC Committee”) and our internal auditors.
Biggest changeThe Audit Committee receives regular reports, from management and our internal auditors regarding information technology, cybersecurity risk, and efforts to prevent and mitigate such risks. The Chairperson of the Audit Committee subsequently reports on the Company’s cybersecurity risk, monitoring, and mitigation activities to the full Board, which equips the Board and its committees to fulfill their risk oversight role.
There can be no assurance that our cybersecurity risk management program, including our controls, procedures and processes, will be fully complied with or that our program will be fully effective in protecting the confidentiality, integrity and availability of our information systems.
There can be no assurance that our cybersecurity risk management program, including our controls, procedures and processes will be fully effective in protecting the confidentiality, integrity, and availability of our information systems.
Our IT Manager has a Bachelor of Science in Computer Science from Texas A&M University and a Master of Business Administration from Rice University. He has over fifteen years of information technology experience in the energy industry.
Our IT Manager is responsible for reporting material incidents to our MC Committee. 32 Table of Contents Our IT Manager has a Bachelor of Science in Computer Science from Texas A&M University and a Master of Business Administration from Rice University. He has over 16 years of information technology experience in the energy industry.
Our IT Manager is responsible for assessing and managing risks from cybersecurity threats, our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our IT Manager is responsible for reporting material incidents to our MC Committee.
Our internal auditors perform audit engagements to assess our strategies, policies, procedures, and controls to reduce the risk of a cybersecurity incident. Our IT Manager is responsible for assessing and managing risks from cybersecurity threats, guiding our overall cybersecurity risk management program, and supervising both our internal cybersecurity personnel and our retained external cybersecurity consultants.
The MC Committee consists of our CEO, CFO, EVP of Engineering and Corporate Planning, and our IT Manager. Our internal auditors perform audit engagements to assess our strategies, policies, procedures, and controls to reduce the risk of a cybersecurity incident.
The Board and Audit Committee are supported in their oversight capacity by our Management Cybersecurity Committee (the “MC Committee”) and our internal auditors. The MC Committee consists of our CEO, CFO, EVP of Engineering and Corporate Strategy, Vice President - General Counsel, and our IT Manager.
Removed
The Audit Committee receives regular reports, typically on a quarterly basis, from management and our internal auditors regarding information technology, cybersecurity risk, and efforts to prevent and mitigate such risks.

Item 2. Properties

Properties — owned and leased real estate

62 edited+9 added−7 removed33 unchanged
Biggest changeThe following table sets forth our gross and net undeveloped acreage, as of December 31, 2023, under lease that will expire over the next three years unless (i) production is established on the lease or within a spacing unit of which the lease is participating, or (ii) the lease is renewed or extended prior to the relevant expiration dates: Undeveloped Acreage 2024 2025 2026 Gross Net Gross Net Gross Net Central Basin Platform 1,800 1,046 1,240 100 720 239 Northwest Shelf 8,475 1,481 8,946 3,496 3,015 454 Total 10,275 2,527 10,186 3,596 3,735 693 44 Table of Contents Production History The following table presents the historical information regarding our produced oil, natural gas and natural gas liquid volumes for the years ended December 31, 2023, 2022, and 2021: Years ended December 31, 2023 2022 2021 Oil (Bbls) Central Basin Platform 2,347,068 1,409,211 867,835 Delaware Basin (2) 25,743 81,936 104,129 Northwest Shelf 2,207,131 1,968,693 1,714,976 Total 4,579,942 3,459,840 2,686,940 Natural Gas (Mcf) (1) Central Basin Platform 3,940,107 1,563,808 171,690 Delaware Basin (2) 11,265 96,516 288,918 Northwest Shelf 2,387,786 2,428,318 2,074,580 Total 6,339,158 4,088,642 2,535,188 Natural Gas Liquids (Bbls) (1) Central Basin Platform 703,818 227,996 — Delaware Basin (2) 2,867 3,718 — Northwest Shelf 270,167 139,615 — Total 976,852 371,329 — Total production (Boe) Central Basin Platform 3,707,571 1,897,842 896,087 Delaware Basin (2) 30,488 101,740 152,282 Northwest Shelf 2,875,262 2,513,028 2,060,739 Total 6,613,321 4,512,610 3,109,108 Daily production (Boe/d) Central Basin Platform 10,158 5,200 2,455 Delaware Basin (2) 84 279 417 Northwest Shelf 7,877 6,885 5,646 Total 18,119 12,364 8,518 (1) Due to our acquisition of Stronghold's assets, which reported its volumes and revenues on a three-stream basis, beginning July 1, 2022, we began reporting volumes and revenues on a three-stream basis, separately reporting crude oil, natural gas, and NGL sales.
Biggest changeThe following table sets forth our gross and net undeveloped acreage, as of December 31, 2024, under lease that will expire over the next three years unless (i) production is established on the lease or within a spacing unit of which the lease is participating, or (ii) the lease is renewed or extended prior to the relevant expiration dates: Undeveloped Acreage 2025 2026 2027 Gross Net Gross Net Gross Net Central Basin Platform 640 115 240 108 1,223 996 Northwest Shelf 7,051 3,450 2,192 524 1,627 452 Total 7,691 3,565 2,432 632 2,850 1,448 42 Table of Contents Production History The following table presents the historical information regarding our produced oil, natural gas and natural gas liquid volumes for the years ended December 31, 2024, 2023, and 2022: Years ended December 31, 2024 2023 2022 Oil (Bbls) Central Basin Platform 2,851,788 2,347,068 1,409,211 Delaware Basin (2) — 25,743 81,936 Northwest Shelf 2,009,840 2,207,131 1,968,693 Total 4,861,628 4,579,942 3,459,840 Natural Gas (Mcf) (1) Central Basin Platform 3,808,653 3,940,107 1,563,808 Delaware Basin (2) — 11,265 96,516 Northwest Shelf 2,615,021 2,387,786 2,428,318 Total 6,423,674 6,339,158 4,088,642 Natural Gas Liquids (Bbls) (1) Central Basin Platform 749,794 703,818 227,996 Delaware Basin (2) — 2,867 3,718 Northwest Shelf 509,020 270,167 139,615 Total 1,258,814 976,852 371,329 Total production (Boe) Central Basin Platform 4,236,357 3,707,571 1,897,842 Delaware Basin (2) — 30,488 101,740 Northwest Shelf 2,954,697 2,875,262 2,513,028 Total 7,191,054 6,613,321 4,512,610 Daily production (Boe/d) Central Basin Platform 11,575 10,158 5,200 Delaware Basin (2) — 84 279 Northwest Shelf 8,073 7,877 6,885 Total 19,648 18,119 12,364 (1) Due to our acquisition of Stronghold's assets, which reported its volumes and revenues on a three-stream basis, beginning July 1, 2022, we began reporting volumes and revenues on a three-stream basis, separately reporting crude oil, natural gas, and NGL sales.
As of December 31, 2023, our reserves were based on an SEC average price of $74.70 per Bbl of WTI oil posted and $2.637 per MMBtu of Henry Hub natural gas.
As of December 31, 2023, our reserves were based on an SEC average price of $74.70 per Bbl of WTI oil posted and $2.637 per MMBtu Henry Hub natural gas.
For periods prior to July 1, 2022, sales and reserve volumes, prices, and revenues for NGLs were presented with natural gas.
For periods prior to July 1, 2022, sales and reserve volumes, prices, and revenues for NGLs were presented with natural gas.
Meekins meets or exceeds the education, training, and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers; he is proficient in judiciously applying industry standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserve definitions and guidelines.
Meekins meets or exceeds the education, training, and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers; he is proficient in applying industry standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserve definitions and guidelines.
Central Basin Platform - Andrews, Gaines, Crane, Ector, Winkler, and Ward Counties, Texas – In 2011, we acquired a 100% working interest and a 75% net revenue interest in our initial leases in Andrews and Gaines counties.
Central Basin Platform – Andrews, Gaines, Crane, Ector, Winkler, and Ward Counties, Texas – In 2011, we acquired a 100% working interest and a 75% net revenue interest in our initial leases in Andrews County.
The horizontal wells predominately produce from the San Andres conventional reservoir and the verticals produce from a variety of conventional pay sands including Holt, Glorieta, Clear Fork, Wichita Albany, Tubb, Wolfcamp and Devonian reservoirs . Title to Properties We generally conduct a preliminary title examination prior to the acquisition of properties or leasehold interests.
The horizontal wells predominately produce from the San Andres conventional reservoir and the vertical wells produce from a variety of conventional pay sands including Holt, Glorieta, Clear Fork, Wichita Albany, Tubb, Wolfcamp and Devonian reservoirs . Title to Properties We generally conduct a preliminary title examination prior to the acquisition of properties or leasehold interests.
Prices are adjusted by local field and lease level differentials and are held constant for life of reserves in accordance with SEC guidelines. 39 Table of Contents The standardized measure of discounted future net cash flows relating to the proved oil, natural gas and NGLs reserves are shown below.
Prices are adjusted by local field and lease level differentials and are held constant for life of reserves in accordance with SEC guidelines. 37 Table of Contents The standardized measure of discounted future net cash flows relating to the proved oil, natural gas, and NGLs reserves are shown below.
Our estimates of reserves and future cash flow as of December 31, 2023 and 2022 were prepared using an average price equal to the unweighted arithmetic average of the first day of the month price for each month within the 12-month periods ended December 31, 2023 and 2022, respectively, in accordance with SEC guidelines.
Our estimates of reserves and future cash flow as of December 31, 2024 and 2023 were prepared using an average price equal to the unweighted arithmetic average of the first day of the month price for each month within the 12-month periods ended December 31, 2024 and 2023, respectively, in accordance with SEC guidelines.
("CGA"), independent petroleum engineers. These reserves are 37 Table of Contents attributable solely to properties within the United States. A summary of the changes in quantities of proved (developed and undeveloped) oil, natural gas and natural gas liquid reserves is shown below.
("CGA"), independent petroleum engineers. These reserves are 35 Table of Contents attributable solely to properties within the United States. A summary of the changes in quantities of proved (developed and undeveloped) oil, natural gas, and natural gas liquid reserves is shown below.
Below is a description of the changes in our PUD reserves from December 31, 2022 to December 31, 2023. Notable changes in proved undeveloped reserves for the year ended December 31, 2023 included the following: • Conversions to developed.
Below is a description of the changes in our PUD reserves from December 31, 2023 to December 31, 2024. Notable changes in proved undeveloped reserves for the year ended December 31, 2024 included the following: • Conversions to developed.
Our Executive Vice President of Engineering and Corporate Strategy, Mr. Alex Dyes, is the technical professional primarily responsible for overseeing the preparation of our reserves estimates. He has a Bachelor of Science degree in Petroleum Engineering from the University of Texas with over 17 years of practical industry experience, including over 13 years of estimating and evaluating reserve information.
Our Executive Vice President of Engineering and Corporate Strategy, Mr. Alex Dyes, is the technical professional primarily responsible for overseeing the preparation of our reserves estimates. He has a Bachelor of Science degree in Petroleum Engineering from the University of Texas with over 18 years of practical industry experience, including over 14 years of estimating and evaluating reserve information.
Within CGA, the technical person primarily responsible for preparing the estimates set forth in the CGA letter dated January 26, 2024, filed as an exhibit to this Annual Report, was Mr. Zane Meekins. Mr. Meekins has been a practicing consulting petroleum engineer at CGA since 1989. Mr.
Within CGA, the technical person primarily responsible for preparing the estimates set forth in the CGA letter dated January 24, 2025, filed as an exhibit to this Annual Report, was Mr. Zane Meekins. Mr. Meekins has been a practicing consulting petroleum engineer at CGA since 1989. Mr.
(2) The Delaware Basin assets were sold with a closing date of May 11, 2023 and an effective date of March 1, 2023. 45 Table of Contents Production Prices and Production Costs The following tables provides historical pricing and costs statistics for the years ended December 31, 2023, 2022, and 2021.
(2) The Delaware Basin assets were sold with a closing date of May 11, 2023 and an effective date of March 1, 2023. 43 Table of Contents Production Prices and Production Costs The following tables provides historical pricing and costs statistics for the years ended December 31, 2024, 2023, and 2022.
Meekins is a Registered Professional Engineer in the State of Texas (License No. 71055) and has over 36 years of practical experience in petroleum engineering, with over 34 years of experience in the estimation and evaluation of reserves. He graduated from Texas A&M University in 1987 with a Bachelor of Science degree in Petroleum Engineering. Mr.
Meekins is a Registered Professional Engineer in the State of Texas (License No. 71055) and has over 37 years of practical experience in petroleum engineering, with over 35 years of experience in the estimation and evaluation of reserves. He graduated from Texas A&M University in 1987 with a Bachelor of Science degree in Petroleum Engineering. Mr.
As of December 31, 2023, no material amount of proved undeveloped reserves were not scheduled to be converted to proved developed status within five years they were initially disclosed.
As of December 31, 2024, no material amount of proved undeveloped reserves were not scheduled to be converted to proved developed status within five years of when they were initially disclosed.
Productive Wells The following table presents our ownership as of December 31, 2023 in productive oil and natural gas wells (a net well is our percentage ownership of a gross well). Over 99.8% of such wells are in the Permian Basin in Texas.
Productive Wells The following table presents our ownership as of December 31, 2024 in productive oil and natural gas wells (a net well is our percentage ownership of a gross well). Approximately 99.8% of such wells are in the Permian Basin in Texas.
We spent approximately $544.2 million on acquisitions and capital projects during 2023 and 2022. We expect to further develop these properties through additional drilling. The following table summarizes our total net proved reserves, pre-tax PV-10 value and Standardized Measure of Discounted Future Net Cash Flows as of December 31, 2023.
We spent approximately $391.6 million on acquisitions and capital projects during 2024 and 2023. We expect to further develop these properties through additional drilling. The following table summarizes our total net proved reserves, pre-tax PV-10 value and Standardized Measure of Discounted Future Net Cash Flows as of December 31, 2024.
Summary of Oil and Natural Gas Properties and Projects 43 Table of Contents Acreage The following table summarizes our gross and net developed and undeveloped acreage as of December 31, 2023 by region (net acreage is our percentage ownership of gross acreage).
Summary of Oil and Natural Gas Properties and Projects 41 Table of Contents Acreage The following table summarizes our gross and net developed and undeveloped acreage as of December 31, 2024 by region (net acreage is our percentage ownership of gross acreage).
As of December 31, 2022, our reserve estimates included approximately 48.0 MMBoe as proved undeveloped reserves. In accordance with our December 31, 2023 year-end independent engineering reserve report, we plan to drill our PUD drilling locations within five years of original classification.
Proved Undeveloped Reserves Our reserve estimates as of December 31, 2024 include approximately 41.6 MMBoe as PUDs. As of December 31, 2023, our reserve estimates included approximately 41.6 MMBoe as PUDs. In accordance with our December 31, 2024 year-end independent engineering reserve report, we plan to drill our PUD drilling locations within five years of original classification.
Our reserve estimates have not been filed with any Federal authority or agency (other than the SEC). As of December 31, 2023, approximately 68% of the proved reserves have been classified as PD and the remaining 32% are PUD.
Our reserve estimates have not been filed with any Federal authority or agency (other than the SEC). As of December 31, 2024, approximately 69% of the proved reserves were classified as PD and the remaining 31% were PUD.
Years ended December 31, 2023 2022 2021 Average sales price: Oil (per Bbl) $ 76.21 $ 92.80 $ 67.56 Natural gas (per Mcf) (1) $ 0.05 $ 4.57 $ 5.83 NGL (per Bbl) (1) $ 11.95 $ 20.18 $ — Total (per Boe) $ 54.60 $ 76.95 $ 63.14 (1) Due to our acquisition of Stronghold's assets, which reported its volumes and revenues on a three-stream basis, beginning July 1, 2022, we began reporting volumes and revenues on a three-stream basis, separately reporting crude oil, natural gas, and NGL sales.
Years ended December 31, 2024 2023 2022 Average sales price: Oil (per Bbl) $ 74.87 $ 76.21 $ 92.80 Natural gas (per Mcf) (1) $ (1.44) $ 0.05 $ 4.57 NGL (per Bbl) (1) $ 9.23 $ 11.95 $ 20.18 Total (per Boe) $ 50.94 $ 54.60 $ 76.95 (1) Due to our acquisition of Stronghold's assets, which reported its volumes and revenues on a three-stream basis, beginning July 1, 2022, we began reporting volumes and revenues on a three-stream basis, separately reporting crude oil, natural gas, and NGL sales.
The Corporate Reserves department works closely with independent reserve engineers from CGA at each fiscal year end to ensure the integrity, accuracy and timeliness of annual independent reserves estimates. These independently developed reserves estimates are presented to the Audit Committee.
The Corporate Reserves department works closely with independent reserve engineers from CGA at each fiscal year end to ensure the integrity, accuracy, and timeliness of annual independent reserves estimates. These independently developed reserves estimates are presented to the Audit Committee. In addition to reviewing the independently developed reserve reports, the Audit Committee also meets with CGA annually at a minimum.
As of December 31, 2023, the Company had interests in approximately five gross vertical and 146 gross horizontal producing wells, of which we operate five vertical and 111 horizontal wells. The horizontal wells predominately produce from the San Andres conventional reservoir and the verticals produce from Wolfcamp and Devonian reservoirs.
As of December 31, 2024, the Company had interests in approximately five gross vertical and 151 gross horizontal producing wells, of which we operate five vertical and 116 horizontal wells. The horizontal wells predominately produce from the San Andres conventional reservoir and the verticals produce from Wolfcamp reservoir.
Within the Northwest Shelf, we have a total of 48 proved undeveloped locations (100% horizontal) and 4 PDNP opportunities based on the reserve report as of December 31, 2023. Our reserve estimates account for the capital costs required to develop these wells and the future plugging and abandonment cost. We believe the Northwest Shelf leases contain additional potential drilling locations.
Within the Northwest Shelf, we have a total of 35 proved undeveloped locations (100% horizontal) and 3 PDNP opportunities based on the reserve report as of December 31, 2024. Our reserve estimates account for the capital costs required to develop these wells and the future plugging and abandonment costs.
Summary of Oil and Natural Gas Reserves As of December 31, 2023, our estimated proved reserves had a pre-tax PV-10 value (present value discounted at 10%) of approximately $1,647.0 million and a Standardized Measure of Discounted Future Net Cash Flows of approximately $1,399.2 million, over 99.6% of which relates to our properties in the Permian Basin in Texas.
Summary of Oil and Natural Gas Reserves As of December 31, 2024, our estimated proved reserves had a pre-tax PV-10 value (present value discounted at 10%) of approximately $1,462.8 million and a Standardized Measure of Discounted Future Net Cash Flows of 34 Table of Contents approximately $1,232.9 million, over 99.7% of which relates to our properties in the Permian Basin in Texas.
The table below provides a reconciliation of PV-10 to the standardized measure of discounted future net cash flows ( in thousands ): Present value of estimated future net revenues (PV-10) $ 1,647,031,127 Future income taxes, discounted at 10% $ 247,845,936 Standardized measure of discounted future net cash flows $ 1,399,185,191 Reserve Quantity Information Our estimates of proved reserves and related valuations are based on reports independently determined and prepared by Cawley, Gillespie & Associates, Inc.
The table below provides a reconciliation of PV-10 to the standardized measure of discounted future net cash flows: Present value of estimated future net revenues (PV-10) $ 1,462,827,136 Future income taxes, discounted at 10% $ 229,890,793 Standardized measure of discounted future net cash flows $ 1,232,936,343 Reserve Quantity Information Our estimates of proved reserves and related valuations are based on reports independently determined and prepared by Cawley, Gillespie & Associates, Inc.
As of December 31, 2022, our reserves were based on an SEC average price of $90.15 per Bbl of WTI oil posted and $6.358 per MMBtu Henry Hub natural gas.
As of December 31, 2024, our reserves were based on an SEC average price of $71.96 per Bbl of WTI oil posted and $2.130 per MMBtu of Henry Hub natural gas.
As of December 31, 2023, our total proved reserves had a net pre-tax PV-10 value of approximately $1,647.0 million and a Standardized Measure of Discounted Future Net Cash Flows of approximately $1,399.2 million.
As of December 31, 2024, our total proved reserves had a net pre-tax PV-10 value of approximately $1,462.8 million and a Standardized Measure of Discounted Future Net Cash Flows ("SMOG") of approximately $1,232.9 million.
During the year ended December 31, 2023, we incurred costs of approximately $90.3 million to convert 27 properties from PUD to PD through development. These 27 properties produced 573 MBoe during the year ended December 31, 2023, and have reserves of 7,068 MBoe as of December 31, 2023. 41 Table of Contents • Extensions.
During the year ended December 31, 2024, we incurred costs of approximately $64.7 million to convert 33 properties from PUD to PD through development. These 33 properties produced 893 MBoe during the year ended December 31, 2024, and have reserves of 6,538 MBoe as of December 31, 2024. 39 Table of Contents • Extensions.
Changes in Standardized Measure of Discounted Future Net Cash Flows 2023 2022 2021 Beginning of the year $ 2,272,113,518 $ 1,137,364,848 $ 555,871,253 Purchase of minerals in place 141,738,066 996,313,882 33,688,718 Extensions, discoveries and improved recovery 57,607,609 20,447,842 79,003,885 Development costs incurred during the year 70,697,664 67,454,522 17,513,180 Sales of oil and gas produced, net of production costs (266,004,598) (283,588,498) (154,615,685) Sales of minerals in place (59,600,128) — (2,523,746) Accretion of discount 277,365,650 133,209,763 63,810,764 Net changes in price and production costs (1,181,594,019) 646,819,172 636,884,944 Net change in estimated future development costs 37,865,811 (53,253,626) (44,357,751) Revisions of previous quantity estimates (187,443,783) 33,583,837 (22,259,508) Changes in estimated timing of cash flows (17,257,348) (119,428,019) 86,845,188 Net change in income taxes 253,696,749 (306,810,205) (112,496,394) End of the Year $ 1,399,185,191 $ 2,272,113,518 $ 1,137,364,848 40 Table of Contents Our proved reserves by state as of December 31, 2023 are summarized in the table below.
Changes in Standardized Measure of Discounted Future Net Cash Flows 2024 2023 2022 Beginning of the year $ 1,399,185,191 $ 2,272,113,518 $ 1,137,364,848 Purchase of minerals in place — 141,738,066 996,313,882 Extensions, discoveries and improved recovery 226,741,618 57,607,609 20,447,842 Development costs incurred during the year 71,665,321 70,697,664 67,454,522 Sales of oil and gas produced, net of production costs (263,830,836) (266,004,598) (283,588,498) Sales of minerals in place (10,230,951) (59,600,128) — Accretion of discount 164,703,142 277,365,650 133,209,763 Net changes in price and production costs (285,618,955) (1,181,594,019) 646,819,172 Net change in estimated future development costs 6,732,428 37,865,811 (53,253,626) Revisions of previous quantity estimates (50,292,499) (187,443,783) 33,583,837 Changes in estimated timing of cash flows (44,073,556) (17,257,348) (119,428,019) Net change in income taxes 17,955,440 253,696,749 (306,810,205) End of the Year $ 1,232,936,343 $ 1,399,185,191 $ 2,272,113,518 38 Table of Contents Our proved reserves by state as of December 31, 2024 are summarized in the table below.
This data was reviewed by various levels of management for accuracy before consultation with our 42 Table of Contents independent reserve engineers. This consultation included review of properties, assumptions and available data. Internal reserve estimates were compared to those prepared by CGA to test the estimates and conclusions before the reserves were included in this Annual Report.
This consultation included review of properties, assumptions, and available data. Internal reserve estimates were compared to those prepared by CGA to test the estimates and conclusions before the reserves were included in this Annual Report.
Standardized Measure of Discounted Future Net Cash Flows December 31, 2023 2022 2021 Future cash inflows $ 6,622,410,752 $ 9,871,961,000 $ 4,853,709,000 Future production costs (2,413,303,488) (2,751,896,250) (1,395,437,250) Future development costs (1) (562,063,424) (647,196,750) (347,757,000) Future income taxes (548,664,988) (1,142,147,641) (501,586,949) Future net cash flows 3,098,378,852 5,330,720,359 2,608,927,801 10% annual discount for estimated timing of cash flows (1,699,193,661) (3,058,606,841) (1,471,562,953) Standardized Measure of Discounted Future Net Cash Flows $ 1,399,185,191 $ 2,272,113,518 $ 1,137,364,848 (1) Future development costs include not only development costs but also future asset retirement costs.
Standardized Measure of Discounted Future Net Cash Flows As of December 31, 2024 2023 2022 Future cash inflows $ 6,165,487,616 $ 6,622,410,752 $ 9,871,961,000 Future production costs (2,432,555,200) (2,413,303,488) (2,751,896,250) Future development costs (1) (536,825,664) (562,063,424) (647,196,750) Future income taxes (465,768,645) (548,664,988) (1,142,147,641) Future net cash flows 2,730,338,107 3,098,378,852 5,330,720,359 10% annual discount for estimated timing of cash flows (1,497,401,764) (1,699,193,661) (3,058,606,841) Standardized Measure of Discounted Future Net Cash Flows $ 1,232,936,343 $ 1,399,185,191 $ 2,272,113,518 (1) Future development costs include not only development costs but also future asset retirement costs.
Additionally, our five-year PUD development plan is reviewed and approved annually by the Company’s Chief Executive Officer, Chief Financial Officer, Executive Vice President of Operations, and the Executive Vice President of Land, Legal, Human Resources, and Marketing.
Additionally, our five-year PUD development plan is reviewed and approved annually by the Company’s Chief Executive Officer; Chief Financial Officer; Executive Vice President of Engineering and Corporate Strategy; Vice President of Operations; Executive Vice President, Exploration and Geosciences; and Vice President, General Counsel.
As of December 31, 2023, the Company had interests in approximately 695 gross vertical and 197 gross horizontal producing wells, of which we operate 587 vertical and 195 horizontal wells.
As of December 31, 2024, the Company had interests in approximately 581 gross vertical and 198 gross horizontal producing wells, of which we operate 470 vertical and 196 horizontal wells.
As of December 31, 2023, we owned interests in a total of 76,484 gross (65,462 net) developed acres and operate the vast 35 Table of Contents majority of our acreage position. In addition, as of December 31, 2023, we owned interests in approximately 19,643 gross (15,073 net) undeveloped acres.
As of December 31, 2024, we owned interests in a total of 76,284 gross (65,342 net) developed acres and operate the vast majority of our acreage position. In addition, as of December 31, 2024, we owned interests in approximately 21,315 gross (15,577 net) undeveloped acres.
As of December 31, 2023, we owned interests in a total of 63,912 gross (56,711 net) developed acres and 3,385 gross (2,668 net) undeveloped acres with an average proved operated working interest of 97% and net revenue interest of 82% in the area.
As of December 31, 2024, we owned interests in a total of 63,712 gross (56,620 net) developed acres and 6,336 gross (4,029 net) undeveloped acres with an average proved operated working interest of 97% and net revenue interest of 83% in the area.
As of December 31, 2023, we owned interests in a total of 12,572 gross (8,751 net) developed acres and 16,258 gross (12,405 net) undeveloped acres with an average proved operated working interest of 89% and net revenue interest of 67%.
As of December 31, 2024, we owned interests in a total of 12,572 gross (8,722 net) developed acres and 14,979 gross (11,548 net) undeveloped acres with an average proved operated working interest of 91% and net revenue interest of 69%.
These amounts are calculated by dividing our total production costs or total production taxes by our total volume sold, in Boe. 47 Table of Contents Costs incurred for property acquisition, exploration and development activities for the years ended December 31, 2023, 2022 and 2021 are shown below: 2023 2022 2021 Payments to acquire oil and natural gas properties $ 82,900,900 $ 179,387,490 $ 1,368,437 Payments to explore oil and natural gas properties — — — Payments to develop oil and natural gas properties 152,559,314 129,332,155 51,302,131 Total costs incurred $ 235,460,214 $ 308,719,645 $ 52,670,568 Other Properties and Commitments Effective January 1, 2021, the Company moved its corporate headquarters to The Woodlands, Texas.
Costs incurred for property acquisition, exploration and development activities for the years ended December 31, 2024, 2023 and 2022 are shown below: 2024 2023 2022 Payments to acquire oil and natural gas properties $ 2,210,826 $ 82,900,900 $ 179,387,490 Payments to explore oil and natural gas properties — — — Payments to develop oil and natural gas properties 153,945,456 152,559,314 129,332,155 Total costs incurred $ 156,156,282 $ 235,460,214 $ 308,719,645 Other Properties and Commitments Effective January 1, 2021, the Company moved its corporate headquarters to The Woodlands, Texas.
Prior to this, our principal offices were in Midland, Texas. Those offices now serve as an operations office. Our office space lease in Tulsa, Oklahoma was terminated as of March 31, 2021.
Prior to this, our principal offices were in Midland, Texas. Those offices now serve as an operations office.
In 2023, extensions of 4.8 MMBoe were primarily the result of the successful operated drilling program and non-operated activity in the Northwest Shelf and Central Basin Platform. • Purchase of minerals in place.
In 2024, extensions of 12.8 MMBoe were primarily the result of the successful operated drilling program in the Northwest Shelf and Central Basin Platform. • Purchase of minerals in place. In 2024, we did not purchase any additional reserves. • Sales of minerals in place.
For the year ended December 31, 2023 2022 2021 Gross Net Gross Net Gross Net Exploratory Productive — — — — — — Dry — — — — — — Development Productive 5.00 0.59 3.00 0.33 2.00 0.23 Dry — — — — — — Total Productive 5.00 0.59 3.00 0.33 2.00 0.23 Dry — — — — — — Present Activities We had no operated wells in the process of being drilled or completed as of December 31, 2023.
For the year ended December 31, 2024 2023 2022 Gross Net Gross Net Gross Net Exploratory Productive — — — — — — Dry — — — — — — Development Productive — — 5.00 0.59 3.00 0.33 Dry — — — — — — Total Productive — — 5.00 0.59 3.00 0.33 Dry — — — — — — Present Activities We had one operated well waiting on completion as of December 31, 2024.
Of this, 14.00 gross (12.75 net) horizontal San Andres wells were in the Northwest Shelf (nine 1.0-mile laterals and five 1.5-mile laterals.) and 17.00 gross (17.00 net) wells were in the Central Basin Platform, of which six were horizontal San Andres wells in Andrews County, Texas (two 1.0-mile laterals and four 1.5-mile laterals) and 11.00 were vertical wells in Crane County, Texas.
Of this, 5.00 gross (4.94 net) horizontal San Andres wells were in the Northwest Shelf in Yoakum County (four 1.0-mile laterals and one 1.5-mile lateral) and 39.00 gross (39.00 net) wells were in the Central Basin Platform, of which seventeen were horizontal San Andres wells in Andrews County and Crane County, Texas (all 1.0-mile laterals) and 22.00 were vertical wells in Crane County, and Ector County, Texas.
Revisions represent changes in previous reserves estimates, either upward or downward, resulting from new information normally obtained from development drilling and production history, five year rule and/or resulting from a change in economic factors, such as commodity prices, operating costs or development costs. Notable changes in proved reserves for the year ended December 31, 2023 included the following: • Extensions.
Revisions represent changes in previous reserves estimates, either upward or downward, resulting from new information normally obtained from development drilling and production history, a rule that undeveloped reserves must be drilled within five years of originally being booked, and/or resulting from a change in economic factors, such as commodity prices, operating costs or development costs.
In 2023, the negative revisions of prior reserves of 9.0 MMBoe consisted of 5.3 MMBoe (59%) related to changes in price and 3.7 MMBoe (41%) related to changes in performance and other economic factors. 38 Table of Contents Our proved oil, natural gas and natural gas liquid reserves are shown below.
In 2024, the negative revisions of prior reserves of 3.2 MMBoe consisted of a positive 0.2 MMBoe related to changes in price (including differentials and gathering related contract change that effects differentials), offset by a negative 3.4 MMBoe related to changes in performance and other economic factors. 36 Table of Contents Our proved oil, natural gas, and natural gas liquid reserves are shown below.
With respect to our properties of which we are not the record owner, we rely on contracts with the owner or operator of the property or assignment of leases, pursuant to which, among other things, we generally have the right to have our interest placed on record. 36 Table of Contents Our properties are generally subject to royalty, overriding royalty and other interests customary in the industry, liens incident to lending agreements, current taxes and other customary burdens, minor encumbrances, easements and restrictions.
With respect to our properties of which we are not the record owner, we rely on contracts with the owner or operator of the property or assignment of leases, pursuant to which, among other things, we generally have the right to have our interest placed on record.
Pursuing Profitable Acquisitions We have historically pursued acquisitions of properties that we believe to have exploitation and development potential comparable to our existing inventory of drilling locations. We have an experienced team of management, engineering, geoscience, and land professionals who identify and evaluate acquisition opportunities, negotiate and close purchases and manage acquired properties.
We have an experienced team of management, engineering, geoscience, and land professionals who identify and evaluate acquisition opportunities, negotiate and close purchases and manage acquired properties.
Within the Central Basin Platform, we had a total of 163 proved undeveloped locations (13% horizontal and 87% vertical) and 238 PDNP opportunities based on the reserve report as of December 31, 2023. Our reserve estimates account for the capital costs required to develop these wells. We believe the Central Basin Platform leases contain additional potential drilling locations.
We believe the Northwest Shelf leases contain additional potential drilling locations. 33 Table of Contents Within the Central Basin Platform, we had a total of 176 proved undeveloped locations (13% horizontal and 88% vertical) and 217 PDNP opportunities based on the reserve report as of December 31, 2024.
Oil (Bbl) Gas (Mcf) (2) Natural Gas Liquids (Bbl) (2) Boe (1) Balance, December 31, 2021 65,838,609 71,773,789 — 77,800,907 Purchase of minerals in place 28,086,920 108,456,107 16,715,626 62,878,564 Extensions, discoveries and improved recovery 628,978 522,178 52,810 768,818 Sales of minerals in place — — — — Production (3,459,477) (4,088,642) (371,337) (4,512,254) Revisions of previous quantity estimates (2,390,287) (18,792,983) 6,708,559 1,186,108 Balance, December 31, 2022 88,704,743 157,870,449 23,105,658 138,122,143 Purchase of minerals in place 6,543,640 3,372,965 1,089,382 8,195,183 Extensions, discoveries and improved recovery 3,098,845 4,113,480 1,014,343 4,798,768 Sales of minerals in place (4,897,921) (2,674,955) (392,953) (5,736,700) Production (4,579,942) (6,339,158) (976,852) (6,613,320) Revisions of previous quantity estimates (6,728,088) (9,946,459) (621,014) (9,006,845) Balance, December 31, 2023 82,141,277 146,396,322 23,218,564 129,759,229 _____________________________ (1) Six Mcf is deemed the equivalent of one Boe.
Oil (Bbl) Gas (Mcf) (2) Natural Gas Liquids (Bbl) (2) Boe (1) Balance, December 31, 2022 88,704,743 157,870,449 23,105,658 138,122,143 Purchase of minerals in place 6,543,640 3,372,965 1,089,382 8,195,183 Extensions, discoveries and improved recovery 3,098,845 4,113,480 1,014,343 4,798,768 Sales of minerals in place (4,897,921) (2,674,955) (392,953) (5,736,700) Production (4,579,942) (6,339,158) (976,852) (6,613,320) Revisions of previous quantity estimates (6,728,088) (9,946,459) (621,014) (9,006,845) Balance, December 31, 2023 82,141,277 146,396,322 23,218,564 129,759,229 Purchase of minerals in place — — — — Extensions, discoveries and improved recovery 11,495,236 10,630,769 2,738,451 16,005,482 Sales of minerals in place (1,140,568) (56,020) (16,361) (1,166,266) Production (4,861,628) (6,423,674) (1,258,814) (7,191,054) Revisions of previous quantity estimates (6,730,246) (730,235) 3,621,245 (3,230,707) Balance, December 31, 2024 80,904,071 149,817,162 28,303,085 134,176,684 (1) Six Mcf is deemed the equivalent of one Boe.
Approximately $1,262.7 million and $1,072.7 million, respectively, of total proved reserves are associated with the PD reserves, which is approximately 77% of the total proved reserves’ pre-tax PV-10 value. The remaining $384.4 million and $326.5 million, respectively, are associated with PUD reserves. Proved Undeveloped Reserves Our reserve estimates as of December 31, 2023 include approximately 41.6 MMBoe as PUDs.
Approximately $1,130.2 million pre-tax PV-10 and $952.6 million SMOG, respectively, of total proved reserves are associated with the PD reserves, which is approximately 77% of the total proved reserves’ pre-tax PV-10 value. The remaining $332.7 million pre-tax PV-10 and $280.4 million SMOG, respectively, are associated with PUD reserves.
As noted in the table under “Production Prices and Production Costs”, our average production costs including lease operating expenses, gathering, processing and transportation ("GPT") and ad valorem, per Boe, were $11.70 and $12.02 for the years ended December 31, 2023 and 2022, respectively, and our average production taxes, per Boe, were $2.74 and $3.80 for the years ended December 31, 2023 and 2022, respectively.
Cost Information We conduct our oil and natural gas activities entirely in the United States. As can be calculated from the table under “Production Prices and Production Costs”, our average production costs including lease operating expenses, gathering, transportation and transportation ("GTP") and ad valorem, per Boe, were $12.08 and $11.70 for the years ended December 31, 2024 and 2023, respectively.
In addition, we also participated in five gross (0.59 net) non-operated wells of which three were Northwest Shelf and two in Central Basin Platform. These wells were successful and there were no dry wells. 46 Table of Contents The table below contains information regarding the number of operated wells drilled and/or participated in during the periods indicated.
These wells were successful and there were no dry wells (1) . The table below contains information regarding the number of operated wells drilled and/or participated in during the periods indicated.
Approximately 99.8% of our proved reserves are in the Permian Basin in Texas. Oil (Bbl) Natural Gas (Mcf) Natural Gas Liquids (Bbl) Total (Boe) (1) Pre-Tax PV-10 Value (2) Standardized Measure of Discounted Future Net Cash Flows 82,141,277 146,396,322 23,218,564 129,759,229 $ 1,647,031,127 $ 1,399,185,191 _____________________________ (1) Six Mcf is deemed the equivalent of one Boe.
Approximately 99.8% of our proved reserves are in the Permian Basin in Texas. Oil (Bbl) Natural Gas (Mcf) Natural Gas Liquids (Bbl) Total (Boe) (1) Pre-Tax PV-10 Value (2) Standardized Measure of Discounted Future Net Cash Flows 80,904,071 149,817,162 28,303,085 134,176,684 $ 1,462,827,136 $ 1,232,936,343 (1) Six Mcf is deemed the equivalent of one Boe.
In 2023, extensions of 3.7 MMBoe were primarily the result of the successful operated drilling program and non-operated activity in the Northwest Shelf and Central Basin Platform. • Purchase of minerals in place.
Notable changes in proved reserves for the year ended December 31, 2024 included the following: • Extensions. In 2024, extensions of 16.0 MMBoe were primarily the result of the successful operated drilling program in the Northwest Shelf and Central Basin Platform. • Purchase of minerals in place.
In 2023, the negative revisions of prior reserves of 4.9 MMBoe consisted of 0.8 MMBoe (16%) related to changes in price and 4.1 MMBoe (84%) related to changes in performance and other economic factors.
In 2024, the negative revisions of prior reserves of 5.6 MMBoe consisted of a positive 0.2 MMBoe (4%) related to changes in price (including differentials and gathering related contract change that effects differentials) offset by a negative 5.8 MMBoe (104%) related to changes in performance and other economic factors.
For the years ended December 31, 2023 2022 Oil (Bbl) Developed 56,029,039 57,012,137 Undeveloped 26,112,238 31,692,606 Total 82,141,277 88,704,743 Natural Gas (Mcf) Developed 99,896,022 106,399,050 Undeveloped 46,500,300 51,471,399 Total 146,396,322 157,870,449 Natural Gas Liquids (Bbl) Developed 15,449,907 15,332,804 Undeveloped 7,768,657 7,772,854 Total 23,218,564 23,105,658 Total (Boe) (1) Developed 88,128,284 90,078,116 Undeveloped 41,630,945 48,044,027 Total 129,759,229 138,122,143 (1) Six Mcf is deemed the equivalent of one Boe.
For the years ended December 31, 2024 2023 Oil (Bbl) Developed 56,106,714 56,029,039 Undeveloped 24,797,357 26,112,238 Total 80,904,071 82,141,277 Natural Gas (Mcf) Developed 102,538,111 99,896,022 Undeveloped 47,279,051 46,500,300 Total 149,817,162 146,396,322 Natural Gas Liquids (Bbl) Developed 19,426,387 15,449,907 Undeveloped 8,876,698 7,768,657 Total 28,303,085 23,218,564 Total (Boe) (1) Developed 92,622,787 88,128,284 Undeveloped 41,553,897 41,630,945 Total 134,176,684 129,759,229 (1) Six Mcf is deemed the equivalent of one Boe.
Developed Acreage Undeveloped Acreage Total Acreage Gross Net Gross Net Gross Net Central Basin Platform 63,912 56,711 3,385 2,668 67,297 59,379 Northwest Shelf 12,572 8,751 16,258 12,405 28,830 21,156 Total 76,484 65,462 19,643 15,073 96,127 80,535 Leases of undeveloped acreage will generally expire at the end of their respective primary terms unless production from such leasehold acreage has been established prior to expiration of such primary terms.
Developed Acreage Undeveloped Acreage Total Acreage Gross Net Gross Net Gross Net Central Basin Platform 63,712 56,620 6,336 4,029 70,048 60,649 Northwest Shelf 12,572 8,722 14,979 11,548 27,551 20,270 Total 76,284 65,342 21,315 15,577 97,599 80,919 Leases of undeveloped acreage will generally expire at the end of their respective primary terms unless production from such leasehold acreage has been established prior to expiration of such primary terms.
These wells were considered to be analogous based on production performance from the same formation and completions using similar techniques. The technologies and economic data used to estimate our proved reserves include, but are not limited to, well logs, geological maps, seismic data, well test data, production data, historical price and cost information and property ownership interests.
The technologies and economic data used to estimate our proved reserves include, but are not limited to, well logs, geological maps, seismic data, well test data, production data, historical price and cost information, and property 40 Table of Contents ownership interests. This data was reviewed by various levels of our management for accuracy before consultation with our independent reserve engineers.
Years ended December 31, 2023 2022 2021 Average production costs (per Boe): Lease operating expenses $ 10.61 $ 10.57 $ 9.75 Gathering, transportation and processing costs $ 0.07 $ 0.41 $ 1.39 Ad valorem taxes $ 1.02 $ 1.04 $ 0.73 Production taxes $ 2.74 $ 3.80 $ 2.93 The average oil sales price amounts above are calculated by dividing revenue from oil sales by the volume of oil sold, in Bbls.
Years ended December 31, 2024 2023 2022 Average production costs (per Boe): Lease operating expenses $ 10.89 $ 10.61 $ 10.57 Gathering, transportation and processing costs $ 0.07 $ 0.07 $ 0.41 Ad valorem taxes (including methane tax) $ 1.12 $ 1.02 $ 1.04 Methane tax (2) $ 0.07 $ — $ — Ad valorem taxes (excluding methane tax) $ 1.05 $ 1.02 $ 1.04 Production taxes $ 2.24 $ 2.74 $ 3.80 (2) In accordance with the IRA, the EPA implemented a waste emission charge ("WEC") on methane emitted from applicable oil and gas facilities that exceed certain thresholds.
For the year ended December 31, 2023 2022 2021 Gross Net Gross Net Gross Net Exploratory Productive — — — — — — Dry — — — — — — Development Productive 31.00 29.75 32.00 31.35 11.00 9.91 Dry — — — — — — Total Productive 31.00 29.75 32.00 31.35 11.00 9.91 Dry — — — — — — The table below contains information regarding the number of non-operated wells drilled and participated in during the periods indicated.
The table below contains information regarding the number of non-operated wells drilled and participated in during the periods indicated.
Oil Wells Gas wells Total Wells Gross Net Gross Net Gross Net 1,023 847 20 17 1,043 864 Drilling Activity During 2023, as operator, we drilled a total of 31.00 gross (29.75 net) wells.
Oil Wells Gas wells Total Wells Gross Net Gross Net Gross Net 914 746 21 17 935 763 44 Table of Contents Drilling Activities During 2024, as operator, we drilled a total of 44.00 gross (43.94 net) wells.
We do not believe any of these burdens materially interfere with our use of these properties.
Our properties are generally subject to royalty, overriding royalty and other interests customary in the industry, liens incident to lending agreements, current taxes and other customary burdens, minor encumbrances, easements, and restrictions. We do not believe any of these burdens materially interfere with our use of these properties.
In 2023, we sold 1.3 MMBoe from the divestiture of the New Mexico operated assets (81%), and a subset of our assets in Gaines County (19%). • Revision of previous estimates.
In 2024, we sold 0.1 MMBoe from the divestiture of certain oil and gas properties within the Central Basin Platform. • Revision of previous estimates.
Removed
In 2023, the Company completed the acquisition of Founders oil and gas leases and related property within Ector County that resulted in 8.2 MMBoe in additional reserves. • Sales of minerals in place.
Added
Our reserve estimates account for the capital costs required to develop these wells and the future plugging and abandonment costs. We believe the Central Basin Platform leases contain additional potential drilling locations. Pursuing Profitable Acquisitions We have historically pursued acquisitions of properties that we believe to have exploitation and development potential comparable to our existing inventory of drilling locations.
Removed
In 2023, the Company sold 5.7 MMBoe from the divestiture of the Delaware Basin assets (30%), the New Mexico operated assets (57%), and part of the Company's assets in Gaines County (13%). • Revision of previous estimates.
Added
In 2024, the Company did not purchase any additional reserves. • Sales of minerals in place. In 2024, the Company sold 1.2 MMBoe from the divestiture of certain oil and gas properties, including vertical wells and associated facilities, within the Central Basin Platform in Andrews and Gaines Counties. • Revision of previous estimates.
Removed
Oil (Bbl) Gas (Mcf) NGL (Bbl) Total (Boe) % of Total Proved Pre-tax PV-10 (In thousands) Standardized Measure of Discounted Future Net Cash Flows (In thousands) Future Capital Expenditures (In thousands) Texas PD 55,820,275 99,572,221 15,413,055 87,828,701 68 % $ 1,256,679 $ 1,067,574 $ 145,470 PUD 26,112,238 46,500,300 7,768,657 41,630,945 32 % 384,353 326,515 416,478 Total Proved: 81,932,513 146,072,521 23,181,712 129,459,646 100 % $ 1,641,032 $ 1,394,089 $ 561,948 New Mexico PD 208,764 323,801 36,852 299,583 — % $ 5,999 $ 5,097 $ 115 PUD — — — — — % — — — Total Proved: 208,764 323,801 36,852 299,583 — % $ 5,999 $ 5,097 $ 115 Total PD 56,029,039 99,896,022 15,449,907 88,128,284 68 % $ 1,262,679 $ 1,072,670 $ 145,586 PUD 26,112,238 46,500,300 7,768,657 41,630,945 32 % 384,353 326,515 416,478 Total Proved: 82,141,277 146,396,322 23,218,564 129,759,229 100 % $ 1,647,031 $ 1,399,185 $ 562,063 Proved Reserves As of December 31, 2023, we had approximately 129.8 MMBoe (one million Boe) of proved reserves, consisting of approximately 63% oil, 19% natural gas, and 18% NGLs, as summarized in the table above.
Added
Oil (Bbl) Gas (Mcf) NGL (Bbl) Total (Boe) % of Total Proved Pre-tax PV-10 (In thousands) Standardized Measure of Discounted Future Net Cash Flows (In thousands) Future Capital Expenditures (In thousands) Texas PD 55,923,366 102,194,638 19,356,935 92,312,741 69 % $ 1,126,097 $ 949,125 $ 149,138 PUD 24,797,357 47,279,051 8,876,698 41,553,897 31 % 332,654 280,376 378,175 Total Proved: 80,720,723 149,473,689 28,233,633 133,866,638 100 % $ 1,458,751 $ 1,229,501 $ 527,313 New Mexico PD 183,348 343,473 69,452 310,046 — % $ 4,076 $ 3,435 $ 98 PUD — — — — — % — — — Total Proved: 183,348 343,473 69,452 310,046 — % $ 4,076 $ 3,435 $ 98 Total PD 56,106,714 102,538,111 19,426,387 92,622,787 69 % $ 1,130,173 $ 952,561 $ 149,236 PUD 24,797,357 47,279,051 8,876,698 41,553,897 31 % 332,654 280,376 378,175 Total Proved: 80,904,071 149,817,162 28,303,085 134,176,684 100 % $ 1,462,827 $ 1,232,936 $ 527,411 Proved Reserves As of December 31, 2024, we had approximately 134.2 MMBoe of proved reserves, consisting of approximately 60% oil, 19% natural gas, and 21% NGLs, as summarized in the table above.
Removed
In 2023, we completed the acquisition of Founders oil and gas leases and related property within Ector county that resulted in 3.7 MMBoe in additional reserves. • Sales of minerals in place.
Added
Estimated Costs Related to Conversion of Proved Undeveloped Reserves to Proved Developed Reserves Year Estimated Oil Reserves Developed (Bbl) Estimated Gas Reserves Developed (Mcf) Estimated NGL Reserves Developed (Bbl) Total Boe Estimated Development Costs 2025 9,654,298 6,533,610 1,631,662 12,374,895 $ 119,174,352 2026 6,405,076 12,440,141 2,262,321 10,740,754 101,542,200 2027 4,796,872 21,769,433 3,283,966 11,709,077 107,656,840 2028 3,941,111 6,535,867 1,698,749 6,729,171 44,293,536 2029 (1) 5,508,540 Total 24,797,357 47,279,051 8,876,698 41,553,897 $ 378,175,468 Preparation and Internal Controls Over Reserves Estimates All the proved oil and natural gas reserves disclosed in this Report are based on reserve estimates determined and prepared by our independent reserve engineers, Cawley, Gillespie & Associates, Inc.
Removed
Estimated Costs Related to Conversion of Proved Undeveloped Reserves to Proved Developed Reserves Year Estimated Oil Reserves Developed (Bbl) Estimated Gas Reserves Developed (Mcf) Estimated NGL Reserves Developed (Bbl) Total Boe Estimated Development Costs 2024 10,512,071 8,637,030 1,538,117 13,489,693 $ 157,234,213 2025 8,815,136 7,676,596 1,838,167 11,932,736 126,315,450 2026 4,047,980 15,057,984 2,286,811 8,844,455 73,672,123 2027 2,737,051 15,128,690 2,105,562 7,364,061 51,012,096 Total 26,112,238 46,500,300 7,768,657 41,630,945 $ 408,233,882 Preparation and Internal Controls Over Reserves Estimates All the proved oil and natural gas reserves disclosed in this Report are based on reserve estimates determined and prepared by our independent reserve engineers, Cawley, Gillespie & Associates, Inc.
Added
These wells were considered to be analogous based on production performance from the same formation and completions using similar techniques.
Removed
In addition to reviewing the independently developed reserve reports, the Audit Committee also periodically meets with the independent reserve engineers that prepare estimates of proved reserves.
Added
The methane charge became effective in 2024 at $900 per metric ton of methane, and is set to increase to $1,200 per metric ton of methane for 2025, and $1,500 per metric ton of methane by 2026 and thereafter.
Removed
Cost Information We conduct our oil and natural gas activities entirely in the United States.
Added
For the year ended December 31, 2024, we accrued for $527,687 in methane taxes within Ad valorem taxes in our Statements of Operations. The average oil sales price amounts above are calculated by dividing revenue from oil sales by the volume of oil sold, in Bbls.
Added
For the year ended December 31, 2024 2023 2022 Gross Net Gross Net Gross Net Exploratory Productive — — — — — — Dry — — — — — — Development Productive (1) 43.00 42.94 31.00 29.75 32.00 31.35 Dry — — — — — — Total Productive 43.00 42.94 31.00 29.75 32.00 31.35 Dry — — — — — — (1) One of the 44.00 drilled wells has been drilled but not yet completed as of December 31, 2024.
Added
As shown in the aforementioned table, our average production taxes, per Boe, 45 Table of Contents were $2.24 and $2.74 for the years ended December 31, 2024 and 2023, respectively. These amounts are calculated by dividing our total production costs or total production taxes by our total volume sold, in Boe.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−0 removed3 unchanged
Biggest changeThe Company has filed an answer and a counterclaim denying the allegations and asserting affirmative defenses that would bar or substantially limit the plaintiff’s claims, asserting breach of contract and requesting a declaratory judgment and attorneys’ fees and costs. The parties have begun taking depositions and are conducting discovery. Item 4: Mine Safety Disclosures Not applicable. PART II
Biggest changeThe Company has filed an answer and a counterclaim denying the allegations and asserting affirmative defenses that would bar or substantially limit the plaintiff’s claims, asserting breach of contract and requesting a declaratory judgment and attorneys’ fees and costs. The parties have concluded discovery in the matter and are currently set for trial in the first quarter of 2025.
Added
Item 4: Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed4 unchanged
Biggest changeThe performance graph is not solicitation material subject to Regulation 14A of the Exchange Act. Record Holders As of March 7, 2024, there were approximately 84 holders of record of our common stock. This is the number of record holders in the records of our transfer agent. It does not include holders of shares via brokerage accounts.
Biggest changeThe performance graph is not solicitation material subject to Regulation 14A of the Exchange Act. Record Holders As of March 5, 2025, there were approximately 83 holders of record of our common stock. This is the number of record holders in the records of our transfer agent. It does not include holders of shares via brokerage accounts.
This table is not intended to forecast future performance of our common stock. 48 Table of Contents The performance graph above is furnished and not filed for purposes of Section 18 of the Exchange Act and will not be incorporated by reference into any registration statement filed under the Securities Act unless specifically identified therein as being incorporated by reference.
This table is not intended to forecast future performance of our common stock. 46 Table of Contents The performance graph above is furnished and not filed for purposes of Section 18 of the Exchange Act and will not be incorporated by reference into any registration statement filed under the Securities Act unless specifically identified therein as being incorporated by reference.
The graph assumes the investment of $100 on December 31, 2018 in our common stock and each index and the reinvestment of all dividends, if any.
The graph assumes the investment of $100 on December 31, 2019 in our common stock and each index and the reinvestment of all dividends, if any.
Issuer Repurchases We did not make any repurchases of our equity securities during the year ended December 31, 2023. Item 6: Reserved 49 Table of Contents
Issuer Repurchases We did not make any repurchases of our equity securities during the year ended December 31, 2024. Item 6: Reserved 47 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

60 edited+38 added−31 removed64 unchanged
Biggest changeThe table below sets forth our drilling and completion activities for 2023 by quarter, and full year total through December 31, 2023. 51 Table of Contents Quarter Area Wells Drilled Wells Completed Recompletions 1Q 2023 Northwest Shelf (Horizontal) 4 4 — Central Basin Platform (Horizontal) — — — Central Basin Platform (Vertical) 3 3 6 Total 7 7 6 2Q 2023 Northwest Shelf (Horizontal) 4 4 — Central Basin Platform (Horizontal) — — — Central Basin Platform (Vertical) 2 2 3 Total 6 6 3 3Q 2023 Northwest Shelf (Horizontal) 5 2 — Central Basin Platform (Horizontal) 3 3 — Central Basin Platform (Vertical) 3 3 — Total 11 8 — 4Q 2023 Northwest Shelf (Horizontal) 1 4 — Central Basin Platform (Horizontal) 3 3 — Central Basin Platform (Vertical) 3 3 — Total (1) 7 10 — FY 2023 Northwest Shelf (Horizontal) 14 14 — Central Basin Platform (Horizontal) 6 6 — Central Basin Platform (Vertical) 11 11 9 Total (1) 31 31 9 (1) Fourth quarter total and full year total do not include one SWD well completed in the Northwest Shelf.
Biggest changeThe table below sets forth our drilling and completion activities for 2024 by quarter, and full year total through December 31, 2024. 49 Table of Contents Quarter Area Wells Drilled Wells Completed Drilled Uncompleted ("DUC") (2) 1Q 2024 Northwest Shelf (Horizontal) 2 2 — Central Basin Platform (Horizontal) 3 3 — Central Basin Platform (Vertical) 6 6 — Total (1) 11 11 — 2Q 2024 Northwest Shelf (Horizontal) — — — Central Basin Platform (Horizontal) 5 5 — Central Basin Platform (Vertical) 6 6 — Total 11 11 — 3Q 2024 Northwest Shelf (Horizontal) 3 3 — Central Basin Platform (Horizontal) 4 2 2 Central Basin Platform (Vertical) 6 6 — Total 13 11 2 4Q 2024 Northwest Shelf (Horizontal) — — — Central Basin Platform (Horizontal) 5 6 1 Central Basin Platform (Vertical) 4 4 — Total 9 10 1 FY 2024 Northwest Shelf (Horizontal) 5 5 — Central Basin Platform (Horizontal) 17 16 1 Central Basin Platform (Vertical) 22 22 — Total (1) 44 43 1 (1) First quarter total and full year total do not include one SWD well completed in the Central Basin Platform (2) Note that the DUC wells represent period-end counts rather than period-to-date totals.
(the "Company," "Ring," "we," "us," "our" and similar terms) is a growth oriented independent oil and natural gas exploration and production company based in The Woodlands, Texas and is engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in the Permian Basin of Texas.
(the "Company," "Ring," "we," "us," "our" and similar terms) is a growth oriented independent oil and natural gas exploration and production company based in The Woodlands, Texas engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in the Permian Basin of Texas.
On July 1, 2014, the Company entered into a Credit Agreement with SunTrust Bank (now Truist), as lender, issuing bank and administrative agent for several banks and other financial institutions and lenders (the “Administrative Agent”), (which was amended several times) that provided for a maximum borrowing base of $1 billion with security consisting of substantially all of the assets of the Company.
On July 1, 2014, the Company entered into a Credit Agreement with SunTrust Bank (now Truist Bank), as lender, issuing bank and administrative agent for several banks and other financial institutions and lenders (the “Administrative Agent”), (which was amended several times) that provided for a maximum borrowing base of $1 billion with security consisting of substantially all of the assets of the Company.
The Second Credit Agreement also contains other customary affirmative and negative covenants and events of default. The Company is required to maintain on a rolling 24 months basis, hedging transactions in respect of crude oil and natural gas, on not less than 50% of the projected production from its proved, developed, producing oil and gas.
The Second Credit Agreement also contains other customary affirmative and negative covenants and events of default. The Company is required to maintain on a rolling 24 months basis, hedging transactions in respect of crude oil and natural gas, on not less than 50% of the projected production from its proved, developed, and producing oil and gas.
A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling. The Company did not have any write-downs related to the full cost ceiling limitation during the years ended December 31, 2023, 2022, or 2021.
A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling. The Company did not have any write-downs related to the full cost ceiling limitation during the years ended December 31, 2024, 2023, or 2022.
Our estimates of reserves and future cash flow as of December 31, 2023 and 2022 were prepared using an average price equal to the unweighted arithmetic average of the first day of the month price for each month within the 12-month periods ended December 31, 2023 and 2022, respectively, in accordance with SEC guidelines.
Our estimates of reserves and future cash flow as of December 31, 2024 and 2023 were prepared using an average price equal to the unweighted arithmetic average of the first day of the month price for each month within the 12-month periods ended December 31, 2024 and 2023, respectively, in accordance with SEC guidelines.
Our operating lease expense increased by $177,893 to $541,801 in 2023 from $363,908 in 2022 due to a full year of the Midland office lease additional space, which was amended effective October 1, 2022, as 55 Table of Contents well as a quarter's impact of The Woodlands office lease additional space, which was substantially completed on September 27, 2023.
Our operating lease expense increased by $177,893 to $541,801 in 2023 from $363,908 in 2022 due to a full year of the Midland office lease additional space, which was amended effective October 1, 2022, as well as a quarter's impact of The Woodlands office lease additional space, which was substantially completed on September 27, 2023.
The ultimate realization of deferred tax assets is assessed at each reporting period and is dependent upon the generation of future taxable income and the Company’s ability to utilize operation loss carryforwards during the periods in which the temporary differences become deductible. We also consider the reversal of deferred tax liabilities and available tax planning strategies.
The ultimate realization of deferred tax assets is assessed at each reporting period and is dependent upon the generation of future taxable income and the Company's ability to utilize net operating loss carryforwards during the periods in which the temporary differences become deductible. We also consider the reversal of deferred tax liabilities and available tax planning strategies.
Average oil and natural gas prices received through 2022 and 2023 continued to demonstrate commodity price volatility and we believe oil and natural gas prices will continue to be volatile for the foreseeable future. The ability to find and develop sufficient amounts of crude oil and natural gas reserves at economical costs are critical to our long-term success.
Average oil and natural gas prices received through 2024 continued to demonstrate commodity price volatility and we believe oil and natural gas prices will continue to be volatile for the foreseeable future. The ability to find and develop sufficient amounts of crude oil and natural gas reserves at economical costs are critical to our long-term success.
Natural Gas Takeaway Capacity The Permian Basin has been experiencing a lack of sufficient pipeline transportation that is connected to markets that are purchasing the natural gas produced. This has resulted in negative natural gas prices at times, whereby the seller is actually paying the purchaser to take the gas.
Natural Gas Takeaway Capacity The Permian Basin has been experiencing a lack of sufficient pipeline transportation that is connected to markets that are purchasing the natural gas produced. This has resulted in negative natural gas prices at times, whereby the seller is 50 Table of Contents actually paying the purchaser to take the gas.
The Pre-Funded Warrants of 13,428,500 were exercised and common stock was issued in 2021, as shown in our Statements of Stockholders' Equity.
The Pre-Funded Warrants of 13,428,500 were exercised and common stock was issued in 2021, as shown in our Statement of Stockholders' Equity.
This was due to a full year of accretion on the assets acquired in the Stronghold Acquisition, a partial year of accretion on the assets acquired in the Founders Acquisition, and new wells drilled during 2023, offset by wells sold during 2023. Operating lease expense.
This was due to a full year of accretion on the assets acquired in the 55 Table of Contents Stronghold Acquisition, a partial year of accretion on the assets acquired in the Founders Acquisition, and new wells drilled during 2023, offset by wells sold during 2023. Operating lease expense.
Total gross proceeds from the 2020 underwritten public offering and the registered direct offering aggregated $20,846,282. Total net proceeds for the Common Warrants exercised in 2020 aggregated $19,379,832. The Common Shares of 9,575,800 and 3,500,000 were issued in 2020. The Pre-Funded Warrants of 3,300,000 were exercised and common stock was issued in 2020.
Gross proceeds totaled $4,756,700. Total gross proceeds from the 2020 underwritten public offering and the registered direct offering aggregated $20,846,282. Total net proceeds for the Common Warrants exercised in 2020 aggregated $19,379,832. The Common Shares of 9,575,800 and 3,500,000 were issued in 2020. The Pre-Funded Warrants of 3,300,000 were exercised and common stock was issued in 2020.
On August 31, 2022, the Company modified its Credit Facility through a Second Amended and Restated Credit Agreement (the "Second Credit Agreement"), extending the maturity date of the facility to August 2026 and the syndicate was modified to add five lenders, replacing five lenders.
On August 31, 2022, the Company modified its Amended Credit Facility through that certain Second Amended and Restated Credit Agreement (the "Second Credit Agreement"), extending the maturity date of the facility to August 2026 and the syndicate was modified to add five lenders, replacing five lenders.
Of the aforementioned 23,004,300 Common Warrants, 442,600 were exercised and common stock was issued in 2021; 10,253,907 were exercised and common stock was issued in 2022; and 19,029,593 were exercised and common stock was issued in 2023 (4,517,427 exercised at $0.80 and 14,512,166 exercised at $0.62 - refer to Note 11 — STOCKHOLDERS' EQUITY); as shown in our Statements of Stockholders' Equity.
Of the aforementioned 23,004,300 Common Warrants, 442,600 were exercised and common stock was issued in 2021; 10,253,907 were exercised and common stock was issued in 2022; and 19,029,593 were exercised and common stock was issued in 2023 (4,517,427 exercised at $0.80 and 14,512,166 exercised at $0.62 - refer to NOTE 11 — STOCKHOLDERS' EQUITY), and no Common Warrants were exercised during 2024; as shown in our Statement of Stockholders' Equity.
Gross proceeds totaled $16,089,582. Concurrently with the underwritten public offering, the Company closed on a registered direct offering of (i) 3,500,000 Common Shares, (ii) 3,300,000 Pre-Funded Warrants and (iii) 6,800,000 Common Warrants at a combined purchase price of $0.70. The Common Warrants have a term of five years and an exercise price of $0.80 per share. Gross proceeds totaled $4,756,700.
Gross proceeds totaled $16,089,582. Concurrently with the underwritten public offering, the Company closed on a registered direct offering of (i) 3,500,000 Common Shares, (ii) 3,300,000 Pre-Funded Warrants and (iii) 6,800,000 Common Warrants at a combined 57 Table of Contents purchase price of $0.70. The Common Warrants have a term of five years and an exercise price of $0.80 per share.
We believe the combination of the sources of capital discussed will continue to be adequate to meet our short and long-term liquidity needs. Credit Facility.
We believe the combination of the sources of capital discussed will continue to be adequate to meet our short and long-term liquidity needs. 56 Table of Contents Credit Facility.
In April 2019, the Company amended and restated the Credit Agreement with the Administrative Agent (as amended and restated, the “Credit Facility”).
In April 2019, the Company amended and restated the Credit Agreement with the Administrative Agent (as amended and restated, the “Amended Credit Facility”).
The oil sales increased by a volume variance of approximately $103.9 million from a significant increase in sales volumes to 4,579,942 barrels of oil in 2023from 3,459,840 barrels of oil in 2022, with approximately 19% of the increase in oil 54 Table of Contents volumes related to the Founders Acquisition.
The oil sales increased by a volume variance of approximately $103.9 million from a significant increase in sales volumes to 4,579,942 barrels of oil in 2023 from 3,459,840 barrels of oil in 2022, with approximately 19% of the increase in oil volumes related to the Founders Acquisition.
Historically, primary sources of cash have been from operations, equity offerings and borrowings on the Credit Facility. During 2023, 2022, and 2021 we had net cash provided by operating activities of $198.2 million, $197.0 million, and $72.7 million, respectively. During the three years ended December 31, 2023, we financed $20.9 million through proceeds from the sale of common stock.
Historically, primary sources of cash have been from operations, equity offerings and borrowings on the Credit Facility. During 2024, 2023, and 2022 we had net cash provided by operating activities of $194.4 million, $198.2 million, and $197.0 million, respectively. During the three years ended December 31, 2024, we financed $20.5 million through proceeds from the sale of common stock.
Our executive team, with its extensive experience in the Permian Basin, has many relationships with operators and service providers in the region. 2023 Developments and Highlights Drilling, Completion, and Recompletion In the first quarter of 2023, in the Northwest Shelf, the Company drilled and completed two 1-mile horizontal wells (each with a working interest of 100%), and two 1.5-mile horizontal wells (one with a working interest of approximately 99.8% and the other with a working interest of approximately 75.4%).
Our executive team, with its extensive experience in the Permian Basin, has many relationships with operators and service providers in the region. 2024 Developments and Highlights Drilling and Completion In the first quarter of 2024, in the Northwest Shelf, the Company drilled and completed two 1-mile horizontal wells (one with a working interest of 99.5% and the other with a working interest of 100%).
During the three months ended December 31, 2023, the Company made net paydowns of $3 million on its revolving line of credit, resulting in the outstanding long-term debt balance of $425 million. • Employ industry leading drilling and completion techniques .
During the three months ended December 31, 2024, the Company made net paydowns of $7 million on its revolving line of credit, resulting in the outstanding long-term debt balance of $385 million. • Employ industry leading drilling and completion techniques .
Our total gathering, transportation and processing costs (“GTP”) decreased by $1,372,451 to $457,573 in 2023 from $1,830,024 in 2022 and decreased slightly on a Boe basis to $0.07 in 2023 from $0.41 in 2022.
Our total GTP costs decreased by $1,372,451 to $457,573 in 2023 from $1,830,024 in 2022 and decreased slightly on a Boe basis to $0.07 in 2023 from $0.41 in 2022.
The Midland office lease was amended effective October 1, 2022, with the revised five-year lease ending September 30, 2027. The Company has financing leases for vehicles with varying maturity dates through 2026. Future lease payments for financing leases aggregate $2,006,453.
The Midland office lease was amended effective October 1, 2022, with the revised five-year lease ending September 30, 2027. The Company has financing leases for vehicles with varying maturity dates through 2027. Future lease payments for financing leases aggregate $1,667,763.
If these depressed or inverted natural gas prices continue in the region, our natural gas revenues will continue to be negatively impacted. Inflation 52 Table of Contents Inflation has increased costs associated with our capital program and production operations.
If these depressed or inverted natural gas prices return to the region, our natural gas revenues will continue to be negatively impacted. Inflation Inflation has increased costs associated with our capital program and production operations.
Additionally, during 2023, 2022 and 2021, we used cash of $215.0 million, $511.0 million and $83.2 million, respectively, to reduce the outstanding balance on our Credit Facility.
Additionally, during 2024, 2023 and 2022, we used cash of $170.0 million, $215.0 million and $511.0 million, respectively, to reduce the outstanding balance on our Credit Facility.
As of December 31, 2023, $425 million was outstanding on the Credit Facility and the Company was in compliance with all covenants contained in the Second Credit Agreement. Equity Offering.
As of December 31, 2024, $385 million was outstanding on the Credit Facility and the Company was in compliance with all covenants in the Second Credit Agreement. Equity Offering.
The borrowing base is subject to reduction in certain circumstances such as the sale or disposition of certain oil and gas properties of the Company or its subsidiaries and cancellation of certain hedging positions. Rather than Eurodollar loans, the reference rate on the Second Credit Agreement is the SOFR.
The borrowing base is redetermined semi-annually each May and November. The borrowing base is subject to reduction in certain circumstances such as the sale or disposition of certain oil and gas properties of the Company and cancellation of certain hedging positions. Rather than Eurodollar loans, the reference rate in the Second Credit Agreement is the SOFR.
During 2023, 2022, and 2021, the Company had a net draw of $10.0 million, a net draw of $125.0 million, and a net repayment of $23.0 million on the Credit Facility, respectively. We primarily used this cash to fund our capital expenditures and development aggregating $596.9 million over the three years ended December 31, 2023.
During 2024, 2023, and 2022, the Company had a net repayment of $40.0 million, a net draw of $10.0 million, and a net draw of $125.0 million on the Credit Facility, respectively. We used cash to fund our capital expenditures and development aggregating $700.3 million over the three years ended December 31, 2024.
As of December 31, 2023, we had cash on hand of $0.3 million and negative working capital of $57.9 million, compared to cash on hand of $3.7 million and negative working capital of $78.6 million as of December 31, 2022 and cash on hand of $2.4 million and negative working capital of $46.9 million as of December 31, 2021.
As of December 31, 2024, we had cash on hand of $1.9 million and negative working capital of $54.6 million, compared to cash on hand of $0.3 million and negative working capital of $57.9 million as of December 31, 2023 and cash on hand of $3.7 million and negative working capital of $78.6 million as of December 31, 2022.
We make changes to depletion rates and impairment calculations in the same period that changes to the reserve estimates are made. 61 Table of Contents All capitalized costs of oil and natural gas properties, including the estimated future costs to develop proved reserves and estimated future costs to plug and abandon wells and costs of site restoration, less the estimated salvage value of equipment associated with the oil and natural gas properties, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent petroleum engineers.
All capitalized costs of oil and natural gas properties, including the estimated future costs to develop proved reserves and estimated future costs to plug and abandon wells and costs of site restoration, less the estimated salvage value of equipment associated with the oil and natural gas properties, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent petroleum engineers.
Additionally, in its Crane County acreage within the Central Basin Platform, the Company drilled and completed two vertical wells (each with a working interest of 100%) and performed three vertical well recompletions (each with a working interest of 100%).
On the southern side of the Central Basin Platform, the Company drilled and completed one vertical well in its Crane County acreage and three vertical wells in its Ector County acreage (each with a working interest of 100%).
We continue to closely monitor costs and take all reasonable steps to mitigate the inflationary effect on our cost structure and also work to enhance our efficiency to minimize additional cost increases where possible. 53 Table of Contents Results of Operations The following table sets forth selected operating data for the periods indicated: For the years ended December 31, 2023 2022 2021 Net production: Oil (Bbls) 4,579,942 3,459,840 2,686,940 Natural gas (Mcf) 6,339,158 4,088,642 2,535,188 Natural gas liquids (Bbls) 976,852 371,329 — Net sales: Oil $ 349,044,863 $ 321,062,672 $ 181,533,093 Natural gas 334,175 18,693,631 14,772,873 Natural gas liquids 11,676,963 7,493,234 — Average sales price: Oil (per Bbl) $ 76.21 $ 92.80 $ 67.56 Natural gas (per Mcf) 0.05 4.57 5.83 Natural gas liquids (Bbl) 11.95 20.18 — Production costs and expenses: Lease operating expenses $ 70,158,227 $ 47,695,351 $ 30,312,399 Gathering, transportation and processing costs 457,573 1,830,024 4,333,232 Ad valorem taxes 6,757,841 4,670,617 2,276,463 Oil and natural gas production taxes 18,135,336 17,125,982 9,123,420 Other costs and operating expenses: Depreciation, depletion and amortization $ 88,610,291 $ 55,740,767 $ 37,167,967 Asset retirement obligation accretion 1,425,686 983,432 744,045 Operating lease expense 541,801 363,908 523,487 General and administrative expense ("G&A") 29,188,755 27,095,323 16,068,105 Share-based compensation 8,833,425 7,162,231 2,418,323 G&A excluding share-based compensation 20,355,330 19,933,092 13,649,782 Other income (expense): Interest income 257,155 4 1 Interest (expense) $ (43,926,732) $ (23,167,729) $ (14,490,474) Gain (loss) on derivative contracts 2,767,162 (21,532,659) (77,853,141) Loss on disposal of assets (87,128) — — Other income 198,935 — — Provision for Income Taxes $ (125,242) $ (8,408,724) $ (90,342) Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Oil sales .
We continue to closely monitor costs and take all reasonable steps to mitigate the inflationary effect on our cost structure and also work to enhance our efficiency to minimize additional cost increases where possible. 51 Table of Contents Results of Operations The following table sets forth selected operating data for the periods indicated: For the years ended December 31, 2024 2023 2022 Net production: Oil (Bbls) 4,861,628 4,579,942 3,459,840 Natural gas (Mcf) 6,423,674 6,339,158 4,088,642 Natural gas liquids (Bbls) 1,258,814 976,852 371,329 Net sales: Oil $ 363,971,394 $ 349,044,863 $ 321,062,672 Natural gas (9,265,335) 334,175 18,693,631 Natural gas liquids 11,621,355 11,676,963 7,493,234 Average sales price: Oil (per Bbl) $ 74.87 $ 76.21 $ 92.80 Natural gas (per Mcf) (1.44) 0.05 4.57 Natural gas liquids (Bbl) 9.23 11.95 20.18 Production costs and expenses: Lease operating expenses $ 78,310,949 $ 70,158,227 $ 47,695,351 Gathering, transportation and processing costs 506,333 457,573 1,830,024 Ad valorem taxes 8,069,064 6,757,841 4,670,617 Oil and natural gas production taxes 16,116,565 18,135,336 17,125,982 Other costs and operating expenses: Depreciation, depletion and amortization $ 98,702,843 $ 88,610,291 $ 55,740,767 Asset retirement obligation accretion 1,380,298 1,425,686 983,432 Operating lease expense 700,362 541,801 363,908 General and administrative expense ("G&A") 29,640,300 29,188,755 27,095,323 Share-based compensation 5,506,017 8,833,425 7,162,231 G&A excluding share-based compensation 24,134,283 20,355,330 19,933,092 Other income (expense): Interest income $ 491,946 $ 257,155 $ 4 Interest (expense) (43,311,810) (43,926,732) (23,167,729) Gain (loss) on derivative contracts (2,365,917) 2,767,162 (21,532,659) Gain (loss) on disposal of assets 89,693 (87,128) — Other income 106,656 198,935 — Provision for Income Taxes $ (20,440,954) $ (125,242) $ (8,408,724) Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Oil sales .
The annual interest rate on each base rate Loan is (a) the greatest of (i) the Administrative Agent’s prime lending rate, (ii) the Federal Funds Rate (as defined in the Second Credit Agreement) plus 0.5% per annum, (iii) the adjusted term SOFR determined on a daily basis for an interest period of one month, plus 1.00% per annum and (iv) 0.00% per annum, plus (b) a margin between 2.0% and 3.0% per annum (depending on the then-current level of borrowing base usage). 58 Table of Contents The Second Credit Agreement contains certain covenants, which, among other things, require the maintenance of (i) a total Leverage Ratio of not more than 3.0 to 1.0 and (ii) a minimum ratio of Current Assets to Current Liabilities (as such terms are defined in the Second Credit Agreement) of 1.0 to 1.0.
The annual interest rate on each base rate loan is (a) the greatest of (i) the Administrative Agent’s prime lending rate, (ii) the Federal Funds Rate (as defined in the Second Credit Agreement) plus 0.5% per annum, (iii) the adjusted term SOFR determined on a daily basis for an interest period of one month, plus 1.00% per annum and (iv) 0.00% per annum, plus (b) a margin between 2.0% and 3.0% per annum (depending on the then-current level of borrowing base usage).
We anticipate business costs will vary in accordance with commodity prices for oil and natural gas, and the associated increase or decrease in demand for services related to production and exploration. Off-Balance Sheet Financing Arrangements As of December 31, 2023, we had no off-balance sheet financing arrangements.
We anticipate business costs will vary in accordance with commodity prices for oil and natural gas, and the associated increase or decrease in demand for services related to production and exploration.
The outstanding balance on that Credit Facility as of December 31, 2023 was $425.0 million, which will require repayment or refinancing at or prior to maturity in August 2026. 59 Table of Contents The Company leases office spaces in The Woodlands, Texas and Midland, Texas.
Contractual Obligations. The Company maintains a Credit Facility which currently has a $600 million borrowing base. The outstanding balance on that Credit Facility as of December 31, 2024 was $385 million, which will require repayment or refinancing at or prior to maturity in August 2026. The Company leases office spaces in The Woodlands, Texas and Midland, Texas.
During the third quarter of 2023, the Company drilled and completed two 1-mile horizontal wells (one with a working interest of 100% and the other with a working interest of 75%) in the Northwest Shelf, and three 1.5-mile horizontal wells (each with a working interest of 100%) in the Central Basin Platform.
During the third quarter of 2024, in the Northwest Shelf in Yoakum County, the Company drilled and completed two 1-mile horizontal wells, each with a working interest of 100%, and one 1.5-mile horizontal well with a working interest of approximately 94.2%.
As of December 31, 2023, our reserves were based on an SEC average price of $74.70 per Bbl of WTI oil posted and $2.637 per MMBtu Henry Hub natural gas. As of December 31, 2022, our reserves were based on an SEC average price of $90.15 per Bbl of WTI oil posted and $6.358 per MMBtu Henry Hub natural gas.
As of December 31, 2024, 59 Table of Contents our reserves were based on an SEC average price of $71.96 per Bbl of WTI oil posted and $2.130 per MMBtu Henry Hub natural gas.
This difference will result in taxable income or deductions in future years when the reported amount of the asset or liability is settled. Since our tax returns are filed after the financial statements are prepared, estimates are required in valuing tax assets and liabilities. We record adjustments to the actual values in the period the Company files its tax returns.
Since our tax returns are filed after the financial statements are prepared, estimates are required in valuing tax assets and liabilities. We record adjustments to the actual values in the period the Company files its tax returns.
First Amendment to Second Amended and Restated Credit Agreement - On February 12, 2024, the Company, Truist Bank ("Truist") as the Administrative Agent and Issuing Bank, and the lenders party thereto (the "Lenders") entered into an amendment (the "Amendment") to the Second Amended and Restated Credit Agreement dated August 31, 2022, by and among the Company, as Borrower, Truist as Administrative Agent and Issuing Bank, and the Lenders (together with all amendments or other modifications, the "Credit Agreement").
On February 12, 2024, the Company, Truist Bank as the Administrative Agent and Issuing Bank, and the lenders party thereto (the "Lenders") entered into an amendment (the "Amendment") to the Second Credit Agreement.
Oil sales increased approximately $28.0 million to $349.0 million in 2023 from $321.1 million in 2022.
Oil sales increased approximately $14.9 million to $364.0 million in 2024 from $349.0 million in 2023.
Liquidity and Capital Resources Financing of Operations. We have historically funded our operations through cash available from operations and from equity offerings of our stock. Our primary source of cash in 2023 was from funds generated from the sale of oil and natural gas production. These cash flows were primarily used to fund our capital expenditures.
Our primary source of cash in 2024 was from funds generated from the sale of oil and natural gas production. These cash flows were primarily used to fund our capital expenditures and pay down our debt balance.
We continually make revisions to reserve estimates throughout the year as additional properties are acquired.
We continually make revisions to reserve estimates throughout the year as additional properties are acquired. We make changes to depletion rates and impairment calculations in the same period that changes to the reserve estimates are made.
Critical Accounting Policies and Estimates Our discussion of financial condition and results of operations is based upon the information reported in our financial statements.
Off-Balance Sheet Financing Arrangements As of December 31, 2024, we had no off-balance sheet financing arrangements. 58 Table of Contents Critical Accounting Policies and Estimates Our discussion of financial condition and results of operations is based upon the information reported in our financial statements.
Among other things, the Amendment amends the definition of Free Cash Flow so amounts used by the Company for acquisitions will no longer be subtracted from the calculation of Free Cash Flow.
Among other things, the Amendment amends the definition of Free Cash Flow so amounts used by the Company for acquisitions will no longer be subtracted from the calculation of Free Cash Flow. The Second Credit Agreement has a borrowing base of $600 million, which is subject to periodic redeterminations, mandatory reductions and further adjustments from time to time.
All of our properties are located within the continental United States. Write-down of Oil and Natural Gas Properties . Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter.
Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. Ceiling Test of Oil and Natural Gas Properties . Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter.
Prices are adjusted by local field and lease level differentials and are held constant for life of reserves in accordance with SEC guidelines. Oil and Natural Gas Reserve Quantities. Reserve quantities and the related estimates of future net cash flows affect our periodic calculations of depletion and impairment of our oil and natural gas properties.
Reserve quantities and the related estimates of future net cash flows affect our periodic calculations of depletion and impairment of our oil and natural gas properties.
Additionally, in its Crane County acreage within the Central Basin Platform, the Company drilled and completed three vertical wells (each with a working interest of 100%). Lastly, the Company drilled and began the completion process on three 1-mile horizontal wells in the Northwest Shelf (each with a working interest of 100%).
Meanwhile, in the Central Basin Platform, the Company drilled and completed six vertical wells, all with a working interest of 100%, three in Ector County and three in Crane County. Finally, in the Central Basin Platform in Andrews County, the Company drilled four 1-mile horizontal wells, all with a working interest of 100%. Two of these wells were completed.
This was offset by increased oil and NGL revenues in addition to a more favorable derivative contract portfolio in comparison with the year-end commodity futures prices. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Oil sales .
This was offset by increased oil and NGL revenues in addition to a more favorable derivative contract portfolio in comparison with the year-end commodity futures prices. Liquidity and Capital Resources Financing of Operations. We have historically funded our operations through cash available from operations and from equity offerings of our stock.
We have outlined below certain of these policies as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by our management. Revenue Recognition. In January 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”).
We have outlined below certain of these policies as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by our management. Oil and Natural Gas Reserve Quantities.
Next, in its Crane County acreage 50 Table of Contents within the Central Basin Platform, the Company drilled and completed three vertical wells (each with a working interest of 100%) and performed six vertical well recompletions (each with a working interest of 100%).
In the Central Basin Platform, the Company drilled and completed nine wells, all with a working interest of 100%.
In its Crane County acreage within the Central Basin Platform, the Company drilled and completed three vertical wells (each with a working interest of 100%). In summary, for 2023, the Company drilled and completed 20 horizontal wells, 11 vertical wells, and 1 SWD well. In addition, the Company performed 9 vertical well recompletions.
Also in Crane County the Company drilled three 1-mile horizontal wells (each with a working interest of 100%), completing the first two in the fourth quarter, and the last well will be completed in 2025. In summary, for 2024, the Company drilled 22 horizontal wells, 22 vertical wells, and one SWD well, completing all but one horizontal well.
Additionally, the Company drilled and completed one saltwater disposal (SWD) well in the Northwest Shelf (with a working interest of 100%), and completed the 2023 horizontal drilling program with one 1.5-mile horizontal well in the Northwest Shelf (with a working interest of approximately 97.7%), as well as two 1-mile horizontal wells and one 1.5-mile horizontal well (each with a working interest of 100%) in the Central Basin Platform.
Additionally, within the Central Basin Platform, the Company drilled and completed one salt water disposal ("SWD") well in Crane County. In the second quarter of 2024, in the Central Basin Platform, the Company drilled and completed eleven wells, all with a working interest of 100%.
In the fourth quarter of 2023, the Company completed and placed on production the three aforementioned 1-mile horizontal wells in the Northwest Shelf.
The remaining two wells were completed in the fourth quarter of 2024. In the fourth quarter of 2024, the Company completed and placed on production the two aforementioned 1-mile horizontal wells in the Central Basin Platform. The Company completed two additional 1-mile horizontal wells in the Central Basin Platform in Andrews County (both with a working interest of 100%).
This was a result of the 32 additional wells added from 2022 drilling activities as well as ARO accretion associated with the properties acquired in the Stronghold Acquisition, offset by wells plugged and abandoned during 2022. Operating lease expense.
This was offset by additional ARO accretion from wells acquired in the Founders Acquisition, which closed in August 2023, as well as new wells drilled in 2024. Operating lease expense.
The average realized price per barrel of NGLs was $20.18 in 2022. Lease operating expenses. Our total LOE increased from $30,312,399 in 2021 to $47,695,351 in 2022 and increased on a Boe basis from $9.75 in 2021 to $10.57 in 2022. These per Boe amounts are calculated by dividing our total LOE by our total volume sold, in Boe.
Our total lease operating expenses (“LOE”) increased approximately $8.1 million to $78.3 million in 2024 from $70.2 million in 2023 and increased slightly on a Boe basis to $10.89 in 2024 from $10.61 in 2023. These per Boe amounts are calculated by dividing our total LOE by our total volume sold, in Boe.
Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. Income Taxes. Deferred income taxes are provided on differences between the tax basis of assets and liabilities and their carrying amounts in the financial statements, and tax carryforwards.
Deferred income taxes are provided on differences between the tax basis of assets and liabilities and their carrying amounts in the financial statements, and tax carryforwards. This difference will result in taxable income or deductions in future years when the reported amount of the asset or liability is settled.
Our total ad valorem taxes increased from $2,276,463 in 2021 to $4,670,617 in 2022 and increased on a Boe basis from $0.73 in 2021 to $1.04 in 2022. Ad valorem taxes increased primarily due to the increase in taxed commodity prices from the prior year, as well as $783,159 for the properties acquired in the Stronghold Acquisition.
Our total ad valorem taxes increased approximately $1.3 million to $8.1 million in 2024 from $6.8 million in 2023 and increased on a Boe basis to $1.12 in 2024 from $1.02 in 2023. Ad valorem taxes increased $1.1 million due to a full year of taxes for the properties acquired in the Founders Acquisition (i.e.
Natural gas sales increased approximately $3.9 million from $14.8 million in 2021 to $18.7 million in 2022. The natural gas sales volume increased from 2,535,188 Mcf in 2021 to 4,088,642 Mcf in 2022 and the average realized per Mcf gas price decreased from $5.83 in 2021 to $4.57 in 2022.
Natural gas sales decreased approximately $9.6 million to $(9.3) million in 2024 from $0.3 million in 2023. The natural gas sales decreased by a negative price variance of approximately $(9.6) million, as the average realized per Mcf gas price decreased to $(1.44) in 2024 from $0.05 in 2023.
For the derivative contract settlements, the Company recorded a realized loss of $52,768,154 during 2021 and a realized loss of $62,525,954 during 2022, The increase of $9,757,800 in the realized loss was a result of the rise of crude oil prices during 2022, which was above the fixed prices of the derivative contracts.
For the derivative contract settlements, the Company recorded a realized loss of $5.2 million during 2024 and a realized loss of $9.1 million during 2023. The decrease of $3.9 million in the realized loss was $1.1 million from realized oil derivative settlements and $2.8 million from realized natural gas derivative settlements.
Removed
In the second quarter of 2023, in the Northwest Shelf, the Company drilled and completed two 1.5-mile horizontal wells (one with a working interest of 100% and the other with a working interest of approximately 75.4%) and two 1-mile horizontal wells (both with a working interest of approximately 91.1%).
Added
Specifically, in our Andrews County 48 Table of Contents acreage the Company drilled and completed three 1-mile horizontal wells, in the Ector County acreage the Company drilled three vertical wells, and in the Crane County acreage the Company drilled and completed three vertical wells.
Removed
Oil sales increased approximately $139.5 million from $181.5 million in 2021 to $321.1 million in 2022 due to an increase in the average realized per barrel oil price from $67.56 in 2021 to $92.80 in 2022 and an increase in sales volume from 2,686,940 barrels of oil in 2021 to 3,459,840 barrels of oil in 2022.
Added
Specifically, in our Andrews County acreage the Company drilled and completed five 1-mile horizontal wells, in the Ector County acreage the Company drilled three vertical wells, and in the Crane County acreage the Company drilled and completed three vertical wells.
Removed
The increased average realized per barrel oil price was a result of the significantly higher oil price during the first eight months of 2022.
Added
The oil sales increased by a volume variance of approximately $21.5 million from an increase in sales volumes to 4,861,628 barrels of oil in 2024 from 4,579,942 barrels of oil in 2023, primarily driven by production from wells within the 52 Table of Contents assets acquired with the Founders Acquisition (closed in August 2023).
Removed
The increased sales volumes were a direct result of assets acquired in the Stronghold Acquisition, which resulted in higher volumes for the last four months of 2022, as well as organic growth from capital expenditures that were $78.0 million greater in 2022 than in 2021. Natural gas sales.
Added
Other impacts to revenue volumes include organic growth from workovers, new drills, and other capital expenditures, offset by divestitures completed and natural asset decline. The volume variance was offset by a negative price variance of approximately $(6.5) million from a decrease in the average realized per barrel oil price to $74.87 in 2024 from $76.21 in 2023. Natural gas sales.
Removed
The sales volume increase was due to 56 Table of Contents the aforementioned increase in capital expenditures as well as the Stronghold Acquisition, which closed August 31, 2022. The price decrease was driven by the Company's change in reporting presentation from two-stream (oil and natural gas) to three-stream (oil, natural gas and NGLs) beginning July 1, 2022. NGL sales.
Added
The significant reduction in realized natural gas prices was driven by a lower market index price. In 2024, the average gross realized price for natural gas was $0.29 per Mcf, and the average fees per Mcf were $(1.73), bringing the net average price to $(1.44) per Mcf.
Removed
NGL sales increased approximately $7.5 million from $0.0 million in 2021 to $7.5 million in 2022. NGL sales volumes in were 371,329 barrels compared to zero barrels in 2021, due to the Company’s change in reporting presentation for its natural gas products, which were presented on a three-stream basis beginning July 1, 2022.
Added
In 2023, the average gross realized price for natural gas was $1.67 per Mcf, and the average fees per Mcf were $(1.62), bringing the net average price to 0.05 per Mcf. This was only slightly offset by the volume variance as the volume increased to 6,423,674 Mcf in 2024 from 6,339,158 Mcf in 2023. NGL sales.
Removed
LOE increased primarily due to a 45% increase in production of 1,403,502 Boe year-over-year, as well as increased costs for goods and services due to increased Permian activity. Gathering, transportation and processing costs. Our total GTP decreased from $4,333,232 in 2021 to $1,830,024 in 2022 and decreased on a Boe basis from $1.39 in 2021 to $0.41 in 2022.
Added
NGL sales decreased approximately $0.1 million to $11.6 million in 2024 from $11.7 million in 2023. NGL sales had a volume variance of approximately $3.4 million, as volumes were 1,258,814 barrels of NGLs in 2024 compared to 976,852 barrels in 2023, with 36% of the increase in barrels due to the assets acquired in the Founders Acquisition in 2023.
Removed
GTP costs decreased due to costs classified as a reduction to oil and natural gas sales revenues, due to a natural gas processing entity beginning to take control of transportation at the wellhead beginning May 1, 2022. Ad valorem taxes.
Added
Offsetting this increase to sales was a negative price variance of approximately $(3.4) million, as the average realized price per barrel of NGLs was $9.23 in 2024 compared to $11.95 in 2023.
Removed
Oil and natural gas production taxes . Oil and natural gas production taxes as a percentage of oil and natural gas sales were 4.65% during 2021 and increased to 4.93% in 2022. Overall, the percentage was consistent year over year, with a slight increase due to proportionately higher gas revenues which are taxed at a higher rate.
Added
This was due to a reduction in the gross realized price per NGL barrel to $20.00 in 2024 compared to $21.16 in 2023 coupled with a growth in the average fees per barrel to $(10.77) in 2024 compared to $(9.20) in 2023. Lease operating expenses.
Removed
Production taxes vary from state to state. Therefore, these taxes are likely to vary in the future depending on the mix of production we generate from various states (currently only Texas and New Mexico), and on the possibility that any state may raise its production tax rates. Depreciation, depletion and amortization .
Added
LOE increased due to the full year of expenses from the assets acquired with the Founders Acquisition (closed in August 2023) which contributed to a 9% increase in production of 577,733 Boe year-over-year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−0 removed4 unchanged
Biggest changeFor the Year Ended As of December 31, 2023 December 31, 2023 Percentage of Oil, Natural Gas, and Natural Gas Liquids Revenues Percentage of accounts receivables from the sale of our oil and natural gas production Purchaser: Phillips 66 Company ("Phillips") 66% 65% Enterprise Crude Oil LLC ("Enterprise") 12% 11% NGL Crude Partners ("NGL Crude") 10% 8% Interest Rate Risk We are subject to market risk exposure related to changes in interest rates on our indebtedness under our Credit Facility, which bears variable interest based upon a prime rate and is therefore susceptible to interest rate fluctuations. 63 Table of Contents Changes in interest rates affect the interest earned on the Company’s cash and cash equivalents and the interest rate paid on borrowings under the Credit Facility.
Biggest changeWe believe that the loss of any of these purchasers would not materially impact our business because we could readily find other purchasers for our oil and natural gas. 61 Table of Contents For the Year Ended As of December 31, 2024 December 31, 2024 Percentage of Oil, Natural Gas, and Natural Gas Liquids Revenues Percentage of accounts receivables from the sale of our oil and natural gas production Purchaser: Phillips 66 Company ("Phillips") 61% 64% Concord Energy LLC ("Concord") 14% 11% LPC Crude III, LLC ("LPC") 13% 11% Interest Rate Risk We are subject to market risk exposure related to changes in interest rates on our indebtedness under our Credit Facility, which bears variable interest based upon a prime rate and is therefore susceptible to interest rate fluctuations.
NGL prices received during 2023 ranged from a monthly average low of $7.07 per barrel to a monthly average high of $14.71 per barrel. A significant decline in the prices of oil or natural gas would likely have a material adverse effect on our financial condition and results of operations.
NGL prices received during 2024 ranged from a monthly average low of $7.04 per barrel to a monthly average high of $12.43 per barrel. A significant decline in the prices of oil or natural gas would likely have a material adverse effect on our financial condition and results of operations.
In some months, fees exceeded the pricing, causing a negative net realized price. Gross natural gas prices ranged from a monthly average low of $0.76 per Mcf to a monthly average high of $2.78 per Mcf. Fees ranged from a monthly average low of $(2.07) per Mcf to a monthly average high of $(0.87) per Mcf.
In some months, fees exceeded the pricing, causing a negative net realized price. Gross natural gas prices ranged from a monthly average low of $(0.82) per Mcf to a monthly average high of $2.43 per Mcf. Fees ranged from a monthly average low of $(1.88) per Mcf to a monthly average high of $(1.44) per Mcf.
Oil prices received during 2023 ranged from a monthly average low of $68.72 per barrel to a monthly average high of $89.13 per barrel. Natural gas prices realized during 2023 ranged from a monthly average low of $(0.94) per Mcf to a monthly average high of $1.52 per Mcf.
Oil prices received during 2024 ranged from a monthly average low of $67.84 per barrel to a monthly average high of $84.43 per barrel. Natural gas prices realized during 2024 ranged from a monthly average low of $(2.38) per Mcf to a monthly average high of $0.91 per Mcf.
The following table sets forth certain information regarding the top three purchasers of our oil, natural gas, and NGLs for the year ended December 31, 2023. We believe that the loss of any of these purchasers would not materially impact our business because we could readily find other purchasers for our oil and natural gas.
The following table sets forth certain information regarding the top three purchasers of our oil, natural gas, and NGLs for the year ended December 31, 2024.
Currency Exchange Rate Risk Foreign sales accounted for none of the Company's sales; the Company accepts payment for its commodity sales only in U.S. dollars. Ring is therefore not exposed to foreign currency exchange rate risk on these sales. Please also see Item 1A “Risk Factors” above for a discussion of other risks and uncertainties we face in our business.
Currently, we do not use interest rate derivative instruments to manage exposure to interest rate changes. Currency Exchange Rate Risk Foreign sales accounted for none of the Company's sales; the Company accepts payment for its commodity sales only in U.S. dollars. Ring is therefore not exposed to foreign currency exchange rate risk on these sales.
See "Note 9 — REVOLVING LINE OF CREDIT" in the notes to the financial statements for more information on the Company’s interest rates of our Credit Facility. Currently, we do not use interest rate derivative instruments to manage exposure to interest rate changes.
A 1% change in the interest rate on our Credit Facility would result in an estimated $3.9 million change in our annual interest expense. See "NOTE 9 — REVOLVING LINE OF CREDIT" in the notes to the financial statements for more information on the Company’s interest rates of our Credit Facility.
As of December 31, 2023, we had $425.0 million outstanding on our Credit Facility with a weighted average annual interest rate for the year then ended of 8.8%. A 1% change in the interest rate on our Credit Facility would result in an estimated $4.3 million change in our annual interest expense.
Changes in interest rates affect the interest earned on the Company’s cash and cash equivalents and the interest rate paid on borrowings under the Credit Facility. As of December 31, 2024, we had $385 million outstanding on our Credit Facility with a weighted average annual interest rate for the year then ended of 9.2%.
Item 8: Financial Statements and Supplementary Data The financial statements and supplementary data required by this item are included beginning at page F-1 of this Annual Report. Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Please also see Item 1A “Risk Factors” above for a discussion of other risks and uncertainties we face in our business. Item 8: Financial Statements and Supplementary Data The financial statements and supplementary data required by this item are included beginning at page F-1 of this Annual Report.
See "Note 7 — DERIVATIVE FINANCIAL INSTRUMENTS" to our financial statements for further information. 62 Table of Contents Oil Hedges (WTI) Gas Hedges (Henry Hub) Month Average BBL/day Average MMBtu/day January 2024 6,475 — February 2024 6,457 8,999 March 2024 6,438 8,311 April 2024 5,921 8,383 May 2024 5,906 7,999 June 2024 5,891 8,124 July 2024 5,575 7,704 August 2024 5,575 7,590 September 2024 5,575 7,722 October 2024 5,400 7,336 November 2024 5,400 7,467 December 2024 5,400 7,133 January 2025 5,275 7,023 February 2025 5,275 7,633 March 2025 5,275 6,831 April 2025 5,100 6,961 May 2025 5,100 6,662 June 2025 5,100 6,790 July to September 2025 4,450 6,450 October to December 2025 4,400 6,500 Customer Credit Risk Our principal exposure to credit risk is through receivables from the sale of our oil and natural gas production (approximately $37.9 million as of December 31, 2023).
See "NOTE 7 — DERIVATIVE FINANCIAL INSTRUMENTS" to our financial statements for further information. 60 Table of Contents Oil Hedges (WTI) Gas Hedges (Henry Hub) Month Average BBL/day Average MMBtu/day January 2025 7,420 — February 2025 10,939 8,557 March 2025 9,963 7,558 April 2025 10,008 7,643 May 2025 9,616 7,248 June 2025 9,684 7,350 July 2025 9,333 6,987 August 2025 9,203 6,863 September 2025 9,290 6,970 October 2025 8,977 6,632 November 2025 9,071 6,743 December 2025 8,779 6,500 January 2026 5,211 6,327 February 2026 5,681 6,904 March 2026 5,056 6,150 April 2026 5,150 6,257 May 2026 4,914 5,971 June 2026 5,010 6,083 July 2026 4,781 5,809 August 2026 4,721 5,732 September 2026 4,817 5,846 October 2026 4,603 5,584 November 2026 4,700 5,703 December 2026 4,494 5,455 Customer Credit Risk Our principal exposure to credit risk is through receivables from the sale of our oil and natural gas production (approximately $33.8 million as of December 31, 2024).
Added
Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

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